BT published an article about a study that reveals a clear gap between raw material prices and consumer selling prices.
According to BT, Henning Otte Hansen, a senior consultant at the Institute for Food and Resource Economics at the University of Copenhagen, revealed the findings of a new study indicating a clear imbalance in the Danish food market. The study, which tracked food price trends over the past fifteen years, showed that consumers are paying significantly more than is justified by the cost of raw materials on the global market.
According to BT, Henning Otte Hansen indicated that the market is not working properly, explaining: “There is an imbalance. We are facing an inefficient market in which consumers are paying excessive amounts for products,” in a statement he made earlier to the Jyllands-Posten newspaper.
Cocoa and bread prices are glaring examples of the dysfunction.
Hansen explained to BT that this defect is clearly visible in several products, saying:
“We can take chocolate as an example. Since January, cocoa bean prices have fallen on global exchanges, but chocolate prices in stores are still rising.”.
He added that the same situation applies to bread, saying: “The price of raw wheat has now returned to the level it was at in 2020, yet the price of bread in stores has increased by 27% since then.”.
The expert noted that this pattern is repeated across Europe, adding: “There is a significant slowdown in price reductions at the retail level. I estimate that prices in stores are between 10 and 151 TP3T higher than what is paid in raw materials markets,” according to BT.
Call for improved competition and market monitoring
Regarding possible solutions, Hansen told the source: “The first step is to highlight this problem, and fair competitive conditions in the market must be ensured.”.
He pointed out that prices in stores rarely decrease, as data showed that since 2020, and during 69 months, prices in stores have decreased only three times, while they increased in the remaining months.
High rice prices despite lower global costs
The Danish expert continued, saying:
“I studied rice prices at four different exchanges in Vietnam. Global prices have now returned to pre-2021 levels, yet rice prices in stores continue to rise.”.
He added that rice does not undergo complex manufacturing processes or multiple production stages that justify this difference, unlike products such as bread.
Hope for lower prices in the long term
Despite the bleak picture, Henning Otte Hansen sees glimmers of hope, telling the source: “In the long term we will indeed see a decrease in food prices, because production costs are falling in several areas. But it is difficult to determine how long this will take.”.
The study concludes by emphasizing that the imbalance between raw material prices and consumer prices has persisted for more than 15 years, making it difficult for consumers to remain optimistic when they look at the prices of butter, milk, and meat in shopping carts, although a potential future decline may gradually alleviate this gap.
