Czech farmers ask gov't for help

Food prices will rise about 3 percent as a result of the government's plan to raise the lower VAT rate from 10 percent to 17 percent as of 2012, Agriculture Minister Ivan Fuksa speculated Oct. 2 on the Václav Moravec TV talk show, another potential blow against an industry struggling with rising utility costs, taxes and poor protection against cheaper foreign imports.

The prices won't match the VAT rate increase thanks to competition between supermarkets, he said. But retailers believe that prices will not only follow the VAT rate hike more closely, but stores will have to raise prices because of energy costs, which are also forecasted to rise in the next couple of years, said Czech Confederation of Commerce and Tourism Vice President Petr Vyhnálek.

Any price growth is going to directly hurt domestic agriculture, Jan Veleba, president of the Czech Agricultural Chamber, said on the program and repeated to The Prague Post. Foreign imports will gain an even larger share of the domestic market, he said.

"The amount of imported food increases each year. This year, for example, 50 percent of our pork is imported," he told The Prague Post. "I estimate the negative balance of our agricultural foreign business will be more than 32 billion Kč. A lot of that is from our neighbors Austria, Germany and Poland. Why doesn't it also happen the other way around, from us to older EU-member countries?"

Veleba raises a question most farmers and producers are considering: Why are foreign agricultural imports outperforming domestic products? Standards created by the Agricultural Ministry can even be harder on Czech-produced foods than imports coming in on the EU open market, a problem Fuksa has promised to address, by "softening" standards on some domestic products.

Despite what Veleba said is a promising minister, compared to previous ones, the domestic sector has organized itself into the Producers' Initiative, a lobbying group founded by seven major agricultural businesses and claiming the support of 600 smaller producers and farmers. Their proposal, presented at a Sept. 10 meeting with Fuksa, outlines six points they hope the government will consider.

Those requests include halting the decline of domestic livestock numbers, more rigorous quality control for imported food and goods, a reduction in the bureaucracy for food standards, marketing and promotion for Czech products and the promotion of agricultural biogas plants. A sixth point concerns the common agricultural policy (CAP) of the EU, which will level the playing field for the Czech Republic even more after 2013. A public debate on the CAP ended in June, and the EU expects a proposal by the end of this year to reform CAP at the start of 2013.

The Agricultural Chamber is cooperating with the initiative closely, and Veleba praised the idea of putting more weight behind the proposals, but the ideas are ones the industry has struggled with for years, he said.

"When we unite our forces we will create synergy and increase our negotiating ability. The Initiative's goals are not anything new, it is the same collection of Czech agricultural problems which we have been studying for a long time," he said.

Older member countries have detailed systems on protecting domestic products, Veleba said, like in Germany, for example, where chickens even used in laboratories must be of German origin.

"So it is not the Czech state that is protecting its production in defiance of EU directives but some of the old 15 member countries," he said.

The first two requests from the Producers' Initiative have to do with producers who are "beating at the open door," said Agriculture Ministry spokeswoman Tereza Dvořáčková, in a sense having problems getting a foothold in their own market. Some of the proposals would be impossible because of EU rules and legislation, she added, but the minister is already working on some of the issues.

"For example, the elimination of unnecessary bureaucracy and quality foodstuff promotion are among Fuksa's priorities, and he has already taken some steps," she said. "The 'Klasa' quality mark [which designates Czech products] has existed for seven years, and a regional food promotion project started this summer."

One example of excessive bureaucracy the group has brought to Fuksa's attention has to do with animal transportation. Czech authorities don't distinguish between livestock farmers and independent transporters, thereby forcing experienced animal farmers into classes and training courses meant for commercial transporters.

While the Czech authorities are able and willing to help domestic producers, it cannot be directly to the disadvantage of imports coming from other EU member states.

"It is not possible, of course [to disadvantage EU producers]. In this respect, the Producers' Initiative cherishes hopes and unrealistic expectations," Dvořáčková said.

Claire Compton can be reached at
ccompton@praguepost.com