Cooperative societies are the solution to spiraling food prices, the head of the Saudi Consumer Protection Association (CPA) said here recently.

“Cooperative societies are the solution to price manipulation. Even though costs are low in the Kingdom prices are on the increase, which means there are illegal practices (taking place),” said Nasir Al-Twaim.

Al-Twaim was referring to the power of cooperatives to cut out intermediaries such as importers, wholesalers and retailers.

Cooperative societies import commodities directly at reduced costs. These savings are then passed to consumers.

He said other countries have successfully introduced these societies.

Al-Twaim said an earlier initiative by the government to set prices has failed because merchants did not implement it. He said some merchants had raised prices of certain goods by 200 percent.

Al-Twaim said Saudi consumers should form a cooperative society general commission, with a bank and investment arm.

He said the state could assist with a favorable tax regime, and the provision of land and other infrastructure.

He said Chinese cooperative societies recently signed an agreement where they would offer a 20 percent discount on any products imported from China. This type of deal would be beneficial for Saudi cooperative societies, he said.

Al-Twaim said the coming period would see merchants try to sell stored goods close to expiry. He said the CPA has launched an awareness campaign to educate consumers about the need to check expiry dates before making purchases.

An investor in the food industry, Abdullah Al-Ahmad, said the prices of food such as rice, sugar and milk has increased. Attempts to Saudize the sector has failed because Saudis are not prepared to take up jobs in the industry.

He said there has been an abundant supply of food in the market, which should have seen prices drop. The government’s Saudization program has also seen many people deported who violated the system, “but prices are still on the increase,” he said.

According to recent reports by the Central Department of Statistics and Information, there has been a 4.6 percent rise in the price of food in the country.