Food Prices Influenced by Demand and Economic Downturn

Total Croatia News

ZAGREB, April 12, 2020 – Global economy is slowing down, causing a drastic fall in prices of food on the global market, however, the trend has still not emerged on the Croatian market, shows an analysis by the Smarter consulting firm on the impact of the corona crisis on food price trends.

Nevertheless, the analysis shows that consumers in Croatia are starting to spend more rationally, fearing for their household budget after an initial increase in demand caused by fear of shortages.

Smarter notes that the latest data from the Market Information System in Agriculture (TISUP), which monitors price developments on a weekly basis, show that, compared to March 2019, prices for some categories of meat, especially pork, were up by around 10%.

Considerable price fluctuations were also registered in some fruit and vegetable categories – from around 10% for lettuce to around 40% for green onions, the analysis shows.

Smarter consultants believe that the stabilisation of prices was influenced by a government decision to limit price increases for certain foods, adopted at the start of the corona crisis. They emphasise that the measure was the trigger which prevented drastic price increases due to increased consumption, as a result of the fear of shortages.

“We estimate that, after the drastic increase in demand due to the fear of isolation, stock-piling and panic buying, the situation has stabilised,” Smarter notes.

Influenced by the crisis which has already resulted in layoffs and closure of restaurants, hotels, and coffee shops, and having to stay home, consumers fear for their household budget and are spending more rationally. In other words, they worry if they will have enough money for the post-corona period, analysts note.

The analysis shows that the crisis caused by the coronavirus epidemic has led to new trends in supply.

“Due to the measures introduced, there has been an explosion of online purchases and deliveries of fruit, vegetables, and other foodstuffs,” Smarter says, noting that various drive-in markets, support groups, and Facebook groups are offering products delivered to the consumer’s doorstep.

Although this type of selling is modern and is working at the moment, because consumers are shut in at home due to the epidemic, Smarter thinks that this is a short-term solution which makes goods more available to consumers and enables domestic producers to sell their goods, as they cannot sell it on farmers’ markets due to the current restrictions.

Most consumers, especially older persons, still prefer buying from the shelves in retail chains, say Smarter analysts, who also think that retailers should pay attention to the safety of goods they are offering.

Smarter estimates that Croatian consumers will soon feel a financial strain, as economic activities have slowed down or halted completely, which consequently leads to layoffs, pay reductions, delays in payment of goods and services, etc.

That is why it is important to act right away, so that goods, and especially such goods as fruit and vegetables, are purchased and placed on the market via safe and verified supply chains, experts at Smarter think.

They also think that an about-turn is necessary in agricultural policies to make them focus on higher production business models, raising the level of self-sufficiency, producers’ forming associations, and on establishing purchase centres where larger quantities of goods can be gathered and sent to consumers.

Smarter is a consulting firm specialising in the agricultural and food sectors.

More economy news can be found in the Business section.


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