Czech Food Chamber head: Food prices beginning to stabilize, but reliance on imported products presents a problem

Excessively high food costs have been driving many Czechs to do their shopping across the border in Poland or Germany. Reacting to the high profits posted by agricultural companies, Prime Minister Petr Fiala said he is glad the price of basic foodstuffs like milk, sugar, and butter is finally beginning to fall, and that others must follow suit. However, given the country’s dependence on imported products, there is little control over determining food prices due to a lack of internal competition.

I spoke with Dana Večeřová, President of the Czech Food Chamber, about the situation.

To start with, could you give us an overview of the situation with food prices here in Czechia?

Dana Večeřová | Photo: ČT24

“Currently, food prices are beginning to stabilize and price growth is slowing down. The problem with food prices was especially bad last year after the start of the war in Ukraine; the prices of energy, gas, and electric rose sharply. Depending on the type of product, production costs increased by 40 to 80 percent. The cost of agriculture materials needed for processing and packaging also increased, and so did wages. Unfortunately, the Czech Republic had and still has one of the highest energy prices in Europe, which of course has a big impact on the costs in the agriculture and food sector.”

What’s expected to happen with prices in the coming months, is there any sense of what’s ahead?

“As I mentioned, prices are gradually stabilizing. In some cases, for example, dairy products – prices are starting to fall. Take milk for example – in December of last year it cost over 13 crowns per litre, and now we are approaching ten crowns per litre. We will see what the situation will be with baked goods after the harvest this year, whether it will be possible to start producing from cheaper grain. We have had a big problem with the prices of grain in the last year, the prices were twice as high. Unfortunately the situation with products where we are not self-sufficient, such as pork – where we are dependent on the prices of the German stock exchange, those prices are still rising.”

In an interview with Czech Radio (iRozhlas) you said Czechia should be cautious about relying on imported food products. What are the potential risks this reliance could pose, and how can the country’s food industry pivot away from this reliance?

Photo: congerdesign,  Pixabay,  Pixabay License

“Of course the main risk is the price. If there is no domestic competition, then the price is decided by retail chains. We see this especially with fruits and vegetables, where the same pepper from Spain from the same producer is twice as cheap in Austria as it is in the Czech Republic. This is only about the decisions of retail chains. The state must focus on supporting the cultivation of the fruit and vegetable sector, in the form of investment in storage, processing and packaging. When it comes to animal production, pig farming needs to be focussed on too in order to improve technology and animal welfare.”

So it’s really important that Czechia be focussing on developing the agriculture industry internally so it’s not so reliant on other countries?

“Definitely. We are not self-sufficient in vegetable farming, about 20 to 30 percent is imported. We also have very low self-sufficiency with some kinds of fruits.”

And why is that exactly, is the agriculture industry not so robust here in Czechia, or are young people not as interested in getting into agriculture as they used to be?

Photo: carlosfs05,  Pixabay,  Pixabay License

“It’s hard to say. There are not many young people who are interested in getting into agriculture because it’s very hard work. For 30 years we were very big producers of fruits and vegetables. But it’s very hard work, and many farms and agriculture companies stepped away from vegetable and fruit production, and it’s a very big problem.”

Given these high prices, many Czechs are heading across the border to neighbouring countries like Poland to shop because things are considerably cheaper on the other side of the border. The Polish government cut VAT rates following high inflation and energy prices in 2022 to help contain and cool prices, but the Czech government did not. Do you think they should, is this something they should be stepping in to regulate?

“I don’t think we need regulation, but you are absolutely right, the Czech government did nothing for producers of food and farmers. For example, in Poland, you have a zero value added tax for over 300 food products. We still have a 15 percent tax. The second reason that food products are so much cheaper in Poland is because of the electricity costs. The prices of energy are much lower in Poland, they have a third of our energy prices, which means they have lower production costs which makes for lower food prices.”