Premium
Taking food price capping measures would jeopardise the population's food supply and boost profiteering, according to a press statement released on Tuesday by the Romalimenta federation of employers' organisations.
"Making use of capping will have as an immediate effect jeopardising the population's supply of products, and a severe food crisis would be expected, while market shortages would boost profiteering and the underground economy. Thousands of jobs will be jeopardised, and companies will have to take cost-effective measures. Thus, the government's unemployment outlays will increase. The food industry is making a significant contribution to the national economy, which is so challenged at the moment, and needs to be supported by decision-makers, because it is essential to the country and in need of support," the release reads.
Romalimenta says that capping food prices will generate, in addition to an apparent and transient calming of prices, a cascade of persistent negative effects on the entire agri-food chain.
"The economy is going through a prolonged crisis, not only nationally, but also Europewide and even worldwide, including food price inflation, and remedies must be carefully weighed! Romanian food producers need stability, predictability and constant support from decision makers in order to continue under the current hard circumstances, and the imposition of an artificial cap will only jeopardise their ability to continue in business. By adopting such a measure, there is a risk of a major food crisis, because the industry will not be able to bear the losses, many companies will cease to do business, and the food supply of the population will be affected directly and immediately," Romalimenta points out.
According to the employers' organisation federation, the food industry will be severely affected by price caps.
"Our industry will be severely affected in the long run by the fact that the price no longer reflects the cost of production in all its components, meaning we will work at a loss. Measures to protect vulnerable sectors (the population and the economy) must be decided only in consultation with producers, otherwise the negative effects will substantially outweigh the benefits, as most business operators will not be able to bear the losses and will be forced to close down and implicitly stop food deliveries, widening the deficit even more. Capping will lead to substantial financial losses for agri-food producers, which will also affect employees, by losing jobs due to the impossibility of companies to pay their employees, with social effects difficult to quantify," according to the release.
At the same time, Romalimenta says the government has the necessary mechanisms to verify the market and possible profiteering trends.
"The government has at its disposal the necessary leverage, for example through the Price Monitor, or the Competition Council, with the latter being able to penalise economic operators seeking to profit unjustifiably and abusively. In conclusion, we are calling on decision makers to understand the importance of the food sector and the works of the food chain in all its aspects and not to put up barriers in the way of production and supply of consumers with vital products, in this special context," the release also reads.
