Yolanda Díaz's price limit on food finds opposition in the sector and division in the Government

The latest proposal by the Vice President and Minister of Labor, Yolanda Díaz, on limiting the price of a "balanced and healthy basket" of food, that he told elDiario in an interview published this Mondayhas provoked suspicion and opposition in the sector of distribution and division of opinions in the Government.

The Ministry of Agriculture of Luis Planas was previously positioned (and remains) against it, as well as other portfolios of the PSOE. On the other side of the coalition, Alberto Garzón's Ministry of Consumer Affairs is included in the working group to negotiate this new cap, which aims to alleviate the damage to families and producers of the current inflation crisisstemming from rising energy prices and exacerbated by the Russian invasion of Ukraine.

The employers of supermarkets and the rest of the companies that are dedicated to distributing food deny that they had prior information about this announcement. And although they admit that the rise of oil, bread, milk or eggs is a serious problem, they consider that a measure such as reducing VAT (Value Added Tax) on these products would be more appropriate.

One day before the interview with Yolanda Díaz was published (on Sunday), Luis Planas assured, in statements offered to Europa Press, that price intervention is an "exceptional measure" that can only be adopted, in accordance with European regulations, in the case of regulated markets and the agri-food market it is not. From the Ministry of Agriculture, this Monday, they adhered to this position, as confirmed by elDiario. Other government sources consulted maintain that they were unaware of the proposal.

In an interview on the Cuatro chain, the Government spokesperson and Minister of Territorial Policy, Isabel Rodríguez, ruled out the second vice president's proposal by pointing out that the lines of the Executive's policy go in another direction. “We are in a free market, but the government's measures go in another direction. I understand that the second vice president is deepening this approach, but today the strength of the government is another: to strengthen purchasing power and help the productive sectors to take charge of the increase in costs, ”said Rodríguez.

Meanwhile, Yolanda Díaz reiterated this Monday that "food is being a huge problem for our country, for citizens and for producers", and that she is not seeking a law but "an agreement", which will not violate competition, with the distributors and consumers to "determine a basket of basic products, around 20 or 30, in which, as we have done with gas and other materials, we cap prices".

Food inflation, he stressed, "is proving to be a problem for the consumer because he loses purchasing power and has difficulty eating healthily. And for the producer because he is selling his oranges for 15 cents and we buy them for 1.40 euros , or it also happens with potatoes...", with the cost of transport and energy skyrocketing.

"There is already, for example, a maximum price for the butane cylinder, because it is an exceptional moment, we are at war," added the second vice president.

Food is experiencing a strong variation between the price at which producers sell their products to distribution companies and what consumers have to pay when these products are sold on supermarket shelves. The agricultural association COAG monitors this price variation on a monthly basis. According to their data for the month of June, the difference between the price at which the farmer sells and the price at which the supermarket sells was 575% for potatoes, 887% for oranges or 749% for garlic, among others. products (see graph).

For their part, sources from the Ministry of Consumer Affairs shared that the proposal is "fundamental", and that it had previously been discussed with Yolanda Díaz, as well as that Alberto Garzón will have an active role in the "agreement" on the "basic and healthy basket, but It is not a question of indicating products unidirectionally from the Government but of agreeing them with the companies".

"A progressive government has the need to protect the purchasing power of working families, and the crisis cannot be paid by the same as always when the large companies in this country, especially the energy companies, continue to obtain extraordinary multimillion-dollar profits," they explain in Consumption.

"It would be a great help to families if an agreement could be reached between the large distribution companies and the primary sector that would lead to a consumer basket of basic products having limited prices. Without a doubt, this measure would not exhaust the range of other possible measures to meet the objective of curbing the loss of purchasing power”, they add.

Much more reticent, the national spokeswoman for the PSOE, Pilar Alegría, refused to make an assessment and assured that the PSOE is "fully aware" of the increase in costs that producers must face, given the rise in the cost of fertilizers, energy or feed. And he pointed out that "from the first moment" "measures to contain the high increase in costs" have been approved, and pointed to the discount of 20 cents per liter on fuel or the reduction to 5% of the VAT applied to electricity, extended now to gas, as well as other taxes associated with electricity. Also the aid package for livestock included in the economic response plans to the war in Ukraine -169 million euros for dairy farmers and another 193 million for meat livestock- and the recent approval of the reform of the Law on food chain.

For their part, in Podemos they recall that they have already proposed a specific tax on the extraordinary profits of large food companies, a measure that they consider more effective than the agreement to limit prices that Yolanda Díaz defends. "From Podemos we already proposed in its day to create an extraordinary tax on large food and distribution companies to help families afford the shopping basket with the proceeds," recalled Pablo Fernández, the spokesman for the purple formation. Fernández said that it is "commendable" that the government tries to reach agreements, although he stressed that what it has to do is "make decisions," reports José Enrique Monrosi.

At a press conference after the meeting of the Coordination Council, the spokesman described the proposal put forward by the vice president as "sensible", although he avoided explicitly endorsing it after admitting that he considers it unrealistic. “It would be complex to reach an agreement with the big companies so that they lower their benefits. It is the Government that has to set the priorities and from Podemos our priority is to support families and we believe that the most appropriate solution is that extraordinary tax”, she pointed out.

from the employer Anged (National Association of Large Distribution Companies), which brings together Alcampo, Carrefour or El Corte Inglés, reduce the proposal to a personal assessment of the vice president. "We do not know to what extent it is an opinion shared by the rest of the Government, nor if the CNMC shares it [Comisión Nacional del Mercado y la Competencia]", they suspected this Monday. In Aces (Association of supermarkets), which join the groups prior to Eroski, prefer not to comment on the vice president's proposal.

On his side, in handles (Spanish Association of Distributors, Supermarkets and Supermarkets), whose members are DIA, Save More, Condis, Covirán, Lidl or Mercadona, acknowledge that they have been warning of their concern about prices since January, and defend their proposal to reduce VAT on foods in which there is margin to do so, from 21% to 10% or from 10% to 4%, "since inflation causes more to be collected", by increasing the tax with the rise in price.

"Inflation is due to well-known causes", lament Asedas, and list the impact of the war on "imported raw materials (cereals, fertilizers...), on fuels and on energy in general", although they defend that the Food CPI (Consumer Price Index) "demonstrates the containment effort [de trasladar este incremento de los costes a los precios finales de los productos] what the sector has done".

From April to July, the last CPI data known in detail, the growth of food prices has exceeded general inflation each month. In April, the CPI for food jumped to 10.1% year-on-year, a rate that has not stopped rising since then to 13.5% in July, always compared to the same figure last year, and when average inflation remained in 10.8%.

This acceleration is much more moderate than that of the IPC of energy, fully fired. And, in the same vein, it should be noted that the largest monthly jump was in April, of 3.4 points, and that since then it has fallen to increase by only 0.3% in July.

"The transport strike [a finales de febrero] had a serious impact", recalls Asedas, who insists that, "as Planas acknowledges, the entire sector is behaving responsibly" and considers "price intervention makes no sense".

"We are willing to sit down and talk, but we had no news of this proposal and the Ministry of Agriculture is admitting that the supply chain is working, and the enormous competition guarantees that prices are formed efficiently," they continue from this employer's association, which defends that it is "a tremendously responsible industry, which was demonstrated in the pandemic".

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