There are signs that not everything is kosher in chain prices, says Výborný – Nauzal

Food prices in the Czech Republic often drop after many months of steep growth. And the Ministry of Agriculture does not forget to emphasize that it has merit for this. How will food prices continue to develop? What is the department planning to prevent the situation from worsening again?

Guest I’m asking was Minister of Agriculture Marek Výborný (KDU-ČSL).

Some food items continue to become cheaper in domestic stores. According to the latest Eurostat data, price reductions in the Czech Republic have picked up the fastest pace in the entire European Union. In recent weeks, Minister Výborný explained this by the above-average harvest and his pressure on large retail chains.

At a meeting at the Ministry of Agriculture, representatives of eight of them have already assured government officials that the planned reduction in value added tax (VAT) will also be written into the price tags from the New Year. The consolidation package under discussion envisages moving food from the current 15 percent VAT rate to 12 percent.

Výborný repeated that his resort does not set prices in stores, but he wants to continue working to ensure that Czech customers have access to quality food as in neighboring countries. “There is, of course, one more thing that has an effect on this, which is forgotten, and that is the gauntlet thrown down to consumers, the Czech fascination with discount events. We are experts at that,” said Výborný. “We also have to talk with the chains, if the trend of selling everything in discount events doesn’t lead to a general distortion of the market.”

What topics does the minister want to address with chains in the coming months? How much longer will people go shopping abroad? And what about the taxation of still wine?

You can play the entire interview in an audio player, in your favorite podcast app or in a video.

What was said in the conversation?

1:00 How long will Czechs go shopping in Poland or Germany? – I am not really a minister who would say, go shopping here or there. I want to do my best for people to shop in the Czech Republic.

2:00 People learned to go abroad partly because of the lower food prices that were, perhaps still are, across the borders. And quite often also because of the higher quality of food that was sold in foreign stores. how is it now – It is not true that we do not have quality food in the Czech Republic. I am responsible for quality and safety, I agree to that. We have the State Food Inspection, we have the State Veterinary Administration here. And the results are absolutely obvious. The interception of problematic batches of food of Czech provenance is significantly lower than that of some imported to the Czech market. And the only thing that follows from this is that Czech food, Czech vegetables, Czech fruit, Czech meat are among the highest quality and safest in Europe.

3:30 So the so-called double quality of food is gone? – It’s gone, it’s truly gone. Also thanks to the members of the European Parliament. We have also legislated this clearly, meaning that the same food would be of different quality in the Czech Republic, in Germany, in the Netherlands, it is simply not possible. We are part of the single market and this is settled.

5:00 AM Prices have been falling in the past few months for a wide range of foods. Do you or don’t you as the Minister of Agriculture have credit for it? – Certainly, the informal pressure that I, as a minister, and the Ministry of Agriculture create, contributes to the fact that food prices have been continuously falling in our country for five months. By the way, it is precisely food that is currently driving down inflation in the Czech Republic. And that’s good. I am not saying that this is only due to the Ministry of Agriculture. Of course, competition has an effect on this, also the fact that we are at the end of the season, when by default prices have some volatility and, for example, in the case of dairy products, this is normally the case in autumn.

6:00 The only thing I can use towards prices as Minister of Agriculture is informal pressure on all links in the chain, including traders. 80 to 85 percent of our food is sold in eight chains and I have met with them, we have another meeting planned now. I think on the 4th or 8th of December, because some answers were not given at that first meeting and I want to continue that debate. – Why didn’t it work earlier if you say that informal pressure simply worked? Did your predecessor for the KDU-ČSL, Minister Zdeněk Nekula, do it wrong, or did he not try hard enough? – I will not look back and I will not evaluate any of my predecessors at all. I joined the ministry with a vision for the food market, and I am trying to fulfill it.

7:00 It is also necessary to honestly say that the period from autumn 2022 to spring 2023 was burdened by a significant increase in energy prices, which of course was also reflected in food prices. We are in a slightly different situation today, even when it comes to energy. And of course this is also reflected in the price of food, even though we are rather talking about business strategies, for example those of chains. And actually only one thing applies to me, I want our rules to be the same towards the customer as in Bavaria, Poland.

9:00 What tools do you have ready up your sleeve if prices start to rise again? – I am also leading a debate on controls by the Antimonopoly Office (ÚOHS). If there was an extreme situation of price growth that would be contrary to some trends, inflation and the like, then here we have tools within the Act on significant market power, competence in the hands of the ÚOHS. We also have a law on prices, which is then a matter for the ministry.

9:30 I am considering one thing, it also came from a subcommittee in the House of Representatives. Greece has a system about which I would like to open a debate, namely so that everyone in the Czech Republic, every customer has the opportunity to have an application on their mobile phone, for example from the Ministry of Agriculture, which will show them the current average price of selected foods, milk, bread, coarse flour… – And are you going to do that? – No, the debate is now de facto opening. Because it came from the information we obtained from monitoring the situation in EU countries. – But is it something you would like? – Yes, in Greece this model led to the fact that customers very quickly downloaded the application, use it, make decisions accordingly when buying basic items of the consumer basket, and in reality it led to an 18 percent discount on some foods. (…) We will at least try to find out if it is realistic to introduce it, but if it works in Greece, why couldn’t it work in the Czech Republic.

11:00 Are there or are there any commodities where there is still significant room for a drop in prices? – The higher the competition for those individual commodities, the more the prices move to some reasonable level, for example, it is a question of sugar prices. But I would actually say something else about it, and that is perhaps a bit of a gauntlet to us consumers as well. I also go grocery shopping for the household every week. On the one hand, we carefully consider what we buy, I say again, Czech food, Czech vegetables, Czech fruit, it is a guarantee of quality. The second thing, it’s good when I go shopping to consider where. If I use a chain for this, or a local dealer.

13:30 That sounds very nice, but in the complex economic situation we have here, when we observe sociologists’ numbers about how significantly poorer Czech households are, many of them may say that they simply can’t afford it, it’s expensive . – When they go to buy onions from the farmer, they buy them for 17 crowns a kilo. And in the chain they find for 32 or 28. So I think that’s the answer to your question. (…) I also try to support, for example, farmers’ markets not only here in Prague, but also anywhere else.

16:00 What I’m interested in are things that relate to some kind of pricing strategy. I am aware that it has its limits, trade secrets and the like, but I want them to really be able to guarantee me that their approach is similar to the approach to customers in other European countries. – Does it work at the moment in such a way that the chains have different conditions here than abroad? – I also want to ask about that, because the signals that not everything here is kosher, to put it bluntly, are those. (…) To be completely specific, if, for example, onions are delivered from a Czech greengrocer for 17 crowns and on the counters of the final chain they are sold for 30 crowns, this is not a reasonable trade markup. I wonder what is in between? Is there a middleman to whom it is sold for a certain price and he sells it somewhere else and is there a tie-up and such? Those are the things I question.

19:00 So the topic you want to address with the chains in December is whether they are not earning disproportionately on the Czech market, whether it is the same as abroad? – Exactly, because in the end it is reflected in a fair approach to the end customer. In other words, they earn more. Then, of course, there is one more thing that has an effect on this, that is forgotten, and that is the gauntlet thrown down to customers, consumers, and that is the Czech fascination with discount events. That’s what we’re experts at. (…) We also have to talk with the chains, if the trend of selling everything in discount events does not lead to a total distortion of the market.

23:00 What subsidies will be cut in the Department of Agriculture? – We primarily cut those that went into so-called operating subsidies, but then we will not list some programs that are, even from my point of view, redundant. Because, for example, they were aimed at large companies, which in the long term, even in crisis years such as 2022 or 2021, ended up with a larger profit. For example, subsidies for large food companies.

26:00 Has the KDU-ČSL made progress in whether it will come up with a proposal for us to move to the debate on the taxation of still wine in order to tax it? – No, it is not at all about an agreement or something that KDU-ČSL should bring, I want to emphasize that, it was an agreement of the entire coalition of five, not KDU-ČSL. – Minister Nekula made it clear here. – Unlike Zdenek Nekula, I was at those meetings. I was at the final negotiations on the recovery package at the time as chairman of the parliamentary club, so I know how it went, and I know that it was the final coalition consensus and it was not the case that KDU-ČSL was the only one defending something. Part of that agreement was that a working group would be created to look at what to do with the still wine region. That task force is working. We will have another meeting this month, we have assigned tasks, we will bring some studies.

30:00 Why is it that the pre-election preferences of the separate KDU-ČSL are so low? – Of course, I’m not happy about it, because it also affects the overall atmosphere and the like. We make mistakes. I never denied that. We may not be able to communicate some topics quite correctly even through the media, we may be communicating some things that we shouldn’t be communicating because we are not responsible for them.