«Attacking the Aiem is attacking the REF, which benefits the entire Canary Islands»
-What has been the balance of the Canarian industry in 2022, a year marked by rising costs?
- We have managed to soften the adversities that have been coming. Not only was 2022 a year of rises. Since the second half of 2021 we have felt a rapid increase in the costs of freight transport and in the Canary Islands it affects a lot because everything comes by sea or air. An increase in world demand led to an increase in freight rates and here it affected us directly. Also in 2021 we suffered the rise in electricity. The industry is an intensive consumer of electricity and fuel and, therefore, we were greatly affected. Commodities also rose in 2021 and 2022.
– How did they get away with it? Based on cutting margins or with rising prices? Or with a little of everything?
–Mainly at the expense of the results of the companies and the benefits and more than one reached red numbers due to the fact that the increase in prices was unexpected and rapid and has lasted longer than expected. The sector has tried to delay as long as possible the transfer of the increase in the cost of raw materials and products while waiting for a drop in prices.
–What do you expect for 2023?
–This year, in terms of the results of the companies, we believe that they will return to economic activities prior to the pandemic. In 2022 we have not yet reached ordinary volumes. We trust that this year it will be achieved and have an impact on a better functioning of our companies. On the other hand, we are appreciating a decrease in the prices of raw materials. Although it is far from the levels of 2019, they are already relaxing and it gives us some stability to wait for a reduction at some point. The price of electricity has also dropped significantly. Although there may be new upward spikes, we are no longer at the level of the first half of 2022.
"They are taking advantage of a general problem of rising prices to go against Aiem"
- Do you understand that this year prices can go down and some relaxation of inflation?
We understand that yes. Each company has its price structure but we all more or less have the same. If raw materials and others drop and there is competition in the market, we will all have to adjust our prices. We understand that as this goes down, prices will return to your site. They will not return to where we came from because there are variables that remain, such as salary table updates, but there will be some relaxation.
-In the prices of the shopping cart, what weight does Aiem have?
– I do not have the data on how much it has an impact, but we do have the data that in 2022 the rise in the CPI for food in the Canary Islands has been four tenths lower than the national average. In addition, the CPI in the Canary Islands is lower than the national one, which has not had a negative impact.
–But we are talking about a CPI in the interannual rate, the evolution of 2022 compared to 2021 and the Aiem has been in the Canary Islands for many years, so the effect is not visible in the evolution of the CPI for one year.
– Yes, but despite everything, the price variation in the Canary Islands is lower. In any case, those who have to talk about the shopping basket are the commercial distribution sector.
- So you don't have any data on its impact?
– Only that the Aiem collection represents 65 euros per year per consumer in the Canary Islands, since it includes the floating population, considering that there are an average of 300,000 people due to tourism. The Aiem represents 0.8% of the imported product in general, not only food.
"The Government should be transparent and provide the data to put an end to speculation"
– When talking about Aiem on the islands, it seems that there is a fear of speaking openly and giving an opinion.
- I don't think it's fear. There is objectivity because of what the Aiem supposes. Although the rest of the sectors consider that it may have an effect on prices, they generally believe that it is good and defend it. The Aiem exists to protect local productions and what it does is that there is a diversified economy in the Canary Islands and that there is industrial, agricultural and livestock activity. We have to continue counting on these activities. Let's not forget that the industry, for example, employs 50,000 families who are consumers of the businesses in the Canary Islands. The Aiem is also within the Economic and Fiscal Regime (REF). Attacking the Aiem is attacking the REF, which is designed to adapt the Canary Islands to the conditions of the continent, and is for the benefit of Canarian society, its improvement and progress.
– Nueva Canarias blames the Aiem for the fact that the Canary Islands have the most expensive shopping basket and blames the distributors for it, whom it accuses of “being rich”. Is it about looking for culprits in prices?
–Maybe they have taken advantage of a universal problem, a global circumstance such as the increase in raw materials and energy, which leads to inflation, to attack Aiem. Otherwise we don't see the point. The tariff as an economic policy occurs in many territories and it occurred before the soaring inflation, which is for another reason. In the Canary Islands, the high prices are being taken advantage of to relate it to the Aiem. That later there are members of different governments that relate prices to the profits of some companies and even putting names, it seems to us that it is out of place. It is feeding the fire and diverting the debate. Has no sense. In the Canary Islands, commercial distribution has more competition and brands than in the mainland and this means that they have to be more competitive in price. I don't think they can make much of a profit, especially with the rise in energy and raw materials. All companies at the moment are in subsistence mode, earning what is necessary or losing as little as possible when it is time to lose. This is what has happened in 2022, that there are companies that have lost money but we want to keep jobs.
-Do you consider capping prices a good option, as proposed by NC and before by Minister Yolanda Díaz?
– No. Applying interventionist measures is not convenient. It is necessary that there is competition and that each one of us is more efficient to be more competitive with the prices that we offer. If limits are established, we can find ourselves in situations similar to those that occur in other destinations and that there may even be a black market, and this is not desirable. It will lead to a lack of supply, in addition the product will be more expensive and less accessible to the population and while there will be shortages at the points of sale where the products are found.
«The solution to the prices of the shopping cart is not to cap them. It would have consequences»
–He points out that it is not convenient to take interventionist measures but the Aiem itself is interventionist.
– No, no, the Aiem is a protection measure and there are similar ones in other countries and markets to protect local productions. What does the EU want with tariffs on goods from third countries? Well, that the production of their countries be maintained. Industrial relocation is even being promoted and for this we must provide facilities so that we are self-sufficient and do not depend on third countries as happened in March 2020. The Canary Islands do not intervene in the market but rather facilitate certain activities so that employment and wealth are generated. Something as simple as maintaining the territory. If agricultural and livestock production in the Canary Islands is not supported, what would become of our territory? The Aiem favors the sustainability of the Canary Islands and reduces the carbon footprint because there is a zero kilometer product.
– Do you think that the Government of the Canary Islands should change its strategy when it comes to talking about Aiem and provide more transparency?
- Yes, we agree. We also ask for that transparency. To begin with, because we also want to know the data. Asinca always boasts of well-founding his proposals and opinions and looking for solutions to improve Canarian society. Without data this is difficult. It's hard to find the data and get it. Transparency is a healthy exercise. Doubts should not be raised. If the information is there, it will be objective. Without it, it will give rise to lucubrations and speculations. From Asinca we also ask to have the information on imports from the Canary Islands.
– Now it is the Aiem but a few months ago it was the farmers of the Canary Islands who complained about the REA and that in the distribution of its 80 million it was the industrialists who were favored. What happens that they are always the target of criticism from other sectors? ?
–Possibly because from the industrial sector we want to be positive and constructive. We do not consider it fair to act in a way that harms other economic sectors in the Canary Islands because what is good for others is good for the Canary Islands and the industrial sector. What the industrial sector does is work in silence in favor of all. The Aiem is in the REF, as I said before, and the REF benefits all the economic sectors of the Canary Islands and all the Canaries, not just the industry. Now if they want to point to us, each one there. In 2021 the Government of the Canary Islands distributed 1,144 million European funds and distributed by the Government of Spain. Very little of this amount went to the industrial sector. As we maintained activity during the pandemic, although less, we did not meet the requirement to reduce sales by 30%. In general, the industry was left with a 25% drop in sales. That was a tremendous blow in an industry where margins are very low and are driven by volume. If the volume is reduced, the figure leads to negative results and even so, we could not benefit from money that went to all the economic sectors of the Canary Islands.
–Would you be willing to review Aiem?
–The first thing that must be said is that the Aiem is reviewed and supervised with a certain periodicity and is justified, and this goes to a report from the European Union. This tax is controlled. Now if you ask me for a review, yes we are willing even though one was done recently and several products were released. Asinca and other organizations actively participate in the construction of Aiem, putting in and taking out games and we have been doing it for many years. It is more than 40 years of this tariff, which is a widespread economic policy in all markets, not only in the Canary Islands. The EU already has tariffs to protect its commercial productions. It must be said that it is the EU that approves it and that it is reviewed periodically. At Asinca we will contribute to improving this measure.
- The Canarian industry has part of its productive capacity idle. What is needed to increase current productions? More support from tourism?
– From Asinca we ask for the support of all sectors and public administrations. We have been asking for years that in the bidding documents of the different administrations, products and services that come from Canarian companies that are in the Canary Islands generating employment can be weighted to a greater extent and it is not done. We also ask the tourism sector and we know that there are companies that do it but we need more. We have a long way to go. It also happens with commercial distribution. They support us but we can still have more growth. The Canarian consumer also supports us and chooses us. What could happen is that the national or international manufacturer would come and produce its product on the islands and manufacture its brands in the Canary Islands. Or with that idle capacity that alliances be established between operators on the continent and Canarian manufacturers to manufacture and supply their brands here.