Administration’s moves will not stop food prices’ hike

Administrative measures will not halt the rising food prices. Alex Oprunenco, an expert with the Expert – Grup independent analytical center considers the task set by the Government to identify the causes of the prices’ rise, within a week, and the solutions to overcome the situation has no chances to be successful. “Most of the governments of countries coping with this issue responded to the food prices’ soaring, a phenomenon having acquired a special name – agflation, that is the inflation of the agricultural produce’s prices. They considered and made decisions to control the prices or to curb exports. I mean Ukraine, Kazakhstan, Serbia, India, Russia, Morocco, Egypt, China and others. But controlling prices distorts the market, discriminates farmers and can bring about food shortage. As a rule, setting export quotas ends in tensions on global markets when farmers produce more cereals and are forced to destroy the surpluses. A recent case happened in Ukraine,” said Alex Opruneco at a sitting of the Economic Press Club. According to him, only the Competition Protection National Agency (CPNA), after analyzing the whole value chain, can legally determine whether producers make mutual arrangements unleashing prices’ hikes, or whether it is a market failure. “We hope the Government will resist the temptation to apply administrative measures – with populist connotations – in an electoral year,” the expert underlined. “The poor categories are to be helped by money compensations, by distributing foodstuffs of vital importance. Also farmers are to be helped to return to normal after last summer’s drought,” the analyst added. The National Bank’s Governor, Leonid Talmaci, had earlier proposed the Competition Protection Agency assistance in determining the market positions of some companies, as this will allow to find an answer to the question „why the prices go up as if ordered on all the markets in the country, when we are market economy.” According to statistics, in the first quarter of 2008, the food prices soared by 7.7 per cent. Also the ratio of households’ expenditures for food in the total grew up. They were 35% in the first quarter, compared with 31.72% in the same period of last year.