Kuwait: Supply Chain Difficulties Push Food Prices Higher

Food prices in the world have witnessed a remarkable growth in the last period, especially with the repercussions of the spread of the Corona virus; This has increased the price inflation of food products and commodities and the emergence of unhealthy practices in the markets that affect those with limited incomes.Join Our Telegram group to know the latest news https://t.me/kuwaitoffering

The growth of prices and the associated stumbling and the increase in the difficulties of supply chains in various countries of the world increased the need to define the role of the state in preserving the basics of life, part of which is food, especially towards limiting price increases, increasing competition and breaking monopoly, and at the same time the state must protect producers The local market, organizing the importers market, and offering competitive opportunities in various matters.

Kuwait faces many structural challenges in population growth and the scarcity of agricultural land for food production. Therefore, it relies heavily on imported foodstuffs. With the health crisis that has swept the world and external regional developments, clear changes have occurred in consumption patterns.

Especially food consumption, and these developments helped increase food prices in the world.

The latest statistic from the Central Administration of Statistics for consumer price index (for the month of April) recorded a decrease of 0.17 percent from March, but Kuwait was affected by the rise in food prices in the international market for the months of August and September, respectively, as the United Nations Food Organization (FAO) reported that Global food prices rose by 33 percent in August on an annual basis and for the second consecutive month in September, reaching a 10-year peak, driven by the rise in the prices of many commodities such as grains, vegetable oils and meat.

With regard to cereal production, the (FAO) raised its forecast this year to a record level of 2.8 billion tons from 2.788 billion tons in September estimates, and announced that these record expectations are lower than expected consumption, while the FAO food price index recorded 130 points in the middle of September. This is the highest reading since September 2011. Join Our Telegram group to know the latest news https://t.me/kuwaitoffering

Because of the importance of this topic, the newspaper conducted an investigation that dealt with the opinions of many specialists, and here are the details:

At the outset, the Chairman of the Trade and Transport Committee at the Kuwait Chamber of Commerce and Industry Khaled Al-Khaled said that the increase in transport and shipping prices is not local, but rather a global increase, as the number of ships and containers is few, in addition to the closure of some factories, so the prices of goods today are more expensive than before, and it is expected Signs of a price drop will begin in the middle of next year.

government facilities

Al-Khaled added that there are no restrictions by laws, but we need speed in delivery, low fees and raising taxes for traders, because the global transport price has become high, and no matter how much the government intervenes, it will not work with a decrease in global prices, and the solution is to open the entire global ports until prices drop, and on The government has to make several facilities to be less expensive so that things return to the way they were, and the state must also enter into facilitating services such as port services, ship fees and paper matters.

new lifestyle

Al-Khaled pointed to the new pattern resulting from the Corona crisis, as it contributed to the closure of factories and homes and affected the movement of the market, and the lifestyle changed in a technological way. The rise in food prices will not change the way of life, and when the cost to people increases, this prompts them to reposition the economy by canceling several things, but the situation will not change much.

Consumer and government

He added that the products are many and varied, and many of them serve the same purpose, and here the responsibility is on the consumer to determine his priorities and choose the lowest-priced goods and perform the same role, not to go to high-priced goods, as the lifestyle must change and the government has an educational role and it must not increase the costs to the merchant in the market Kuwaitis are free, and the government’s role is only to educate the consumer about how to deal with high-cost goods and how to find alternative solutions.

The role of “protection of competition”

In turn, Executive Director of the Competition Protection Authority Abdullah Al-Owaisi said that the food sector is one of the important sectors in Kuwait, as this sector affects other sectors, at a time when the country imports foodstuffs, which constitute 80 percent of the total consumption. Join Our Telegram group to know the latest news https://t.me/kuwaitoffering

Al-Owaisi added that amid the conditions that the world has experienced due to the outbreak of the “Covid 19” pandemic, supply chains in the food sector have been affected, for example, farms in producing countries have witnessed an increase in labor wages, transportation costs, shipping and storage, as well as the imposition of internal policies in them. To secure its food stock by stopping the export, which resulted from the scarcity of supply, and here emerge fears of the lack of competitors in the global and local market.

He explained that the circumstances led to the merger of companies and the exit of others from the market, which may result in a highly concentrated market due to the lack of competing companies, which leads to the emergence of agreements between competitors with the intention of harming competition, such as fixing or raising prices or other practices that lead to harming competition, which negatively affects the competition. the consumer and the economy in general.

He continued, “The agency has an active role in limiting monopolistic practices, and it is one of the goals of the agency mentioned in Article (5) of the Executive Regulations of Law No. 72 of 2020 regarding the protection of competition, and there is no doubt that people are prohibited from undertaking any agreements or business related to relations. horizontal as follows:

1. Determining the prices of the products subject to dealing, directly or indirectly, by raising, reducing, or fixing, or imposing any restrictive commercial conditions in connection with the sale or distribution of a commodity or the supply of a service or in any other way in conflict with the market mechanism. Join Our Telegram group to know the latest news https://t.me/kuwaitoffering

2. Dividing or dividing product markets according to regions, or according to the volume of sales or purchases, or according to the type of products sold, or by any other means.

3. Fixing the quantity of production, distribution or sale of goods, or specifying a method or means for providing services.

4. Restricting technical development or investment with regard to the production, distribution or sale of a commodity or the provision of a service.

5. Complicity in bidding or offering to sell, buy or supply any products.

He stated that Article (6) stipulates that “persons are prohibited from carrying out any agreements, coordinated practices, or actions related to horizontal relationships that would prejudice, limit or prevent competition.” Article (7) states that “persons associated with a vertical relationship are prohibited from Carry out any agreements or coordinated practices that would restrict, limit or prevent competition.

Al-Owaisi said that according to Article (8), “it is prohibited for any person to abuse the dominant position, and it is considered abuse of the dominant position, any practice that leads to the prevention, restriction or limitation of competition in the relevant market.” 

 

SOURCE   :   KUWAIT OFFERINGS

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