By Alexia Saoulli
THE CYPRUS Consumers Association yesterday called on the Prices Committee to extend pricing controls on basic products for as long as it could, despite the committee’s support for EU-driven liberalisation measures.
Controls on the price of milk and bread should both be lifted within the next couple of months, Commerce Ministry Commercial and Industrial Officer Andreas Galatariotis said yesterday, saying that, despite some dissenting voices, most committee members backed price liberalisation.
The European Union requires all prices to be liberalised once a country joins. The Cyprus government, however, still sets prices for all milk and common bread.
Milk is set at 41 cents per litre and common bread at 40 cents a loaf.
The government’s Prices Committee is made up of advisory representatives from various unions, the Finance and Commerce Ministries, the Planning Bureau and the Consumers Association, and is responsible for examining and discussing price suggestions, which are then presented to Minister Nicos Rolandis in detail. The minister then makes a decision, based on these suggestions and for the ” greater national good” .
The Prices Committee is currently investigating a study that suggests two out of the three remaining price-controlled products – milk and bread – be liberalised. The third is cement, which is not being discussed at present, as the liberalisation of that sector would likely wipe out Cypriot manufacturers unable to compete with cheaper foreign – mainly Lebanese – imports.
But the Consumers’ Association disagrees with the plan.
” We are not in favour of liberalising prices for milk and bread just yet, for a number of reasons,”said Dinos Ioannou, General Manager of the association.
” As far as milk products are concerned, we do not feel there are sufficient conditions for healthy competition in the market yet, as there are only three dairy companies: Charalambides dominating roughly 57 per cent of the market, Christis with about 31 per cent, and newcomer Lanitis with around 12 per cent.
” Our concern is that they may create a cartel and increase the prices, thus causing problems for the consumer.”
” As far as bread is concerned,”he added, ” the government only sets the price of common bread. Although the prices are controlled by competition, because there are 400 bakeries in Cyprus and very few bakeries still produce the common bread, we still feel that having that as a base control price will stabilise prices on other breads.”
Although his association does not feel as strongly about the bread price control issue, Ioannou felt that since lower income people or people from large families bought a lot of bread, ” why rush to liberalise its price, since there is still some time to go before Cyprus’ EU accession, when prices will eventually be forced to liberalise?”
Galatariotis of the Prices Committee disagreed.
” Trends indicate that price increases have slowed down on products that have already been liberalised, and besides huge supermarkets make cheaper offers than the common bread, already benefiting lower income families,”he said.
” I am confident that bread will be liberalised very soon and milk within a month or two, and that this healthy competition will only bring about desirable results that protect the consumer.”
He added that an independent competition association was responsible for controlling and regulating healthy competition and that monopolies and oligopolies were not in themselves sinful.
” What is sinful is to take advantage of, and abuse, a monopoly or oligopoly position in the market.
” If this happens, the Ministry will intervene, as will the competition association, to ensure that consumers are not manipulated and the situation does not get out of hand,”he said.
He said Rolandis would be presented with a list of suggestions just as soon as every member’s views had been recorded.
Galatariotis added the consumer had the right to free choice at reasonable prices, which he said was what liberalisation would achieve.
The Financial Manager of Charalambides Dairies, Andreas Alexandrou, told the Cyprus Mailthey supported liberalisation – as long as ” it is full liberalisation” .
” In other words,”he explained, ” you cannot liberalise the sale price, if you continue to control the purchase price.
” This is not liberalisation” .
He said that, as things stood, the purchase price of milk from dairy farmers was controlled. If the dairies still had to buy from a controlled body, at a controlled price, then they should continue to sell at a controlled price, he said.
” We have no objection to liberalisation, as long as it works both ways,”he stressed.
