JEDDAH, 5 January 2008 — The Ministry of Commerce and Industry announced yesterday that prices of food products could go up by a further 20 to 30 percent this year due to a worldwide shortage.
In its annual report on supply and prices, the ministry also blamed the declining exchange rate of the US dollar, fall in agricultural produce caused by drought and hike in export duties for the record increase in prices of essential foodstuffs.
The report comes a day before Commerce and Industry Minister Hashim Yamani, in a bid to contain milk prices , was due to hold a meeting with directors of milk-manufacturing companies in the Kingdom at his office in Riyadh.
“The meeting is aimed at discussing how to bring prices of milk and other dairy products back to their previous levels,” an official statement issued by the ministry said yesterday.
Some producers of dairy products increased their prices by 20 percent on Thursday, raising alarm among Saudis and expatriates.
The ministry emphasized its basic role of organizing the market and supervising supply of goods and their prices when necessary in the light of the Law of Competition decreed in 2004.
“Article Four of the law bans any practice or agreement or contract between competing institutions... if they are aimed at restricting trade and violating competition between institutions,” the ministry statement said.
The same article also bans any major institution from controlling competition between institutions in any way “especially by controlling prices of goods and services that are meant for sale, by either increasing or decreasing or stabilizing prices or through any other manner, harming fair competition,” it added.
The minister’s meeting with dairy producers comes after complaints that his ministry was doing nothing to control skyrocketing prices of essential commodities including rice, milk and chicken.
Last year too, Yamani held a series of meetings with importers and supermarket owners to create “a strong and fair competition environment and ensure adequate supply of commodities,” the ministry said.
However, Adel Al-Otaibi, a teacher, called for activating the consumer protection commission in order to protect the public from greedy traders who increase prices of commodities without any specific reason.
Abdul Rahman Al-Shahri, a bank employee, urged the ministry to monitor markets on a daily basis and take action against those who increase prices of commodities such as rice and baby milk that are subsidized by the government.
Custodian of the Two Holy Mosques King Abdullah last month gave orders to the Ministry of Finance to subsidize rice at the rate of SR1,000 per ton. He also increased the subsidy for baby milk from SR2 to SR12 per kg as part of efforts to reduce the financial burden on the public.
The announcement made both Saudis and expatriates happy and they expected the government to take further steps to reduce the growing burden caused by increasing prices of essential commodities.
Mohammed Shaker Al-Dahlawi, director of compensation at the Ministry of Transport, urged the government to increase salaries of employees as quickly as possible in order to alleviate public suffering caused by increasing prices.
“Subsidies given to a few commodities will not be enough to reduce the difficulties of the public caused by price hike,” Al-Dahlawi told Arab News. He also pointed out that traders were not ready to cut prices of rice and baby milk even after the subsidies. “In my opinion, all government departments as well as private companies must increase salaries to help their workers cope with the present situation,” Al-Dahlawi added. He hoped that milk producers would cut prices, taking minimum profit.
In its annual report, the ministry said prices of American rice increased by 23.6 percent last year as a result of worldwide demand and decline in production. Concomitantly, prices of Indian rice rose by 33 to 52 percent and Pakistani rice by 25 to 57 percent.
Price of Nido milk rose by 35 percent, Klim 16.2 percent and Coast 17.2 percent during 2007, while prices of cooking oil rose by 12 percent, chicken by 9.5 percent and barley by 89 percent, the report said.
