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Responses to the Law voted on Wednesday in the Parliament - Producers: food price will drop! Hypermarkets: no they won't!

de Ioana Morovan, transl/adapt. C.B.
Luni, 21 septembrie 2009, 15:18 English | Politics

The war between producers and commercial chains continues after the Deputies' Chamber adopted a law regulating relationships between them. The main point of argue is the way to determine acquisition prices and payment deadlines. Despite numerous discussions, the final law draft does not appeal to retailers. On the other hand, the patronages in the industry consider that the law will reduce food prices by at least 10%.

The code of good practices between food producers and hypermarkets was put through a year of debates and negotiations. The Code was signed on July 2, 2008 and the document entered parliamentary debated in February 2008 under the form of a legislative project.

Due to the elimination of certain duties addressing the acquisition prices in commercial networks, the prices on the market will drop. The producers are no longer forced to sell their products to other retailers to a higher price than the one exercised by hypermarkets. Plus, the taxes practiced by hypermarkets do not have to be included in the final product price any more.

The representative National Federation of Food Industry Unions, Dragos Frumosu, declared for that this is precisely the measure causing arguments, but that the law under debates is going to reduce food prices. The law was voted in the Parliament and he declared on Wednesday that in about three months, people in Romania should see food prices dropping by a mean of 10%.

The Romanian Association of Big Commercial Networks published a report on Monday, reading that the enforcement of the law will attract extremely negative effects regarding the food retail. According to the report, the political act "proves irresponsibility and lack of skill on behalf of the political factor and of the pressure groups that militated for adopting the Law in this format. Lacking a rigours impact analysis, the catastrophic consequences of the law enforcement must be known immediately, in the last moment".

The report claims that the final consumers will be directly affected and labels the law text to be square and anti0competition, which will affect the food market. The prices will increase because the market will be distorted. The report goes on to say that a shorter payment deadline towards suppliers will lead to many retailers failing to respect them. As a result, delays and blockages will follow, which could conclude with retailers going bankrupt. "In a crisis period, when cash-flow produced many difficulties even for the biggest economic agents, (...) an additional pressure could be, in most cases, fatal".

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