June the 9th, 2022 - Inflation is continuing to cause issues across the board, and it has emerged that Croatian retail prices are higher than those in neighbouring Hungary and Slovenia. Why?
As Poslovni Dnevnik writes, in one year, a kilogram of wheat has risen in price by 80 percent, a kilogram of corn by 61 percent, flour by 55 percent, oil by 50 percent, milk by 20 percent and beef purchased from butchers by 20 percent, HRT reports. The rise in Croatian retail prices was the recent topic of HTV's Otvoreno/Open show, in which Agriculture Minister Marija Vuckovic announced new measures for farmers, including an aid programme worth about 30 million euros.
When asked about possible new state intervention due to rising food prices, Vuckovic reminded that the last big package of Government measures to help both people and companies came into force on April the 1st this year and was worth 4.8 billion kuna.
"Of course we're going to continue to try to react as we have shown in recent years," she assured, before announcing some new measures for farmers. Among other things, she announced a measure that will be intended primarily for cattle breeders, and mainly for the purpose of further protecting the breeding herds.
"I'll also announce emergency aid to farmers affected by natural disasters," she added, saying that ''after all this, there will be an additional assistance programme that will be inteded for different sectors, and refers to micro, small and medium-sized entities in agriculture and processing, and which will be worth approximately 30 million euros.''
She also said that the aid would exceed 300 million kuna.
Zvonimir Sirjan, president of the Baby Beef Association, said that Croatian cattle breeders are getting closer to stopping their production because the prices they achieve on the market are significantly lower than the price of the production process itself. "They just can't cover all the costs," Sirjan added.
He warned that the price of corn could go up to 3 kuna this autumn, and the advisor for the food industry, Zvjezdana Blazic, said that corn was already close to that price and that it was increasing all the time. However, she added, the global food index did fall slightly, which included corn, which fell 3.5 percent globally in May when compared to April.
Blazic also said that the war in Ukraine caused the biggest blow to the growth of primarily oilseeds, and then cereals.
Vjekoslav Budanec, president of the Association of Croatian Vegetable Growers, said that limiting the growth of raw material prices would help them.
Ivica Katavic, president of the Trade Association of the Croatian Chamber of Commerce (HGK), said that the whole series of price increases greatly diminished the importance of the measures, which he said were extraordinary. ''Prices are growing day by day. We have daily announcements that from the 1st of next month there will be an increase in prices and we simply don't see the end to any of this anymore,'' he said.
He said traders have tremendous competition on their hands and that no one can afford to play with high prices and margins.
"We don't need the control of the State Inspectorate, we have our customers who are our judges and executioners, who will decide on whether what's being sold is good or worth it or not," said Katavic.
Why do both neighbouring Slovenia and Hungary have lower prices in stores when compared to Croatian retail prices? Katavic said it was a very good question.
"People who would be Croatian customers go across the border every day to do their shopping because they also know that they may be able to buy something cheaper than they'd be able to get it here," he added. Blazic said that in this situation, which has affected the whole of Europe, the Republic of Croatia had only an average increase in food prices, unlike, say, Hungary, where food prices rose significantly more.
"In all countries that are closer to Ukraine, prices have risen dramatically more than in Croatia, which has had an average increase in prices," she added. Blazic said that Croatian producers are much less technically equipped - this country's productivity, she says, is around 30 percent of the European Union average.
"When we talk about the countries from which we import the most food, that's then many times more. Germany is six times more productive in terms of agriculture than our domestic producers and our product thus becomes more expensive and therefore more uncompetitive,'' explained Blazic.
Sirjan disagreed.
"Croatian retail prices are the same or significantly lower than in those markets,'' he said. Instead, he warned that the valuable resource of agricultural land, especially state-owned land, has become absolutely inaccessible to increasingly serious agricultural producers who could produce much more and better if they had it. Vuckovic said they had adopted amendments to the Law on Agricultural Land that seek to meet Croatia's strategic needs.
"No sector, no criterion can and should be given absolute priority. It's not good for competition, that's what we changed,'' she said. As for new investments and technologies, Vuckovic said that it was true that Croatia was at a mere one third of the EU's average productivity, but also that the country had grown faster in terms of productivity in recent years than many other member states had.
Budanec said that the question is who can invest in new technology at these prices today.
“If we barely survive to stay in production at all, how are we going to invest in new technologies, robotics and the rest? And we know that labour has become extremely expensive. Vegetables are labour-intensive," he said. Should we be afraid that at these Croatian retail prices, some groceries will simply not be able to be found on the country's shelves at all?
Katavic said that he was absolutely convinced that there would be no shortage of food in Croatia.
"Our input channels are solid, I think we've shown that in the time of the coronavirus pandemic and it will continue to be so," he said.
Blazic said that the Croatian structure of agriculture at the moment is really in favour of having those products that could be in short supply in Europe and on the global market, and those are cereals and oilseeds. "And in that sense, we should never be left without these products if we manage them wisely," she said. She added that shortages sometimes occur in Europe, even in highly developed countries such as Germany, and she thinks that Croatia should start thinking about saving food and not throwing it away.
Katavic also said that it was certain that Croatian retail prices would continue to rise for some time, but expressed hope that after the situation calms down and prices stabilise, they would return at least approximately to the level they were before the war in Ukraine broke out. Blazic, on the other hand, said that it will likely be very difficult for food prices to return to the levels they were being sold at just a few years ago.
"Up until two years ago, food was actually quite cheap. We shouldn't even be talking about the return of cheap food anymore,'' she warned. Sirjan said that he was optimistic and that he thought that Croatian retail prices wouldn't increase significantly. He called on domestic consumers to buy products from Croatian farms of proven quality.
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