A meeting on the recent Social Resistance Package took place at Tirana Customs Directorate on Wednesday, with Prime Minister Edi Rama, importers, exporters and representatives of the basic food supply chain exploring ways to deal with hard and challenging times as war in Ukraine has disrupted the entire chain of trade ties in Europe and all over the world.
In these conditions, with the importers and suppliers activity being directly influenced by the current situation, Prime Minister Rama announced that the government will enhance its support through a sovereign guarantee fund in a bid to help enterprises operating in the supply chain of raw materials and basic food items to invest and spend more than usually now so that they can create additional supplies apart from the normal supply stock for any possible scenario.
“We have made available a sovereign guarantee fund for you all so that you can use it under full state guarantees for any bank loan aimed at securing more supplies than usually so that such additional supplies are available for a long-term scenario, because the stores are currently full under the written understanding that any excess or surplus supply will be taken by the state,” the Premier said.
Implementation and the effects of the government’s social aid package of seven measures aimed to support pensioners and vulnerable groups, private and public sector employees and farmers in the face of rising prices due to the global energy crisis and the conflict in Ukraine.
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Remarks by Prime Minister Edi Rama at meeting with importers, exporters and representatives of the basic food supply chain:
I am here today to express first my gratitude to you and others like you operating in the same sector for demonstrating your sensitiveness and readiness, not through words but through real facts by joining this common effort to cope with this disturbing situation that has affected whole Europe and every country throughout the world as a result of a really unique combination of crisis.
We are certainly fully aware that this effort and establishment of the two boards we have already set up to tackle this sharp problem is actually an anti-system effort, in the sense that that state’s intervention to set profit margins and ceilings is neither natural nor advisable given that we have chosen the free market economy system and the totally free market relations.
To this end, the government has made available a sovereign guarantee fund for you all so that you can use it under full state guarantees for any bank loan aimed at securing more supplies than usually so that such additional supplies are available for a long-term scenario, because the stores are currently full under the written understanding that any excess or surplus supply will be taken by the state.
This doesn’t mean you would create dead stock of unsold goods and therefore you would lose money because of a socially responsible investment in this case, not simply a business investment to be there for any possible scenario. This sovereign guarantee fund has been specifically approved for this purpose, so that every private sector operator in the supply chain of raw materials and basic food items is provided the opportunity to invest and spend more than usual now so that they can create additional supplies apart from the normal supply stock for any possible scenario. There is no doubt you would lose not a single penny in this operation.
I would also like to avail myself of this opportunity to focus on the power supply issue. Things are increasingly worsening in terms of the overall power supply situation. This is absolutely true since all countries face a totally unpredictable situation due to the rising power prices. On the other hand, what everyone fears most is not merely the increased price and costs, but the lack of energy. In other words you may seek to access the market but the market lacks power supplies. We have undertaken something we consider absolutely necessary to maintain a normal breathing for everyone in this difficult time and we have decided not to raise the electricity price for all households and small businesses.
I would like to point out two things; first, big businesses should start seriously looking for opportunities to operate independently of the power grid by generating electricity themselves, without pretending to become generators for Albania’s entire power system, because this would be considered threatening to the system in the current situation, not only in Albania but all over the world in terms of introducing a part of energy into system or electricity exchange.
In the meantime, the government is drafting a plan to provide incentives and support for the households. We would encourage households living in multifamily residences to invest in installing solar power panels for hot water, as well as businesses to generate electricity for their factories during the daytime.
We are also conducting a broad research for a possible second development and expanding the relation with the network, but today this investment in individual power self-generation and independently from the network and not connected to the main power network is at any time, in any case possible to connect to the network, it is not something that is left out, but at the moment to create a complete independence, full capacity to have and make up for the lack of generation.
The other aspect I would like to point out is the imperative to keep guaranteeing continued power supply and abide by our commitment and position that we won’t increase the electricity price.
Oil is the other side of the coin. Today, as we speak, the markets are increasingly finding it difficult to secure sufficient oil supplies, the most acute problem is not just the price, but to guarantee the sufficient quantities. This problem is so acute that it suffices to look at the efforts we are making to speed up a geopolitical shift that nobody has ever imagined and include Iran in the market after 47 years of sanctions.
The last thing I would highlight is that we will continue to support those most in need. There are over half a million individuals benefiting direct government support for the next three months, starting now. We will also support farmers and the agriculture sector by providing tax-free oil. And since we are talking about agriculture and given that many claim that “the country’s agriculture is over and it won’t survive this winter”, I would like to point out that Albanian agricultural exports rose 14% year-on-year in the first two months of 2022.
Albania’s agricultural exports totalled a laughable amount of $120 million, whereas agriculture exports have increased to a value of around half a billion dollars, including fisheries, but we should definitely work for the agriculture exports to grow to over $one billion. The other fact I would like to highlight is that we used to export one unit and import seven, while today it is an one to three ratio, meaning that agriculture imports have been halved, whereas exports have increased significantly and this means that the more local grown produce are offered in the domestic market than just a few years ago.
I now start my workday by looking at the price charts and I end my workday with these charts and I also check the international market oil prices four or five times a day.
Thank you.
Question/answer session with the participants:
– Good afternoon! As far as the sector our association operates in, namely the wheat import and flour processing sector, I would say that the sector has worked effectively and has yielded important results. We have succeeded to build sufficient stocks to meet the domestic demand and make sure that the market doesn’t lack these commodities. In the meantime we continue providing more supplies. To be more precise, a ship loaded with wheat is being handled at Durres port, whereas the first 22 trucks loaded with wheat will arrive from Serbia soon. The situation with the wheat and flour is back to normality and to the pre-crisis levels. Wheat price remains a sharp problem, but it doesn’t depend on us. I have proposed to include civil society representatives in the Board so that they can see the figures for themselves and stop labelling us and the facts and figures we release are stubborn.
We also welcome the support through the financial instrument or the sovereign guarantee fund, because, frankly speaking, working capital has tripled. This is all I had to say and I would like to point out that regardless of the situation, we insist that no problems will be encountered in terms of supplies.
PM Edi Rama: It sounds absolutely a positive idea that needs to be promptly considered so that Board meeting regarding basic products becomes totally transparent and so that you can publicly explain the price structure for everyone to see, whereas those who wish to keep interpreting figures and facts can definitely do so as we can’t stop them. Those wishing to go on fighting against facts let them do so. In my capacity as the Prime Minister, I can openly state that Albania has a flour milling industry, which guarantees not only the lowest price in the region, but it also guarantees highest quality within all export standards.
On the other hand, I would like to highlight the fact that opening the supply channel with Serbia doesn’t mean dependence, as it has been branded by some, because it is not that we are desperate as such to beg Serbia for help, but it actually represents the reopening of a supply channel already in place for over 20 or 30 tears, but which was temporarily closed after Serbia banned exports, just like many other countries are already doing in the wake of the Ukrainian conflict. Turkey is a very friendly country, but it doesn’t export wheat and as such it can’t help us. I am not saying that Turkey has told us it won’t help us, but this is what it has been telling to all other countries. Thanks to the Open Balkans, these supply channels are open to North Macedonia and Albania, which is something very positive, I think, and which also clearly shows – even though this is not the case to focus on it, but since we are talking about it –the Open Balkan initiative is after all to the benefit of the Albanian exporters and importers, who are attending this meeting, and it is not for the politicians and not for the grandiose geopolitical schemes of the Albanian turbo-folk. The initiative precisely represents the opportunity for everyone to take advantage of a relationship within a much larger market. It is as simple as that.
As far as the small business is concerned, I would like to underline that the government will continue to strongly persist and deliver on our commitment that the electricity price is not increased and no taxes will be imposed on the small businesses. Albania is the only country in Europe to apply a zero profit tax rate and zero VAT rate on small businesses and it will remain that way. It has clearly yielded its positive results. Whole chain will be completed with the fiscalization reform and small businesses will pay the social and health insurance contributions only and nothing else.
We have witnessed a sound and healthy small business growth, we have witnessed growth in the number of small businesses and we wish to see as many Albanians as possible engage and involve themselves in this category of self-employment and small business employment, which represents the basis for further growth. To this end, small business will be the most privileged one in our relation with the whole business world. Meanwhile, as far as big business is concerned, I already assured them that they will face no further tax increase, since a 15% tax rate is levelled on them, the highest in the region, and efforts to generate electricity themselves.
– As far as cooking oil price is concerned, we are all aware of the fact that the two countries in the armed conflict today, namely Russia and Ukraine, account for 80% of world cooking oil production, and it is impossible to meet the domestic need with the remaining 20%. Understandably, it is impossible to speculate or guess whether all the oil supply the two countries are accounted for will remain there or it would be destroyed by the war. This oil stock can be made available, but we face another serious problem. It is known that the sunflower seeds are generally planted in March. Meanwhile, Ukraine accounts for over 44% of world sunflower production and sunflower planting is not taking place for reasons we all now know. So, the problem of high cooking oil prices will continue and prices are not set by Albanian manufacturers or suppliers.
What we can say about the Albanian government commitment by making available a sovereign guarantee fund for cooking oil importers is extremely important, because we believe that it is the only industry that will accumulate most of the stocks compared to what happens with other industries. Let us not forget that Russia and Ukraine account for 24-25% of the global export of wheat.
I would also like to point out something else. Some claim that cooking oil prices are quite low in the countries in the region and in Europe. This is absolutely not true! Cooking oil price in Greece ranges from 4.5 to 5 euros today. The same goes for Italy. Sales of the cooking oil in Germany are even limited, only one liter per person a month. The same in France, also Italy has blocked any oil exports. So we face a difficult situation in this regard.
PM Edi Rama: Thank you very much and I repeat that the Board meeting should focus not only on the joint work, but it should also be a meeting to inform the public, and as such they should be well-prepared and in full transparency. The public needs to follow the whole discussion on prices, what is going on with the markets, the situation with the supplies so that no sense of insecurity is fuelled, because there should be no room for insecurity. We are really calm in this aspect as you have sufficient supply stocks, but there is room for much joint work and therefore we are making available the sovereign guarantee fund for you to purchase more supplies.
In the meantime, we are committed – and you know it quite well – we are committed to creating conditions, helping you to secure supplies by accessing new channels you can’t normally secure after having been closed or narrowed due to the current situation.
-We have tried to cope with the situation that is normally having its impact on bread producers. We went through an initial shock and this sector was in panic.
We have set up working groups to hold meetings with our colleagues across the country’s districts, with our efforts focusing on ways to deter further bread price increase or tackle bread supply issues. The bread price hasn’t recorded an extreme increase – I mean normal bread price – however we are facing some troubles due to the increasing flour prices. Flour prices have increased significantly. We have never been facing such high flour prices, yet our bread producers union is making whatever we can and whatever it takes to avoid any problem in terms of supplies and in maintaining the balance of prices.
PM Edi Rama: Thank you very much. This actually helps us a lot. When it comes to the agriculture inputs and all the necessary support elements for the country’s agriculture sector, we are actually encountering some problems. It is pretty clear to us and it is of course pretty clear to you. It is not a problem-free sector and it has actually gone through some serious problems that have definitely affected certain companies and individuals. We have identified problems regarding the seeds, pesticides and the Ministry of Agriculture has actually a lot to do in terms of disciplining this whole sector.
I would like to thank each and every one of you and I very much hope and look forward to seeing this cooperation going on so that we can all together work and contribute to the efforts to relief the public as much as we can and defend the public from the disinformation, manipulations and insecurity caused through groundless reports and interpretations.
Thank you very much!
