2 August 2012Regional consumers pay as much as people in countries with a significantly higher standard of living for food, but given external circumstances -- drought, decreasing purchasing power, the ongoing economic crisis and lack of effective government involvement -- consumers should expect additional price hikes.
Prices for flour, meat and meat products, oil, sugar, vegetables, milk and milk products have increased in Serbia by more than 60% in the last two and a half years, and increases are similar throughout the region.
The price of basic foods in Bosnia and Herzegovina (BiH) has risen nearly 100% in the past two years. A family in BiH spends over 50% of its income on food on average. By contrast, in the EU, a family spends 15%.
Croatia also has high food prices because of its VAT rate and insufficient food production. It also imports food to meet tourists' demands.
Goran Papovic, president of the Serbian National Consumer Organisation, told SETimes that the average food and consumer cost in Serbia is 850 euros a month, but the average monthly salary is only 350 euros -- and food prices are going up.
"Food sellers, who are at the same time owners of the food industry, announced new increases in basic foods, justifying the move with the claim that food producers allegedly are threatening to raise prices," Papovic said.
Some food producers said price increases cannot be helped.
"The drought impacts the price of corn as well as raw materials, and it is normal to expect price increases," Ljubisa Jovanovic, president of the board of Serbian Milk Producers Association, told SETimes.
Damir Novotny, president of the Croatian Agriculture Party, told SETimes that Croatia will continue importing food as long as there is a domestic demand due to tourism.
"Because of imports, the Croatian food market is very sensitive to the food prices in the international market, which is a long-term trend due to growing demand from China," Novotny said.
BiH consumers are dealing with "hidden cost" increases, where producers or sellers repackage a product to reduce the quantity but charge the same price. There are also "silent increases" of up to 1% consistently over a period of time which consumers do not readily notice.
"Perhaps the main reason for the price hikes are [increases in] the price of electricity and oil derivatives, which participate with 25% to 30% in the foods' end price," Ljubica Colovic, assistant to the BiH ombudsman, told SETimes.
The government must assess the current global food production especially of soybeans, sunflower and corn, and then formulate how to proceed, according Drago Cvijanovic, director of the Institute of Agricultural Economics in Belgrade.
"They are not at the same level as they used to be. Then [governments need to] make good balances for food safety as well the using stockpiles, and above all, and if really necessary, control exports," Cvijanovic told SETimes.