Rising Food Prices Caused By Domestic Flooding, International Markets
Tirana Times
TIRANA, Feb. 22 – 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 study says rising oil prices and the low level of Albania’s mechanization, and lack of necessary labour force considering massive migration, also influence on rising vegetable and grain prices.
According to the latest edition of Food Price Watch, the World Bank’s food price index rose by 15 percent between October 2010 and January 2011, is 29 percent above its level a year earlier, and is only 3 percent below its 2008 peak.
The increase in some basic food prices such as bread, cooking oil, sugar and rice, but also liquid gas and fuel is making the life of average Albanians, especially pensioners, the unemployed and those who rely on falling remittances even more difficult in this beginning of 2011.
The situation is a result of a sharp rise in basic product prices in international markets where Albania is a net importer but also the high tax burden applied to these products. Bread producers have warned prices will undergo another 10 lek increase as wheat and flour prices soar because of lower production and exports from the world’s main producers. 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.
Consumer prices in January 2011 registered a 0.8 percent increase compared to last December mainly because of higher food and beverage prices but also fuel and liquid gas. Latest data published by the country’s Institute of Statistics (INSTAT) show the Consumer Price Index in January rose 3.3 percent year-on-year, remaining within the central bank’s 3ѱ percent target. In January 2010, the inflation rate was up 4.3 percent year-on-year.
The highest increase was reported in the “alcoholic beverages and tobacco” group with cigarette prices rising by 10.6 percent following a government decision to increase the tobacco excise tax by 20 lek per packet, effective since January 1, 2011.
Albania’s price level index (PLI) for food and non-alcoholic beverages stands at 72 percent of the EU 27, considerably more expensive compared to neighbouring Macedonia, an already EU candidate country, whose index was at 52 percent, and even some EU members such as Poland, Romania, Bulgaria, according to Eurostat.
