Bread producers demand measures to regulate market

TIRANA, March 14 – As bread prices have increased by at least 20 lek during the past few months, the Association of Bread Producers, part of the newly launched Business Albania lobby group, has called on government to make the necessary legal changes on the licensing criteria and weight standards to regulate the market.
Few weeks ago, twenty seven businesses associations among them powerful chambers of commerce joined in a single association called Business Albania to protect business interests and improve the business climate by making the necessary legal changes.
Producers say they often face informal competition from unlicensed bakeries and that the recent price increase is not only a result of the soaring prices in international markets.
The Association says the Agriculture and Economy ministries should intervene to set the weight standards for every king of loaf of bread and carry out tougher controls even on bakeries. As far as prices are concerned, bread producers say they can be determined only by free competition and not the Finance Ministry.
Local producers say the increase in bread prices is unavoidable as long as prices in international markets, where Albania imports 85 percent of its wheat needs, continue rising.
Currently, a standard loaf of bread of 800 grams costs 90 lek (60 Euro cents) in most bakeries, up from 70 lek few months ago. The Agri-food Traders Union has dismissed accusations of abuses, saying that the price increases were only the reflection of what’s happening in international markets. The prices can be kept at the current rates only if the 2 percent customs duty and the 20 percent VAT on wheat import is reviewed, bread producers claim.
Government says rising food and vegetable prices are a result of lower domestic production following last year’s massive flooding and increasing demand. An analysis published by the Food and Agriculture Ministry explains the increase in vegetable, potato, fruit and wheat prices with the lower production from the fertile Shkodra and Lezha regions in northern Albania and the southeastern Korca lowland which suffered massive flooding during 2010, seriously affecting domestic production.
Lack of vegetable production during the first months of the year and rising prices in international markets where Albania is a net importer has also affected the situation.
Ministry’s data show domestic wheat production fell by 11 percent in 2010 while demand continued increasing as prices soared following lower production from the world’s biggest producers such as Russia or Australia. Another reason is that Albanian farmers are finding less interest in cultivating wheat because of high costs and no support by government which grants subsidies only for olive, fruit, and grape cultivation. Data show Albanian wheat imports increased by 35 percent in value but only 1 percent in amount during 2010 compared to 2009.
The increase in some basic food prices such as bread, cooking oil, sugar and rice, but also liquid gas and fuel also reflected in the February Consumer Price Index which rose 4.5 percent year-on-year in February 2011, exceeding the central bank’s target band by 0.5 percent. Compared to last January, the inflation rate was up 2.3 percent mainly because In February 2010, the CPI was up 4.7 percent year-on-year.