Albanian consumers are paying double the price of bread

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  • Rising bread prices have directly affected thousands of low-income people, including retirees and persons in need. Amid strong questions, the Competition Authority decided to save from fines of 4.1 million euros 5 companies accused of price fixing, while INA MEDIA has proven that Albanians are being robbed by bakeries by weight.

     

    Author: Emirjon Senja

     

    Shefqet Kuçi, retired, saves an average of 500 ALL (new) per month, buying yesterday’s bread or even the one from two days ago. The money he saves he uses to buy any other food, as much as he can buy.

    The price of bread increased by 10-20 ALL per unit in the autumn of 2021 and currently mass bread in Tirana bakeries varies between 80-100 ALL. Like Shefqeti, anyone who will buy a loaf of bread left on the shelf, unsold 24 or 48 hours ago, can be satisfied by paying 60-70 lek.

    Shefqet Kuçi

    Photo: INA MEDIA

    The old man tells INA MEDIA that once in two days he goes to the neighborhood bakery, looking for bread that was baked one or two days ago.

    “It’s strong, but not stagnant. I have no other choice. I buy it for 70 all, there are cases when they give it to me even cheaper, when it is the bread of two days ago “, – he said when asked by INA MEDIA how he manages now, that in addition to other foods, bread has also become more expensive.

    Selling leftover bread in drawers at a price of 20-30 lek cheaper, is seen as a solution by the traders themselves so they don’t throw it away.

    Shefqeti is one of thousands of low-income retirees who have been directly affected by the rise in food prices in recent months, while the daily challenge is with the main product of the table, bread.

    Bread, 10-20 lek more expensive

    Bread and flour by-products are one of the main products in the group “Food and non-alcoholic beverages”, which according to statistical data on the monthly expenditures of Albanian households increased the cost of citizens over a month. The increase for this group is estimated to be +2.22 percentage points.

    According to Hasan Stafa from the Office for Consumer Protection, bread has 40% of the weight in the total food products for families in Albania and any change in its price directly affects the pockets of citizens.

    Shefqet Kuçi

    Photo: INA MEDIA

    The old man tells INA MEDIA that once in two days he goes to the neighborhood bakery, looking for bread that was baked one or two days ago.

    “It’s strong, but not stagnant. I have no other choice. I buy it for 70 all, there are cases when they give it to me even cheaper, when it is the bread of two days ago “, – he said when asked by INA MEDIA how he manages now, that in addition to other foods, bread has also become more expensive.

    Selling leftover bread in drawers at a price of 20-30 lek cheaper, is seen as a solution by the traders themselves so they don’t throw it away.

    Shefqeti is one of thousands of low-income retirees who have been directly affected by the rise in food prices in recent months, while the daily challenge is with the main product of the table, bread.

    Bread, 10-20 lek more expensive

    Bread and flour by-products are one of the main products in the group “Food and non-alcoholic beverages”, which according to statistical data on the monthly expenditures of Albanian households increased the cost of citizens over a month. The increase for this group is estimated to be +2.22 percentage points.

    According to Hasan Stafa from the Office for Consumer Protection, bread has 40% of the weight in the total food products for families in Albania and any change in its price directly affects the pockets of citizens.

    Consumer price index for the subgroup “Bread, cereals”, January-December 2021

    Source: INSTAT

    According to INSTAT, the price index of bread and cereals in September 2021 increased by 4.7 percent compared to the same month a year earlier, in October, 5.8%, in November, when it reached its peak, 6.6 % and in December, 6.3%. The largest increase occurred during the period August-November 2021.

    Flour businesses were accused of colluding, how they escaped the 4 million euro fine

    Five companies, dealing with the import, trade and processing of flour in our country, were accused of fixing the price of flour in blocks.

    After a denunciation received in 2019 by one of the flour market operators, for 5 companies, Bloja, AgroBlend, Tirana Flour, Atlas and Atlas Mills, the Competition Authority launched an investigation into the flour market.

    In conclusion, the Competition Authority sealed a document, according to which in the market of import and processing of flour there was a coordination of these 5 companies, which had set the price of flour in the block, leading to an increase in the price of bread.

    “These enterprises coordinate behavior, setting selling prices and controlling production in the flour market due to vertical integration, behavior which falls under the conditions of application of Article 3, point 4 and Article 4, point 1, letter a and b of law 9121/2003 “On protection of competition”, – stated in decision no. 700 of the Competition Commission .

    The Competition Commission decided to undertake an in-depth investigation in the market of wheat import, production and trade of flour for the period 1 January-30 June 2019. The investigation was closed in the summer of 2020, while on July 24 the Commission issued decision no. 700, according to which- a coordinated behavior between the companies Bloja sh. a., AgroBlend sh. pk , Miell Tirana sh. a. , Atlas sh. a. and Atlas Mills sh. p. k was concluded .

    The 1-year investigation also revealed that there was coordination between companies from wheat imports to flour production lines and that these companies together owned up to 85% of the market, thus limiting the entry of new companies.

    Despite this finding, the Commission did not fine the companies in July 2020, asking them only to comply with the obligations of Article 4 of Law no. 9121/2003 “On the protection of competition”.

    According to this decision, “companies should not directly or indirectly set buying or selling prices or any other trading conditions; should not restrict or control production, markets, technical development or investment; not to share markets or sources of supply, as well as to submit to the Competition Authority every three months the records of purchases and sales ”.

    Faksmile of decision no. 700, which ascertains a coordinated behavior between companies in the flour market

    The Authority monitored the companies for a year, at the same time asking them to meet the above requirements during this period, while at the end of this period another assessment would be made, to see whether or not the obligations set out in decision no. 700.

    In September 2021, the Secretariat of the Competition Authority found that the companies had not fulfilled the obligations set out in decision no. 700 of July 2020, proposing to the Competition Commission to take more drastic steps against companies through the application of a fine, ranging from 3% to 10% of last year’s annual turnover. In total, it was a fine amounting to 4.1 million euros.

    The proposal of the Competition Authority inspectors was rejected by a 3-2 vote in the Competition Commission as the highest decision-making body in this institution.

    INA MEDIA had access to the report of the Competition Authority inspectors, as well as the arguments of the Competition Authority commissioners to decide for or against the fine of 4.1 million euros against companies importing wheat and flour production.

    In the report, the Secretariat of the Competition Authority, which has investigated and monitored these companies for a period of one year, has listed the arguments, according to which the coordination between the companies in question for setting prices in the wheat import market and supply in market, taking advantage of their dominant position.

    The arguments of the Secretariat are mainly based on the investigation and monitoring of the behavior of companies in the market, as, according to them, during the period under investigation, no communication was found to prove the coordinated behavior between them.

    The report was approved by all members, who sealed the violations found by the Secretariat, but surprisingly in the final decision it was not possible to reach a majority, to continue with the proposed sanctions and the investigation was closed, while Albanians continue to suffer high prices.

    The main argument of the commissioners, who rejected the proposal for a fine, was related to the fact that it can not be concluded that companies have a coordinated behavior in the market, monitoring only for a short period their behavior, as this methodology requires monitoring for a period of several years.

    The three commissioners, who voted against the fine, rejected with similar arguments the conclusions of the Secretariat of the Competition Authority for vertical integration between companies or barriers that prohibit the entry of other actors in the market, reaching the final decision that companies be kept under monitoring for another year.

    The monitoring report, as well as the arguments used by the parties to support their positions, suggest that there was no proper investigation to substantiate or refute the allegations of distortions of competition in the wheat import and flour production market, making the final decision of the Competition Commission to be the result of procedures and not the reality in the market.

    Import is to blame

    Wheat and flour importers say the price increase was dictated by the international market.

    The head of the Association of Flour Producers , at the same time the administrator of the company Bloja, Adi Haxhiymeri, explains to INA MEDIA that everything started to move, as the wheat harvest during 2021 was not good in the countries that are considered as its main producers.

    “The increase came as a result of climatic conditions, which caused 20 million tons less wheat to be produced worldwide. This, mainly from Russia, as the largest exporter, Canada, USA etc. As a result, the price of wheat for bread initially increased by 60% -65% and is currently over 80%,” he admits.

    Adi Haxhiymeri, administrator of Bloja flour company

    The increase in the price of wheat caused an immediate increase in the price of flour, which was directly reflected in the prices of its by-products.

    Before the beginning of the rise in the price of wheat in the global market, in the period September-October 2021, the price of flour in the country increased by about 10%, reaching 58-60 ALL / kg. A month later, bread producers would face another increase in the price of flour, which reached up to 65-68 lek / kg. Currently, according to Adi Haxhiymeri, bakeries buy a kilogram of flour at an average of 60 lek / kg, a price that remains very high compared to the beginning of summer 2021.

    But, it seems that the increase in the price of bread has produced a chain effect. Avni Nela, administrator of the Nela bakery line, says that in recent months bread producers have faced a nearly 100% increase in the price of other by-products used for bread production.

    “Flour has risen in price by 50%. We got it with about 42 lek / kg, now we get it with an average of 62-63 lek / kg, while oil and butter are 100% more expensive”, – emphasizes Nela.

    Avni Nela, administrator of the Nela bakery line

    According to him, even the increase in the price of bread can not cover the additional costs, caused by the general increase in prices of raw materials and fuel in the country.

    Matilda Murati, a baker in Tirana, is also stuck in the same vicious circle.

    Matilda Murati, baker, Tirana

    Photo: INA MEDIA

    “There are customers now who come in, ask about the price and leave, they do not get bread,” she said. Murati says she received bad news a few days ago, predicting another rise in flour prices in the short term.

    Nentitull: Weight, consumers, twice abused

    The Albanian consumer is abused and stolen several times over. Investigative Network Albania has been able to document that bread traders abuse weight, thus hiding the real increase in the price of bread.

    Bread is traded as a unit and not by weight, as it is taken for granted that it weighs 1 kg.

    However, INA MEDIA has been able to prove that citizens are deceived, paying up to 300 grams more, which every bread unit they buy lacks. Specifically, they pay a loaf of 700 grams as if it were 1 kg.

    To prove this INA MEDIA did market research, buying bread in 10 bakeries in different areas of Tirana.

    The object of observation was only mass bread, which is also the reference product, in cases when talking about its price or quality, given the widespread use in the population.

    The ovens were randomly selected throughout the capital and the purchases were also accompanied by the withdrawal and preservation of the tax coupon. After purchase, the loaves were weighed on an electronic scale, to reveal their weight alongside the price.

    As seen in the table below, the price of a mass bread in Tirana varies from 80 to 100 ALL.

    Every citizen, who paid 80 lekë for a massive loaf of bread, bought a little more than 700 grams of bread, meanwhile, the bread that cost 90 lekë, weighed from 736 to 796 grams.

    In two ovens we found bread worth 100 ALL, which weighed 824 and 826 grams.

    In any case, regardless of the price, all the breads we bought were less than 1 kilogram, causing citizens to pay double the price increase: the first time with the difference between the initial and increased price and the second time through weight reduction.

    In addition to weight problems, the survey found a marked lack of willingness on the part of businesses to issue the tax coupon. To buy 10 loaves of bread, we showed up at 13 bakeries in the capital. In three of them the product was not bought, as they did not issue the tax coupon.

    Meanwhile, out of 10 bakeries, where we could buy with a tax coupon, only in one of them the coupon was provided without the buyer requesting it, while in the other nine we had to ask for it to receive it.

    Presentation of the price and weight of bread we received in 10 bakeries in the capital

    The bread weight scam is also acknowledged by Hasan Stafa from the Office of Consumer Protection, who considers it one of the most common forms of consumer abuse.

    “What is sold as 1 kg of bread in the market, in fact is not 1 kg. Even some producers resisted for a period of the increase in the price of bread during the autumn of 2021, reducing its weight”, – argues Stafa.

    “The size may look the same, as they have increased the amount of yeast, but not the weight. “Now a mass of bread weighs about 700 grams,” accuses the head of consumers, Hasan Stafa.

    Even the Executive Director of the center, the Albanian Consumer , Ersida Teliti, claims that during the period July-August-September, consumers did not notice the increase in the price of bread, as this tactic was used.

    “A good part of the consumers did not notice the increase in the price of bread, because in the ovens where they went, there was no noticeable increase, the movement was in weight,” she said.

    Teliti says that non-governmental organizations find it technically, but also legally impossible to weigh or measure the quality of bread in the market. According to her, it is the state institutions that should follow this practice.

    Ersida Teliti, Executive Director of the Albanian Consumer Center

    “We have set in motion these institutions, such as the State Inspectorate of Market Surveillance, when we have had complaints from citizens about bread,” she said.

    Did only flour make bread more expensive?

    Bread, as the final product of a long cycle , from flour production, transportation, processing and sales, is where this added cost is reflected, directly hitting the consumer.

    Producer Price Index, quarter III, 2015 – quarter III, 2021

    In addition to the increase in the price of flour and other by-products used for the production of bread, Avni Nela lists two other factors, which according to him have directly influenced the increase in the price of bread for consumers.

    “We have an unbearable situation due to the high cost of everything. Now they even took us out of the electricity subsidy regime. I used to pay 7 lekë for electricity per kW / h, and now I pay 19 lekë. Only this month I received the electricity bill of 1.2 million ALL. Another problem is labor. There is no more dough specialist to come and work with a salary of 40 thousand ALL. Now the salaries for them have gone to 80 thousand lek and we still face difficulties in finding them, as they are fleeing to Germany and Belgium”, – he says.

    The consumer price index shows that bread and flour by-products have maintained price stability at least since 2013, having even a slight decrease over the period 2015-2018.

    Consumer price index, June 2013-October 2021

    This stability, presumably, has been maintained by a preferential electricity price regime, which has benefited bakeries.

    While the price of bread had not increased during that 8-year period, the average salary in the group “Trade; transport; accommodation and food service activities ”has increased by at least 40% since 2013.

    Currently, the market lacks a proper measurement by specialized institutions of increased costs across the line, from wheat imports, flour processing to bread production.

    This was also one of the arguments that led to the rejection by a majority of votes by the Competition Commission of the proposal by the Secretariat of the Competition Authority for a total fine of 4.1 million euros against five companies importing wheat and flour production in Albania.

    Given that the investigation launched by the Competition Commission focused only on the upper part of the market, i.e. the import of wheat and the production of flour, consumers found it impossible to find out whether or not they were dealing with abuses in other segments of the market. this market.

    Every Albanian consumes a minimum of 125 kg flour by-products per year

    Albanian families spend a good portion of their monthly income just to meet their food needs. The data show that during 2020 a household unit in Albania had 41.6% of monthly expenditures only for food.

    Statistics show that our country consumes an average of 470-480 thousand tons of wheat per year.

    In 2020 this figure was about 478 thousand tons, with a very slight increase compared to 2019. Of this, 233.4 thousand tons of wheat were produced in the country, mainly in the regions of Fier and Korca , while the rest was imported.

    A ton of wheat produces an average of 7 quintals of flour to produce what we commonly call mass bread. Adding to this about 24 thousand tons of flour, which was imported during 2020, it can be estimated that during one year an individual in Albania consumes about 125 kg flour by-products, where the bulk is bread.

    Pasta, which is mostly imported ready-made, is not included in the account.

    The above calculation was made according to the data of the 2011 census , but, taking into account that in recent years Albania has faced an increase in emigration, where the most vital part of society has left the country, the weight of bread and by-products other flour in the total monthly expenses of an Albanian family seems to be greater, which makes for society an even more acute problem their rising prices.