Falling farm prices reach shop shelves unevenly, study finds

Food commodity price changes reach consumers unevenly and with a delay, according to a study by Estonia’s rural research centre METK, ERR reports. The purchase price of milk fell 23 percent in a year, while retail prices for drinking milk declined much less. Purchase prices for pig and cattle carcasses also fell, even as the retail prices of the meat products studied rose.

The retail price of milk with 2.5 percent fat fell 7 percent year on year, while the price of full-fat milk with 4 percent fat dropped 4 percent. Butter became about 19 percent cheaper and cottage cheese 7 percent cheaper, but the price of Edam cheese rose about 9 percent. The share of raw materials in the final price fell for drinking milk and Edam cheese.

In the third quarter, retail prices for potatoes, carrots, cabbage and apples were lower than a year earlier. The price of table apples fell 28 percent, and the retail trade margin decreased 52 percent. Producers accounted for 48 percent of the apple price and retailers for 32 percent.

The purchase price of pig carcasses fell 22 percent year on year, while the price of cattle carcasses fell 3 percent. By contrast, retail prices rose for all the meat products examined: beef mince by 37 percent, pork mince by 38 percent, frankfurters by 16 percent and homemade-style minced meat by 8 percent. The raw-material share of retail prices fell, while the retail trade share increased.

Egg prices continued to rise year on year. The price of eggs from caged hens increased from 2.51 euros to 2.57 euros per 10 eggs.

The food industry accounted for the largest share of retail prices for grain products, making up 52 percent of the price of bread and 50 percent of the price of white bread. After the purchase price of food wheat rose, the raw-material share of the retail price of wheat flour increased from 24 to 28 cents per kilogram in one quarter. The raw-material share for both white bread and bread rose by 2 cents per kilogram.

Selver communications manager Mariann Järvela told ERR that final product prices are based on the purchase prices charged to the retailer by producers and suppliers. “If the purchase price does not change for us, the final price in the store cannot change either,” she said.

Nele Peil, head of the Estonian Traders’ Association, said the association could not comment because the Competition Authority had recently informed it what could and could not be discussed or said on its behalf. “Prices, both purchase and retail, are the most restricted subject,” Peil added.

METK’s price-margin study is based on data from the centre, Statistics Estonia and the Estonian Institute of Economic Research. It was commissioned by the Ministry of Regional Affairs and Agriculture.