Food price-fixing scheme to last till end of this year

The government's proposed price-fixing agreement with food importers and retailers will last till the end of 2024, sister newspaper Business Today reports.

In early January news emerged that the government was in talks with importers and retailers of foodstuff to lower the costs of some essential items by 15 per cent in a bid to ease the burden on consumers as inflation rose.

Economy minister Silvio Schembri will be officially announcing the agreement this morning, but sources in the industry, who spoke to Business Today on condition of anonymity, outlined the basic premise of the agreement.

Up to 20 food staples are to be included at first, although other items are expected to be added later in the year.

Sources said the government pushed importers and wholesalers, as well as supermarkets and grocery chains, to lower the recommended retail price (RRP) of the identified items by 15%.

Everyday cupboard staples such as cornflakes, instant coffee, tea, canned tuna, penne and spaghetti, fresh and frozen meat products, frozen vegetables and frozen chips are included. All brands of each type of food items are covered.

One importer told Business Today that, under the agreement, importers will absorb 10% of the reduction with retailers absorbing the remaining 5%.

But consumers will not necessarily see a 15% reduction in price on all the food items, one retailer explained.

"Many supermarkets and retailers already sell these items below the RRP," they said. "So if the current RRP on a particular brand of tea bags is - just to give an example - currently €1, and we, at our outlets, currently sell it at €0.90c, we will only be reducing it by 5c to reach the 85% cap established under this agreement."

In today's announcement, Schembri is expected to launch a media campaign to inform consumers of the agreement and the affected food items.

The campaign is also expected to name the numerous importers and retail outlets which have signed up, although this has raised concern that any supermarkets, importers and wholesalers which did not sign up might be targeted in a name-and-shame exercise. 

Schembri is also expected to confirm that the agreement will be in place until the next Budget when it will be reviewed or scrapped. Any new updates or conditions would come into effect on 1 January 2025, so the current agreement will effectively run until the end of 2024.

A number of operators in the industry have complained about the heavy-handed approach adopted by the government when trying to convince them to participate. They said that smaller outlets are bound to lose out under this agreement, with some suggesting that only operators with a turnover over €4 million had been approached.

It is as yet unclear whether other essential non-food products will be added later in the year.