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Increasing dairy prices prepares and warns of uncontrolled main goods' prices.
The Economic Council calls for interference,, and dairy companies get 50% annual profits.
Published in Alriyadh on 10 - 07 - 2011

The negative reaction from the wide classes of the consumers increased after the continuous increase of dairy products' prices by the dairy companies in the local market. This created a continuous concern to the consumer of the instability of one of the main goods especially that Ramadan is approaching where the consuming bills increase for the individuals and families due to the yearly practices of the retail and wholesale traders that make use of all circumstances to raise the prices in unjustified manner.
"Al Riyadh" made a lot of calls with the Ministry of Trade during the previous days to get explanations of the rising prices case of the dairies, but it was not possible to get an answer in such regard. Commenting on that, the economic counselor Abdulrahman Al Zoman, member of the Global Association for Risk Professionals GARP, said to "Al Riyadh" that the sudden increase of dairy prices by the companies without any precedents is considered to be a flagrant challenge to the government efforts that seeks to provide logical basic goods' prices.
He also stressed that such practices acquire huge negative influence on the prices of all goods during the coming days especially before Ramadan month, where the retail traders also get their illicit share from the pockets of citizens through exaggerated prices.
He also added that the companies should have decrease the prices o their products because of the huge profits they are making in very high rates compared to other sectors, benefiting from the unlimited support that the government give in providing the basic goods as am effort to make them available in reasonable process for the consumer inside the kingdom. This is done thorough advertisements, free loans, service facilitations, free lands, customs exemption, open visas and government direct purchases from these companies without any fees or taxes as it is the case in the other world countries. This is all an effort of the country to provide the citizens and residents with the basic goods with reasonable prices instead of the companies' greed of making outrageous profits that violates the current international economic situation on the expense of the goals that the government supported.
He also pointed that the goods market in the kingdom is a free market in which the prices are left for the supply-demand factors, but when it comes to the basic goods then most countries make strict regulations for those that control or manipulate the prices, and they may get fined.
He quoted that these local dairy companies created a union in 2008 and agreed on raising the dairy prices suddenly without any precedents up to 33% in one day, while the Trade minister back then was calling for bringing back the prices to what they were on but the companies denied that and continued its control by selling with the new prices up till today. This action the dairy producers back then created a direct influence on the prices of the other goods in the kingdom where the prices increased significantly and all companies started increasing its prices with unjustified excuses.
He also stressed within the same context that it is time for the Ministry of Trade to practice its duties quickly to stop this new increase of prices through prohibiting and fining the dairy companies that raise its prices without any justification that claim that the production inputs prices are rising although that their financial lists indicate the opposite with their huge profits.
Al Zoman requested the Higher Economic Council to relook those that violate the higher economic principles of this country by prohibiting them from all facilities they acquire, saying that these companies want to cover up their administrative failures on the expense of the citizens' money to provide liquidity.
He also said that it is enough insuring that rising the prices of one big company of theses companies by 7% will make it get additional annual net profits that reach around 500 million Riyals without any right or effort.
He also pointed that the dairy companies forget the support reasons given to them from the government and ignores them through these actions while they make profits that reach 50% or more of its capital.
Al Zoman also showed that it is the responsibility of any company that wants to raise its product's prices to submit a request to the Ministry of Trade and justify its desire of increasing the prices and support it by evidences, while it shouldn't be related to administrative issues but to external uncontrolled issues such as the increase in the prices of input products globally and under the condition that this company made losses in the previous financial year. The increase shouldn't be more than 5% of the previous price and the consumer should be given a 6-months time prior to applying the new price.
The Economic Counselor called the Ministry of Trade to investigate the companies, industries and importers through sudden and continuous investigation visits to insure that none of them will exaggerate the prices and to punish the violators through warnings of strict fines and slander, and in case they redo it then they get prohibited from the support and facilitation that they get from the government, and if the violations still continue then the responsible managers get imprisoned because it is concerned with a basic goods in the food security system


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