The price reduction campaign „Best Price“, initiated by the Government of Serbia, is good as a social measure, but it is short-term and does not solve the problem of prices being similar to those in the EU, because wages are two and a half times lower, said the Deputy Chief Economist at the Centre for Advanced Economic Studies (CEVES), Pavle Medić.
The reasons why food prices in Serbia are at the level of average European prices, while average wages are two and a half times lower, are numerous, according to him.
„Food prices in Serbia are similar to food prices in the EU, and are 10-15 percent higher than prices in the region, 30 percent higher than in North Macedonia, about 25 percent higher than in Romania, 10-15 percent higher than in Bulgaria, and similar to prices in the Netherlands, and even Hungary, which faced the highest inflation in Europe,“ Medić told the Beta agency.
The Government of Serbia agreed with retail chains on a price reduction campaign for 81 categories of food products and hygiene items, which started on September 1 and will last until the end of October, and the prices of these products have been reduced by an average of 26 percent.
Medić said that, although food prices in Serbia are similar to European ones, average wages are two and a half times lower, and that even Romania has a 20 percent higher average wage than Serbia.
„There is an evident gap between prices and wages in Serbia and EU countries. Someone will ask why the ‘Best Price’ campaign, if it is carried out in September, when citizens have spent their income on vacation, and the school year begins, is not implemented before New Year's, Easter... It is quite clear that this type of policy is not possible in the long term and is not a solution to this problem in Serbia,“ Medić assessed.
He added that similar measures were implemented in Europe, last and the year before last, when inflation was high, but then supermarkets in Europe were not „silent“ as in Serbia when these campaigns began to be implemented.
He added that traders in Serbia adopt such measures, unexpectedly, without objection.
This, Medić pointed out, leads to the conclusion that it would be legitimate to review the existence of any kind of agreement that disrupts competition, i.e., whether there is non-market agreement on margins and conditions for suppliers.
„The key jurisdiction lies with the Commission for Protection of Competition, which could conduct a sectoral analysis of the retail market. If it turns out that market competitiveness is at a satisfactory level and there is no non-market behavior, the problem should be examined more deeply. Then, several conclusions would certainly be reached, one of which is that food prices have increased due to the war in Ukraine and the rise in prices of energy and mineral fertilizers,“ Medić said.
Another reason, according to him, is that agriculture and the food industry in Serbia have been neglected and pushed out for years by supply from other countries, of questionable origin and dubious quality – as was the case with meat imports from South America.
„The strategy for the development of agriculture and the food industry lacks a systemic approach. The Ministry of Agriculture serves not to develop this sector, but to administratively distribute subsidies, without deeper analysis, and thus buy social peace,“ Medić said.
The misfortune of agriculture, as he assessed, is that if it is neglected, it requires much more time to recover.
According to him, agriculture was not a development opportunity for Serbia, neither 10 nor 20 years ago, but it is „an absolutely strategic branch of the economy that deserves great attention.“.
Experts from all fields are needed, as he stated, to create a development strategy for agriculture and the food industry and to determine the further directions of development, what needs to be done, how to modernize both production and mechanization, to assess whether production in open fields is still possible, considering weather disasters and difficulties in controlling plant diseases and sanitary control.
„Therefore, it is necessary to have agronomists, food technologists, agricultural technicians, climate change experts, experts who understand food value chains... This was precisely the moment for something like this, considering that the old strategy expires this year,“ Medić said.
However, since, as he said, issues of agriculture, the food industry, and even retail market competitiveness have been systematically neglected, the consequence is that „citizens of Serbia are offered products that are inferior substitutes as a lifeline, and even as something that should be strived for anyway, because parizer is supposedly better than ham.“.
A high dependence on products of this „class“ is present, Medić stated, among most citizens, given that the median wage in Serbia is around 77,000 dinars, which means that half of the 2.4 million formally employed, or 1.2 million citizens, earn less than that amount, while the average consumer basket costs around 104,000 dinars.
Pensioners are, as he said, in an even weaker position since the average pension, around 45,000 dinars, is quite far from the minimum consumer basket of around 55,000 dinars, which does not provide anything beyond bare survival.
„For a large number of citizens, who live in the ‘golden age’, as the authorities claim, such campaigns, unfortunately, become necessary for survival,“ Medić said.
He emphasized that one should be very cautious when the state directly interferes in the market, „because since the Government has been regulating fuel prices, it has never been more expensive, both absolutely and relative to the wider region.“.
Medić stated that Serbia is facing complex problems that require systematic and long-term solutions, as well as consistent application of laws.
In his opinion, the way Serbia currently functions „does not inspire too much confidence that this is possible.“.
„The ‘O-ruk’ (haphazard) approach and lack of transparency in the ‘Serbia 2025’ project, or “Expo 2027', which will consume large funds and are being implemented under lex specialis laws, certainly do not give the impression of having the capacity to solve these problems," Medić said.
Taken from Danas.rs
