There will be grain, bread and oil too, but the difficult navigation in the Black Sea, high fuel prices and problems with ship insurance can create serious logistical difficulties and affect prices. This was commented by the Chairman of the Committee on Agriculture and Food and representative of “Progressive Bulgaria“ Yavor Gechev.
According to him, the threat to shipping is already a fact. He pointed out that only a few days ago problems arose in the economic zone of Romania, which are already affecting the insurance market. “Insurance companies do not want to insure ships, which has a sharp impact on both prices and shipping. If they do not insure your ship, it will most likely not sail at all”, explained Gechev. He recalled that the countries of the Black Sea region are faced with the need to export huge quantities of grain after the harvest – both from Ukraine and Bulgaria.
“If these supplies are hindered, the price of grain will most likely fall and there will be logistical problems”, he said. According to Gechev, however, there is no immediate danger that Bulgaria will run out of food.
“We will be fed. Especially with grains – they are more than we consume. There will be bread in any case. There will be oil in any case and there will be more than we need”, he was categorical. According to him, the bigger problem could be related to competition on the Bulgarian market if the difficult shipping led to a change in trade flows.
Gechev recalled the situation of recent years, when large quantities of Ukrainian production entered the markets of Bulgaria, Romania and Poland. “This could happen again. Not only in terms of cereals, but also in other products, greater competition could be created on the Bulgarian markets. This means that farmers will become not so much consumers as they will be put under additional price pressure“, he pointed out.
At the same time, the chairman of the agricultural committee stressed that fuel prices remain one of the most serious factors affecting agriculture and the final price of food. “Fuel prices directly affect agriculture. This is one of the most shocking sectors. They also directly affect transport prices, including domestic transport, because transport has become too expensive," said Gechev. He admitted that food prices have already risen, but he believes there is a possibility that the increase can be limited.
„Basket with Care“ has not worked
Regarding the measures to control prices, Gechev admitted that the initiative „Basket with Care“ has not achieved the expected effect. „I was one of the first people to say that the basket did not work in its current version,“ he said.
According to him, the measure was voluntary and provided for retailers to reduce the prices of certain products by up to 13%. „Some did it, others - not. We observed a number of unfair trade practices with “Basket with Care“, which remains for their reputation. But ultimately, the trust in the words spoken by the government ends“, commented Gechev. He emphasized that in his opinion, the state should have a more active role in controlling the market and protecting consumers.
The electronic register should bring more transparency
Gechev expects the electronic register for food traceability to be an important step in establishing real prices along the entire chain – from the producer to the end consumer. “We are waiting for the register for food traceability to start in order to see the objective truth. One of the things is that we do not have enough up-to-date data regarding the entire chain“, he explained. According to him, institutions should strengthen inspections, and sanctions for unfair trade practices should be serious enough to have a real effect.
“They are difficult to prove, but not impossible. By law, unfair trade practices can be punished with up to 10% of annual turnover“, said Gechev.
He expressed hope that increased control will make market participants change their behavior.
Gechev supports tax on excess profits
Regarding the idea of taxing excess profits, Yavor Gechev stated that he supports the proposal of the Ministry of Finance. “I accordingly approve the decision of the Ministry of Finance, as submitted with regard to excess profits. I find it reasonable“, he said. Gechev also commented on the criticisms of the Governor of the Bulgarian National Bank Rumen Radev towards such measures. According to him, the central bank should not interfere directly in the government's tax policy.
“With the independence of the various institutions, I do not think that political interference by the Governor of the BNB is correct. There are other instruments, and not to do this publicly“, Gechev stated.
Why is “Lukoil“ an exception?
On the topic of excess profits, Gechev was asked why “Lukoil“ is not among the companies that should be taxed with such a tax. He emphasized that in the past, it was during the caretaker government that 150 million leva in taxes were collected in advance from the company. “The only time we collected a tax package for 150 million leva in taxes was during the caretaker government. We collected 150 million in advance“, he said.
According to Gechev, currently “Lukoil“ is not making excess profits.
“Currently, the trend in terms of prices is such that “Lukoil“ is not making excess profits. On the contrary, it is making its normal profits, even lower than them, so that we can still have the lowest fuel prices in the European Union“, he said. According to him, the refinery should be considered a strategic enterprise not only for Bulgaria, but also for the European Union.
Gechev also announced that an audit is currently underway at “Lukoil“, and its results will be presented to the parliamentary committee on economics. “What I know is that there is currently no excess profit“, he said.
People will not be punished for homemade rakia
Gechev also commented on the controversial texts related to homemade rakia, which caused a public reaction.
He categorically stated that citizens will not be sanctioned for receiving homemade rakia as a gift from a friend, relative or neighbor.
“First, let's reassure citizens – "There will be no such thing," said Gechev.
According to him, there are texts in the bill that can be interpreted ambiguously, but they will be changed between the first and second readings.
„If someone gives you five liters of brandy as a gift, who is the offender - he or you? There is no such thing. These texts simply will not protect themselves from the economy“, he said.
Gechev emphasized that this is about the traditional production of homemade brandy for personal use, and not about intentional sale in commercial establishments.
How long will food prices increase?
At the end of the conversation, Yavor Gechev said that the state must continue with changes in legislation and measures for greater transparency throughout the food chain.
„In any case, a number of things in the legislation have not yet been implemented. Colleagues from the Ministry of Economy are working. We will help them as much as we can from the parliamentary group, including making additional legislative changes so that there are no more gaps in the legislation“, he said.
According to him, high fuel prices will continue to put pressure on food, but the state can limit the additional price increase through better control and transparency.
Gechev also rejected criticism that funds for agriculture are again going mainly to grain producers.
According to him, the distribution of compensation is in line with European legislation and the rules of the European Union.
“This whole thing is based on an exceptional European regulation and it is exactly the same one that they signed. "As the funds are defined in European legislation, so they have been implemented in Bulgaria," said Yavor Gechev.
He added that new changes in the policy towards the agricultural sector are coming, which, according to him, will become visible in the next framework period.