Region: Slovakia offers flour and pasta to the poor

By Beata Balognová

For The Slovak Spectator

Slovak Prime Minister Iveta Radičová says she has a plan to temper global rises in food costs: free pasta.

In an effort to allay concerns of low-income Slovaks who are having a hard time keeping up with their food and energy bills, Radičová and her administration have rolled out a plan that will create programs to distribute flour and pasta to those on state assistance and move to trim electricity bills.

But the plan has already provoked instant derision from the largest opposition party, Smer, which likened it to "ration coupons" for the poor.

Smer leader Robert Fico immediately attacked the government's proposal.

"Are we somewhere in the jungle where it is necessary to help the people in such a way that cars drive around and people throw flour and pasta, and this will be the solution to the unprofessional conduct and inability of the Slovak government to react to problems?" Fico said during an interview on Slovak Radio.

The Trade Unions Confederation (KOZ) also objected to the proposal, claiming the idea of giving away flour and pasta is an insult to human dignity rather than a solution.

The government will shortly adopt legislation that should at least partially reduce food prices, Agriculture Minister Zsolt Simon said after a recent meeting with Radičová and Economy Minister Juraj Miškov.

Simon is also charged with proposing a system to secure basic food products for poor families.

Radičová said that a cut in value-added tax on food products is being considered, although she admitted that a similar policy had not worked well in neighboring countries.

"We have considered this option, but experience from the neighboring countries confirmed that it does not bring the desired effect, which is a drop in food prices," Radičová said, as quoted by the SITA newswire. "This is why we sought other solutions."

According to Radičová, if the regulatory policies of the state are adjusted properly, a drop in food prices could be achieved.

Prices in Slovakia in January were 3 percent higher on the year and up 1.9 percentage points compared with December 2010. The Finance Ministry recently released a report claiming the 6.1 percent year-on-year rise in food prices recorded in January was caused by developments in global markets related to last year's very poor harvest for certain grains and legumes.

Fico insisted the situation is not caused by the weather or global markets but by what he called the seven-month rule of a "mash-up" right-wing government.

Most market watchers, however, did point to the weather, geopolitical influences, looser monetary policies by central banks, increasing demand in China and India, as well as the production of bio-fuels as being behind the price rises, according to the daily Sme.

A public tender has now been announced to process 45,000 tons of grain into flour and pasta for distribution to people eligible for state assistance, of whom there are around 180,000. The deadline for submitting bids is March 15.

Sme reported Feb. 24 that food tycoon Andrej Babiš is interested in participating in the tender. It quoted Jaroslav Kurčík, director of Agrofert, confirming that the firm, which is owned by Babiš, is considering a bid.

Energy bills

Miškov said there is also room for a reduction in energy prices but that it needs to be done in a manner that does not allow companies to take advantage of customers.

"We will appeal to the Regulatory Office for Network Industries [ÚRSO] to set regulatory policy so as to prevent monopolies from making inappropriate profits," he said.

Miškov also reiterated comments by the prime minister, who said the government would put great emphasis on good regulatory policy by the state.

"I am not disclosing any secret when I say that Slovakia has the highest energy prices among the V4 countries," Miškov said, adding that his ministry would not consent to regulatory policy that facilitated such high energy prices.

However, the head of ÚRSO, Jozef Holjenčík, said it is not true that Slovakia has higher energy prices. He said in the supply of electricity and gas to households, Slovakia has lower prices than the European average.

"Distribution fees are also below the European Union average," Holjenčík said, as quoted by SITA. "The prices are higher only for the transmission of electricity, and this is only as a consequence of integrating the 110 kV system during the privatization process into the distribution networks and not the transmission networks, as happened in other states."

Beata Balognová can be reached at news@praguepost.com