[size=55:30vu7rti]BNR

Quality of food margin in retail chains mulled

Rising prices of raw materials and staples worldwide was among the factors that triggered popular revolts in the Arab world. The chain reaction of toppling dictators and governments has in turn caused fuel prices to go up. They will impact on food prices, and so on and so forth. Profiteering in this sphere was among the subjects discussed by the forums of the world’s leaders – of G-8 and G-20 countries. The problem has given rise to concerns in Bulgaria too. 2010 saw soaring prices of basic agricultural products. The annual rise of sunflower prices came to 78 percent, of wheat – to 46 percent, of corn to 50 percent, of grapes to 38 percent and of cow’s milk to 27 percent.

The big retail chains have the potential to act as an effective barrier to profiteering – they have entered the Bulgarian market though with some delay. Unfortunately, close to half of Bulgaria’s population lives in villages, while big retail chains have opened stores in bigger towns and cities only. In places where they operate they have claimed from 50 to 70 percent of the market. As a result, urban population that has higher incomes than the population of small towns, has access to lower prices owing to retail chains operation. It seems that Bulgaria’s rural population has been punished trice: unemployment there is rampant, people have lower incomes, and on top of that, they buy relatively expensive foodstuffs.

Meeting with officials from the big retail chains recently, the Bulgarian Minister of Agriculture and Food Miroslav Naydenov said:

“For sure, retail chains help so as to prevent extensive profiteering, because their work is based on long-term contracts with suppliers. The prices in a big retail chain can hardly change overnight while on the Women’s Market in Sofia they do change that fast. In this way retail chains act the buffer on the market. This is good but we also want to make sure that what customers buy from them is of decent quality.”

Amid the struggle for attracting customers that broke out among big retail chains in Bulgaria, some symbolic promotional prices have given rise to justified concern. Prices such as 400 g of yoghurt at 35 cents, or a kilo of sausages for 1 Euro cannot possibly go with good quality. There are fears that such promotional stuff is simply junk.

“What big chains sell, is certainly safe to consume’, Minister Naydenov admits. “However we discussed with them that we can upgrade safety by factoring in a certain quality component, the so-called quality margin. They are not expected to sell the highest quality products – like the meat products carrying the Stara Planina logo or the dairy products marked with the Bulgarian State Standard logo. Still, they have done a lot to place such good products in their stores’ most visible sections. Well, of course, we are aware that we cannot have only top quality in stores, so we have opened a discussion whether we could negotiate a quality margin that we could institutionalize and declare that it is safe and is of good quality, though also cheap. In the meantime, consumers should be aware that when they require a certain degree of quality, they should be ready to pay the price for it. We have agreed to continue dialogue in a broader format – among producers, consumers and retailers,” concludes Minister of Agriculture and Food Miroslav Naydenov.

The Uk has had it's own problems with commodity prices inflation in the past few months and this would justify a 3pc-3.5pc increase in food prices, but supermarkets have increased prices by 6pc-6.5pc. Supermarkets have been accused of prices rising in excess of justifiable cost increases.
Food prices in Britain are rising at an annual rate of 4.9pc, compared with 3.6pc in Germany, a eurozone average of 1.8pc. The UK is being also accused of being a total rip off with other commodities, not least the banking sector.