Nekula Calls on Chains to Explain High Sugar and Egg Prices

Prague - The Minister of Agriculture, Zdenk Nekula (KDU-SL), has written to retail chains asking them to provide an explanation for the high cost of sugar and eggs. He called attention to the prices last fall, which had increased significantly.

He contends that businesses shouldn't take unfair advantage of the current economic climate to boost profits. The cost of a kilogram of granulated sugar on store shelves increased by 77 percent between September and December, according to the Czech Statistical Office (S).

The Trade and Tourism Association of the Czech Republic (SOCR) responded that prices for sugar are set for the entire year based on tenders and that chains only made price adjustments after suppliers significantly raised their prices in the previous fall. The union will contact the Office for the Protection of Economic Competition because it believes the minister's action to be an illegal attempt to fix prices.

The Czech Republic's agrarian chamber rejected the notion that the price increase was the result of Czech farmers' actions. Nekula requests information from the chain store in a letter, including an estimate of when the consumer price will be lowered to a suitable and reasonable level.

"I certainly don't want to interfere with the free market, but it strikes me as at least immoral that supermarkets are raising their sales mark-ups in this manner at a time when our residents are concerned about rising food prices and households are tightening their budgets. Nobody should take unfair advantage of the current circumstance to artificially raise profits.

The minister remarked, ". In the letter, which is available to ČTK, Nekula writes that citizens turn to him because of the high prices of eggs and sugar.

He claims that the wholesale cost of 100 kilograms of eggs in the Czech Republic is 229 point 68 euros (5483 point 61 CZK), whereas in Poland it is 259 point 84 euros (6203 point 68 CZK), as reported by Eurostat. At the same time, he added, eggs were less expensive in Polish shops than they were in the Czech Republic.

Polish authorities temporarily eliminated the VAT on food last year as a response to the energy crisis. Nekula asks the chains to explain the prices of eggs and sugar in stores, also with regard to the different tax rates.

According to SOCR president Tomáš Prouza, the price of sugar depends on the annual tenders, which set supply prices for one year. Last fall, he said, it was evident in the suppliers' bids that they were trying to raise prices significantly, and most of them demanded increases of up to 100 percent in an attempt to exploit the current inflationary environment and increase their profits.

"The retail chains compensate for this extreme increase in supply prices, at least partially, by including sugar much more often in discount campaigns. In this mode, more than 70 percent of it was sold in the last period," he said.

According to Prouza, the minister's statement shows a fundamental ignorance of the functioning of the market, he sees in it an illegal effort to determine prices. " that from September to December the purchase prices of sugar beet fell by 14 percent and were lower even in a year-on-year comparison.

"In its last year's estimate of the aggregate agricultural account, the Czech Statistical Office already drew attention to the high costs in domestic agricultural primary production and its decreasing profitability and warned against the continuation of this trend," he added. In stores, the average price for a kilogram of granulated sugar in September of last year was CZK 18.21.

In December, it was already 32.23 CZK, which is 77 percent more. The ministry said that sugar prices were significantly affected by the rise in energy costs for producers who started production from last year's harvest in autumn.

According to the Ministry, the current average consumer price of sugar has surpassed historical highs, sugar has not yet cost more than CZK 30 per kilogram in stores. The previous record was CZK 26.1 in September 2004, the ministry said.

Last fall, he said, it was evident in the suppliers' bids that they were trying to raise prices significantly, and most of them demanded increases of up to 100 percent in an attempt to exploit the current inflationary environment and increase their profits.