Producers and retailers have signed a good practice code for trade in food products, which settles relations between the two parties and could contribute to a drop in the price of end products.
"If protocol is kept, then different prices will be charged in stores, which would benefit the end consumer. Surely this guide will have a beneficial impact on prices in the medium and long term," stated Dacian Ciolos, Agriculture Minister. The document will come into force once the Competition Council has approved it.
The producers say price differences will start to show in three to four months' time.
Retail prices will be negotiated based on the benefits the seller gets (discount, bonuses), and on the costs for the services provided by the merchant and billed to the supplier.
"For larger volumes of products, the supplier will offer the merchant a discount, which will not happen in small shops, where the volume is considered low. This will lead to price differences. Moreover, as far as taxes paid by producers to retailers are concerned (which would range from 5% to 60% of the merchandise price) the suppliers are no longer bound to contribute to marketing, store opening or refitting costs," added Dragos Frumosu, chairman of the Food Industry Union Federation.
Other than the retail price, which is the most important point of the whole debate, the good practice code also takes into account the fact that the retailer may not cease working with a supplier that is not willing to contribute to the marketing costs of the store.
Romalimenta, the Federation of Food Industry Business Owners, believes that this guide will enable the processor to use variable pricing for multiple clients.
"The processor will operate a sole price and add to it the expenses incurred in maintaining that particular trade relation every time. Those that will know how to negotiate will stand to gain for a long time and those that won't will stand to lose," announced Sorin Minea, chairman of Romalimenta.
Even though most producers say the good practice guide puts them on an equal footing with retailers, some say this agreement will not produce any concrete results unless backed by a law. "We hope something will change after the signing of this good practice code, but as it is now it is only a 'gentlemen's agreement'. What was decided needs to be made into a law, or a law needs to be enacted to refer to this code," adds Ilie Van, chairman of the Poultry Farmers Union of Romania.
On the other hand, retailers say the guide is a fair agreement for both parties.
"Enforcement of good practice allows small and medium-sized firms (SMEs) to develop their turnover and at the same time preserve their autonomy, skill and independence in terms of management. Our arrangement targets the stimulation of a fair competitive system for SMEs to allow them to remain competitive against big multinationals, to provide local firms with growth opportunities and help new players emerge on the market," says Andreea Mihai, marketing manager of Carrefour Romania.
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