Business Why do you pay 1.25 euros for what the...

Why do you pay 1.25 euros for what the farmer charges 0.20?

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A field operator pays around20 euro cents a kilo of potatoTo the farmer. The tubers are loaded into a truck that, based on the route, costs between 2 and 4 cents per kilo. Your destination is the warehouse where the potatoes are subjected to a selection to see which ones are worth and which are not. Those that do not pass the cut, are deducted from the price paid to the farmer. Those that survive are classified, washed, packaged and mounted in a truck (between 5 and 3 cents) to the wholesaler, retailer or the large distribution. At the end of the tour, thedirect costs are around 0.45 euros. In the supermarket or the greengrocer the kilo is sold at 1.25.

That is the story ofAlberto Duque,a Valladolid farmer who serves as an example of how the agrifood chain works. A sector in which no case is identical, every farmer and rancher, every raw material and every process is a world, but in which the producersThey share the same complaint: low prices at sourceThey lower the profitability of their farms.

An old debate that motivated the emergence on January 28 of a series of regional mobilizations, the first major crisis facing the new government of the PSOE-United We Can; that will last “at least” three more weeks (13 in Malaga and Cordoba, 14 in Asturias, 21 in Murcia and 25 in Seville). Because right now? Agricultural income in 2019 stood at 26,000 million euros, 8.6% less than the previous year, with greater incidence in sectors such as table olives, olive oil, fruits and vegetables.

“If there is only the cost of transportation and the margin of the wholesaler in the process,Why is this huge difference between what they pay me and what the consumer pays?“UPA Secretary General Lorenzo Ramos asks.” There are many intermediaries whose only business is a mobile phone and if you do not pass through them you are not able to sell, “he replies.

To the low prices of origin is added the rise of products from outside, the rise in costs and the downward pressure of prices in the distribution, in addition toTrump’s tariffs,the future Common Agricultural Policy (CAP), which accounts for around 30% of its income, or climatological accruals, such as droughts or DANAS.

The super, pointed

The Government, mobilized to stop the first major crisis that has encountered, began this week with the agricultural organizations COAG, Asaja and UPA a series of meetings that will extend to the entire chain (producers, industry, distribution and consumers). And has pointed directly to thedistribution chainsthrough the ministerFlat, which showed its displeasure towards the “spiral of sales” of supermarkets, but also Pedro Sánchez, who asked them for “self-criticism.”

The Executive has ruled out that the solution is to raise consumer prices, but to “see what is the margin of the chain” to produce a “rebalancing” of it. To this end, Agriculture has convened on Tuesday the Food Chain Observatory, once Food Price Observatory, to re-conduct price studies. The last ones date from almost a decade ago.

From theAssociation of Spanish Supermarket Chains(ACES) that includesCarrefour or AlcampoThey explain that their margin is between 1% and 2%. “All the links adjust the margins a lot because if you don’t have a competitive price you stay out of the market”, defends Ignacio García Magarzo, general director of the Association of Supermarket Companies (Asedas) that integratesMercadonao Condis.

The super warn that only 7% of the production of fruits and vegetables goes to the big chains, but the Executive is not convinced by the excuse: “The fact that it is destined to foreign markets does not mean that 7% is not significant.Everyone has to get homework“warned the minister.

Duties for producers

But farmers and ranchers also have “homework.” In Spain there are some800,000 producers and 4,000 agricultural cooperatives.What is the fourth country in the EU’s agri-food production, has none of its cooperatives among the top 50 in Europe.

“The farmer is paid the potato at the price the buyer wants,has no possibility to negotiate“, explains Alberto Duque. A larger dimension of farms would make the ‘power’ of farmers over the price increase.” It’s not just about concentrating supply but supply, preparation and sale, “warns Asaja president Pedro Cheap.

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