Rising food prices: the ESEC recalls the urgency of reorganizing marketing channels and regulating the role of intermediaries

« The agricultural product marketing system, which remains marked by a set of organizational and functional weaknesses and dysfunctions, was one of the factors that contributed to the increase in the price of the main food products, in parallel with the dysfunctions recorded in the management of water resources, exacerbated by recurrent droughts, the health crisis and the repercussions of the war in Ukraine, on the cost of factors of production », explains the ESEC in an Alert.

In this exceptionally difficult context, inflation peaked at levels not reached since the beginning of the 1990s, approaching, according to the High Commission for Planning (HCP), 11% on average for food products over the year 2022, know the same source.

Faced with this situation and in order to limit the impact on citizens’ purchasing power and not compromise the country’s food security, the public authorities have taken a series of emergency measures, such as control operations prices and the fight against speculation, export regulation to secure the supply of the domestic market, support for professionals in the road transport sector and the lifting of customs duties and VAT on imports red meats (cattle) in order to compensate for the drop in the local supply.

However, believes the ESEC, these efforts will not have been enough to absorb the rise in the price of food products in a context marked in particular by the persistence of the upward trend in the prices of agricultural inputs and phytosanitary products.

This situation is attributable to a set of domestic factors of a structural nature, in particular the absence of a global and integrated governance framework for the process of marketing agricultural products, leading to several shortcomings in terms of the organization of agricultural product markets (markets for wholesale and weekly souks) and the predominance of parallel marketing circuits (informal sales).

It is also about the low capacity of small and medium-sized farmers to organize themselves to sell their products under good conditions. Added to this is a still very weak digitization of the processes of marketing and adding value to agricultural products, which does not facilitate the direct and fluid access of small and medium-sized farmers to the various markets and outlets.

The ESEC also raises excessive and poorly controlled intermediation which encourages speculation and the multiplication of players, penalizes the producer, impacts the quality of the products by lengthening the distribution circuits and therefore increases the final selling price to the consumer. The price of a product can sometimes triple or quadruple before reaching the consumer.

In the light of the various findings and analyzes established by the Council in its various opinions, it is proposed to take a set of measures to organize the marketing channels for agricultural products and limit speculation by intermediaries, as well as to speed up the reform of the wholesale markets by adopting a system open to competition and subject to compliance with specifications and by implementing regulations that clarify the internal functioning of the markets, the procedures for the eligibility of participants, and the new fee system.

In addition, the ESEC recommends developing short cooperative marketing circuits, promoting local trade and encouraging small and medium-sized farmers to group together in cooperatives, drawing inspiration from the approaches adopted by the sugar and dairy sectors. and to put in place a legal framework governing storage practices for agricultural products either for consumption purposes or intended for subsequent cultivation and making it possible to fight effectively against storage for speculative purposes.

The Council also recommends accelerating the digital transformation of the marketing of agricultural products, in particular through the design of digital platforms allowing farmers, on the one hand, to instantly access data on real prices in order to better negotiate with all stakeholders in the marketing chain, and on the other hand to directly sell part of their products, as well as to put in place a precise and enforceable regulatory framework to rethink and regulate the role and missions of the profession of the intermediary which clarifies its rights and obligations at the level of the marketing chain.

It is also a question of broadening the scope and increasing the frequency of operations relating to price control and respect for competition in order to fight effectively against speculative practices in the various sectors concerned by the rise in prices and to set up a « Prices and margins observatory », which could be hosted by the Competition Council, to help detect any behavior of unjustified accumulation of profit margins to the detriment of the purchasing power of citizens.