site.btaMarket Distortions, High Markups, Loss of Production Reported by Consumer Protection Commission

There is strong regional concentration in small towns, distortions in the dairy sector indicating a loss of production and dependence on imports, and high markups - these are the main conclusions of the Commission for Consumer Protection (CCP)'s interim report on the modern retail market for agricultural and food products. The 110-page report, now available on the CCP's website, was presented by Commission member Zhelyo Boychev at the University of National and World Economy on Tuesday.

The CCP identified the most significant distortions in the dairy industry. These include a marked 25% decline in local production of the primary raw material for dairy products, fresh cow's milk, between 2020 and 2024, coupled with a 43% rise in milk imports. As a result, production of dairy products has fallen by 8-14%, despite steady consumption levels.

The interim analysis of retail chains' pricing policies also shows high markups on final sales prices. The CCP specifies that these markups are not profit margins for the chains, but evidence of their relations with suppliers and producers. They found markups of up to 77% for milk, up to 82% for cheese and up to 91% for yellow cheese. The highest markup was found for mineral water. These conclusions are based on information received from retailers by the supervisory authority. 

The interim analysis also reveals a strong concentration of large retail chains in small towns. This has been identified in eight regions: Vidin, Targovishte, Gabrovo, Lovech, Razgrad, Shumen, Kardzhali and Smolyan. 

The main preliminary conclusions of the sectoral analysis of vertically integrated production and processing markets are reduced production, dependence on imports, a lack of quality standards and effective control, and insufficient funding and institutional support for agricultural production and processing. 

The CCP has announced that the analysis will continue beyond these findings already.

CCP Chairman Rosen Karadimov called on the modern trade sector to self-regulate based on these findings. A broad public discussion of the report is forthcoming, to which all interested parties are invited, with the aim of establishing self-regulatory mechanisms. Karadimov also said a telecommunications sector analysis is forthcoming.