Unstoppable increase in prices and... abuse!

Author: Ernilda Luzi

While inflation in the prices of food products is a phenomenon that has affected the entire globe due to the crises of recent years, Albania, unlike many EU countries, does not have instruments in place for assistance to producers of basic food products. basket, can ease the financial burden for the consumer, nor institutions to monitor the possibility of price abuse by different operators. Albania, despite being one of the countries with the lowest income per person in Europe, ranks for many basket products as one of the countries with the highest prices, leaving behind EU countries.

The increase in the prices of basket products is becoming an extremely heavy burden for citizens.

In the grocery store nearby Ballet School you see citizens, who touch the products, pass them through their hands and then put them back in the vendors' baskets. One of the citizens begins to complain: "We cannot afford these prices, the salary is very low. With these prices that we have, we should be stressed about life. We can't make it with that income, we pay for food, we pay for the internet, we pay for the lights, the water, the phone, but we don't think of getting sick. We are afraid, when we get sick, we take the cheapest medicines".

At the same time, an elderly lady passes by, leaning on a stick, barely walking and with trembling hands, as she opens the bag full of medicine, she mutters: "I am a pensioner, the pension is too small . I have a bag of medicine, I only need the pension for medicine".

The increase in prices has not only affected the elderly, but also the youth, a part of which sees leaving the country as an escape route.

"With these prices, not only do we not manage to save, but we hardly even manage to postpone the month. The only solution, as a path of hope, that I see, is that, after receiving the diploma, I leave as soon as possible, because here it doesn't work out, here we have no support, nothing from the government", says a student.

The prices of products increase by astronomical figures

Citizens consume less compared to two years ago. At least this is what the sellers in the fruit and vegetable markets in Tirana say. The reason: rising prices. The reports of the Institute of Statistics show a significant increase in the prices of basket products, where almost all categories of food products have increased compared to previous years, but basic products, such as sugar, jams, honey, oils and fats, as well as bread and cereals themselves have seen an increase many times higher than other products with 11,4%, 24% and 115,8% increase in base price respectively, compared to a year ago.

An increase in prices has been observed by INSTAT also in the first months of 2023, where compared to the month of May 2022, the largest increase in prices is observed in the group "Food and non-alcoholic beverages" with 10,0%, followed by the groups "Entertainment and culture", with 6,9%, "Furniture, household appliances and house maintenance", with 6,5%, "Hotels, cafes and restaurants", with 5,0%, "Clothing and shoes", with 4,2 %, "Miscellaneous goods and Services", with 4,0%, "Alcoholic beverages and tobacco", with 3,7%, "Rent, water, fuel and energy" and "Educational service", with 2,2% each, "Health", with 1,4% and "Communication", with 1,2%.

This increase in prices has also led to a decrease in the consumption of products, noticed even by traders.

"The purchase has fallen. The reason: people have left, only old people have remained, but the increase in prices has also had an impact. Compared to the period before the quarantine, to be honest, it has decreased a lot", says a trader at one of the stalls in Elbasan street.

The economic expert, Teuta Nunaj Kortoçi, explains that the increase in prices has come as a result of two factors. The external factor: "The crisis of Covidcreated supply problems, at the same time the Russia-Ukraine war, which aggravated the effects of the first crisis."

"For livestock products, the increase in prices is related to the shrinking of farms, as a result of immigration, which has had effects in some sectors and in some forms, that is, less is produced; this will increase costs", - explains the economy expert.

Eurostat has recently published the report on the consumer price index for the year 2022, where Albania appeared with higher prices for a product category than the EU countries themselves. In 2022, Albania ranks among the European countries with the highest prices of dairy products and eggs, with about 111.7% of the average of the European Union countries. In other words, if 1 kilogram of these products cost an average of 100 ALL in EU countries, in Albania it would cost around 111.7 ALL in 2022.

Increase in the price of secondary products increases the cost of food production/ Subsidies, insufficient

Kasemi, the farmer from the village of Dushk in Lushnja, says that with the situation of rising prices, it has become even more difficult to make a profit from trading agricultural products.

"We spend more than we earn from trading agricultural products", he says, indicating that the cost of production itself has increased several times.

"The cost of production has increased, because only fertilizer costs 130 Lek per quintal. Only wheat seed costs 100 Lek, while the cost is very high for other products, such as batha; this year the price of the bath is 120 thousand lek a kilo; but also herbs, like alfalfa dengue, which we need for livestock, have become expensive", he says.

Finding a buyer and selling products at a low price to the dealer remains the problem faced by the farmers.

"Our production suffers, as it is very difficult to find a buyer. Traders buy from us at a low price and sell the products themselves at a high price. It takes us a long time to find a buyer, if not found, we throw the wheat to the chickens", says Kasemi.

Support for producers to curb inflation is lacking

According to the economy expert, Teuta Nunaj Kortoçi, "the farmer must be supported, so that he can reduce the costs of the products. By reducing costs, it will increase the amount of production, at the same time it will produce more".

According to her, "generally traders benefit more than the farmer who realizes the product, so the profit margin that benefits the farmer is smaller than the trader. This brings dissatisfaction to the farmer and because of the low income, he chooses to abandon the land and migrate. In this case, the state can intervene as a regulator, to protect the farmer and avoid price abuses".

Through a request for information from ACQJ addressed to the Ministry of Agriculture, the latter states that the measures taken for farmers for 2022 include a total budget for the national support scheme of 5.1 billion lek, with the fund allocated for the oil support measure for carrying out mechanized works in agriculture for the year 2022 of 1.95 billion ALL.

Executive Director of the association Milk Processing Industry, Donjaldo Hoxha, says that the fund made available by the Ministry of Agriculture is insufficient.

"In 2022, about 7 livestock farmers applied and managed to benefit only 200 of them, therefore, even though it is in limited quantities for the number of heads, even though it is a small amount of subsidy, it is still insufficient compared to the demand that has Albanian livestock", he says.

"Regarding the subsidy scheme or the support given by the government of any country to livestock breeders and farmers, in Albania it is several times lower than the support that livestock breeders receive in the region. If we compare it with one of the countries in the region, in the first place they have the scheme based on production, that is, for every liter of milk produced by livestock farmers and farmers in the region (Kosovo, Macedonia, Serbia) they are subsidized by their state ", - says Mr. Hoxha.

He further explains about ACQJ that the second subsidy scheme is about support for the head. This scheme, in comparison, is the same scheme as the one given in Albania, but with an extremely big difference, there is no upper limit, which means, if a farm has 300 heads, the subsidy is 25 euros/head , so for different amounts of heads, you get a different support and subsidy.

"This does not happen in Albania, there is an upper limit and above that limit everyone gets the same, regardless of the number of heads they have. The support for leaders in the region is 25 euros, in our country it is 1.200 lek or 10 euros."

Mr. Hoxha says that there is a decrease in the number of heads, especially of small ones in our country, because their breeding has not been of interest and benefit to farmers and ranchers.

In parallel with the lack of appropriate subsidies which lead to a price for fresh milk from livestock farmers of 35%-40% higher than in the EU region, Hoxha says that the price of the final product is also negatively influenced by high prices of oil, electricity, gas, packaging materials, salaries of industry employees, etc., which lead to non-competitive prices, and the suffocation of the domestic market by imported products.

ACQJ addressed several different producers, large in the dairy market in Albania, to get a comment on the increase in raw material for their products and how this has affected the increase in the prices of final products, such as milk, cheese, butter or other fats in market displays, but until the moment of publishing this article, all the companies asked have refused to comment.

Price increase, but also abuses

Despite the increase in raw and auxiliary products in production for farmers, which has led to a natural increase in the prices of various products on supermarket shelves, experts also talk about cases of abuse of the prices of basket products.

The head of the National Center for Consumer Protection, Hasan Stafa, points out the problem of abuse, which has been done in prices, where an increase in complaints from consumers, addressed to this organization, can be noticed these days.

"There are 724 complaints reported at least in the last two months and still very few measures have been taken. The consumer remains completely unprotected. Abusive prices continue, theft continues, fraud continues in almost all food products", he says.

He says that his center has denounced the abuse, but no state institution has intervened.

"If cheese, from 450 ALL, has gone today to 1.200 ALL, that is, it has gone about 82% within a month without any justification, because the price in the global, regional market has fallen... When there are no mechanisms to stop this type of abuse , consumers are almost at the mercy of fate", he says.

ACQJ, based on the large increase in the prices of food products and the position of experts in the field on this issue, conducted an assessment of the market for these products, where it was noticed that unlike neighboring countries, but also from EU countries, the prices of many products were at very high levels.

The economic expert, Teuta Nunaj Kortoçi, says that, "the price is high in the market in relation to salaries". She says that generally, when prices have been raised in the past, it has been very difficult for them to decrease, so there are few cases of reduction.

Looking at the inflation rate in 2022 and in the first half of 2023, Mrs. Kortoçi does not anticipate that there will be a decrease in the prices of basket products either in the following months or in the first months of 2024.

The role of state institutions

One of the measures taken by the government to manage the situation of rising prices was the establishment of the Board of Transparency and Monitoring of Wholesale/Retail Prices of Basic Food Products, set up pursuant to normative act no. 7, dated 18.03.2022 "On transparency and price monitoring for some basic food products and other related products, as a result of the special situation created in the market".

Through a request for information, ACQJ asked the Ministry of Finance about the functioning and purpose of the Transparency Board. The latter assessed that the decision to create the Transparency Board was necessary for the created situation.

"In the conditions of an uncertain situation, not only for our country, but for many countries in Europe, in order to avoid panic among consumers, a goal that was achieved, government intervention was deemed necessary in order to guarantee the supply of the population with the most necessary food products and maintaining prices within normal trading limits, without affecting the activity of economic operators and predicting gross trading margins, normal activity", - is underlined in the response of the ministry.

Meanwhile, this Board has held three meetings until today, where it decided to approve the margins, which will be applied to some basic food products, but it has already been abolished through a decision of the Constitutional Court as an institution with activities incompatible with the Constitution of the Republic of Albania.

The experts state that the Board did not fulfill its function in any case.

According to the economy expert, Teuta Nunaj Kortoçi, the Transparency Board should have been closed a long time ago.

"This intervention did not bring the expected results, because in the case of the increase in the price of flour, the four largest flour and bread production companies in the country were fined by public institutions, due to price abuse, that is, for violating the rules of competitiveness", she says.

In a request initially addressed to the Consumer Protection Authority, ACQJ asked for information in what form this authority guarantees the rights of the citizen, fighting the abuse of basket product prices. This authority declared incompetence and delegated responsibility to the Market Administration Agency under the jurisdiction of the Municipality of Tirana, as well as the National Food Authority.

After AMK's response, we turned to the National Food Authority and the Market Administration Agency, but again both of these institutions emphasized that they do not have the competence to fight against the abuse of food product prices.

The prices of basic foods continue to increase year after year, as well as the production prices for farmers and ranchers, but in a market where there has been no shortage of abuse with speculation on the prices of these products, the responsibility for consumer protection has remained on the streets.