The meals chain legislation prevents promoting merchandise beneath manufacturing prices and these elevated as a result of vitality disaster and the warfare in UkraineThe president of Mercadona acknowledged that costs had risen “a nonsense”, as a result of not doing so would have generated a catastrophe all through the chainAccording to the Minister of Finance, María Jesús Montero, Juan Roig’s phrases have been ironic and “taken out of context”
Just on the identical day that the INE confirmed that the rise in meals costs remains to be not reaching its ceiling regardless of the Government’s measures and forecasts, the president of Mercadona corroborated what the pockets of shoppers had already seen. “We have raised costs a bit, they’re proper,” acknowledged Juan Roig within the presentation of annual outcomes of the biggest distribution firm within the sector.
The businessman’s response, which went on to clarify that not having undertaken this improve would have “generated a formidable catastrophe all through the manufacturing chain”, provoked intense criticism, particularly from United We Can. “In addition to placing your hand in your pocket each time you buy groceries, it pisses in your face,” stated spokesman Pablo Echenique on social networks.
The criticisms of the purple formation, which has been placing Roig on the middle of the goal of its reproaches to the enterprise sector for months, have been answered this Wednesday by the Minister of Finance. María Jesús Montero assured that the businessman had used a tone “from irony” and that his remark had been “taken out of context.”
But the reality is that the phrases of the proprietor of Mercadona weren’t a joke nor did they intend to insinuate the alternative of what he had stated. What Juan Roig assured is that this “nonsense” rise in costs is the results of the right functioning of the agri-food sector and compliance with the legislation of the meals chain.
Fair costs for producers, business and distribution
The head of the distribution firm, which final yr elevated its turnover by 11% and its income by 5.6% to 718 million euros, defined that the worth improve was carried out “as a result of you need to do the sustainable exercise for your complete meeting line”.
That is to say, that prices and profitability are distributed in a balanced manner between producers, business and distribution, as required by the legislation of the meals chain.
The goal of this commonplace is to make commerce relations between these three events fairer and extra clear. It was bolstered on the finish of 2021 after farmers and ranchers carried out essential mobilizations, weeks earlier than the pandemic, to denounce the low costs they obtained for his or her merchandise, usually beneath what it value them to supply them.
Thus, so as to obtain truthful costs and defend all operators, particularly the weakest ones -the producers- the legislation obliges every hyperlink within the chain to pay the instantly previous one a worth equal to or higher than what it has value to supply it. And these manufacturing prices, that are the idea for negotiating the contracts between the events, skyrocketed final yr as a result of vitality disaster, issues in provide chains and the results of the warfare in Ukraine.
Rising prices
The rise in vitality, gas, fertilizer, seed and different important uncooked supplies for the first sector largely clarify the rise in meals costs recorded final yr.
According to Eurostat information, inflation of meals at supply was 25% final yr in Spain (as within the European Union common). The improve in costs was contained all through the chain thanks, in response to consultants, to the truth that many retail companies adjusted their margins and didn’t go on all of those will increase.
Juan Roig himself assured this Tuesday that his prices had elevated by 12% in 2022, whereas the rise in his merchandise for purchasers had remained at 10%; and that the margin per invoiced euro, he defended, was the identical because the earlier yr:
In addition, along with the will increase brought on by the warfare and the vitality disaster, producers have warned that the rise in costs can also be as a consequence of features similar to drought and better labor prices. For this cause, and since the remainder of the inputs haven’t but registered vital decreases (except for electrical energy), within the sector it isn’t anticipated that meals inflation will contract within the brief time period.
What’s extra, many farmers and ranchers warn towards a doable drop in costs that can power them to return to work at a loss. Since for the primary time in years, they are saying, they’re receiving a good worth for his or her merchandise and acquiring financial profitability from their exercise.
In any case, the president of Mercadona is assured, he says, that the various factors concerned within the agri-food sector will enable costs to drop in 2023 whereas sustaining the sustainability of the remainder of the parts. “That’s the purpose. We shopkeepers prefer to decrease costs, not increase them.”