Business Farm minister scolds major food retailers but gives more time for improved results

05-06-2014 16:16 | Chris Johnstone

Czech retailers are once again in the spotlight for the quality, sourcing, and price of the food on sale. But while the Ministry of Agriculture is increasing the maximum fines for some infringements, it looks like it is giving the stores a bit more time to improve their overal act.

Photo: Kristýna MakováPhoto: Kristýna Maková The Czech Republic and Slovakia went their different ways in 1993 and nowhere was the difference starker than over their attitude to supermarkets.

Whereas the Czech Republic threw its door open and retailers of almost all nations united to offer their wares and fight for the favours of Czech shoppers, the Slovaks put up the barriers and attempted to keep small shops and stores alive by banning supermarkets. The Slovak law curbing the big stores was eventually cast aside, but Slovakia has generally been more active in try to limit the power of the big retailers and scrutinize their prices and profits.

A new version of a Slovak law aimed at outlawing supermarkets from putting undue and unlawful pressure on their suppliers was enacted in 2012. The types of abuse are charges for giving more visibility to products, supplementary payments for non-existent services etc. Whether the law works as intended or not is open to debate, but it is there in place. A Czech equivalent has frequently been talked about but never came into being.

At the moment though the two countries share a common determination to get more local products on shelves as part of the wider target of greater food self sufficiency and the evergreen complaints about supermarket abuse and excessive profit margins.

Czech Minister of Agriculture Marian Jurečka met with retail bosses earlier this week and scolded them about the quantity of Czech products on sale, the quality of products, and their high margins, especially on bio food where the difference between prices demand by the producers and those marked up in supermarkets are enormous.

According to comments from the Czech Confederation of Commerce and Tourism, the margins are sometimes as high as 23 percent for large stores with not much difference for smaller retailers. The confederation adds that stores in most cases don’t source their goods direct from farmers but have to go through processers and distributors.

Czech supermarkets will face a new law at the start of next year which will hike the maximum fines for poor quality food and duplicitous and false marketing from the current 3 million crowns to 10 million crowns. The fine for foodstuffs that represent a real threat to consumers’ health could climb as high as 50 million crowns. The minister want to see punitive fines slapped on repeat offenders.

While the quantity of Czech food on sale has improved in recent years, the minister believes there is still room for sizeable improvement. According to public service broadcaster, Czech Television, Czech produced products represent around 40 percent of the goods on sale German retailers Kaufland and Lidl. That figure rises to 54 percent for Makro and climbs to 60-70 percent for Netherlands-based retailer Albert; 65-70 percent for Globus; 68 percent for Billa and 70 percent for Penny Market and Tesco. The highest share of around 75 percent is credited with the Co-op chain of stores.

One demand of the new law taking effect from January 1 is that stores will have to prominently display the five main countries which are supplying them. But on the excessive supermarket margins, minister Jurečka appears to be willing to give the supermarkets more time to improve their act before considering a tougher line.

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