On March 31st, an inhabitant of the southwestern Lithuanian town of Vilkaviskis posted a photo of a cashier's receipt for the purchase of a head cauliflower. The receipt indicates that one head of cauliflower costs 3 euros 49 cents. Soon tens of thousands of Lithuanian Facebook community members exploded with anger over skyrocketing food prices in the country. Food prices became the number one story on social media: Lithuanians spontaneously announced a three-day boycott, between May 10 and 12, of all four main supermarket chains in Lithuania, Maxima, Iki, Rimi, and Norfa.
According to Laurynas Vilimas, executive manager of the Lithuanian Retailers Association, the four boycotted supermarket chains control 80 per cent of the retail market in Lithuania while 10 per cent is controlled by retail cooperatives (such as Aibe), and the remaining 10 per cent is controlled by sellers at farmers’ markets. The latter sell products from individual local farmers as well as imports from other countries, including neighbouring Poland, where food in supermarkets is cheaper than in Lithuania.
Poland’s value added tax (VAT) for local fruit and vegetables is 3 per cent, while Lithuania’s VAT of 21 per cent is imposed on these products. It is why many Lithuanians, especially those who live close to the Lithuanian-Polish border, go mass-shopping in Poland.
Seasonal vegetable price fluctuations?
Nerijus Maciulis, the chief economist at Swedbank, argued that the growth of cauliflower prices is justified and caused by a seasonal hike in the world market. “I know that there is a temptation to accuse somebody, but the price of cauliflower grew not due to the euro introduction and the greed of farmers or retailers. The weather was simply too cold for cauliflower,” Maciulis wrote on Facebook, pointing out that prices of cauliflower in supermarkets in the US, Canada, and New Zealand are even higher than in Lithuania.
However, many Lithuanians, who recently moved to live and work in western Europe, published photos of vegetables and their prices in foreign supermarkets as well as photos of promotion leaflets and Internet pricelists of western supermarkets on Facebook — they showed that the western European prices are lower than in Lithuania. For example, a cauliflower in the low-cost Aldi chain’s supermarket in England costs 89 British pence (1.15 euro), more than three times less than in Lithuania.
On May 9, Statistics Lithuania, the Lithuanian government’s department of statistics, reported that prices of commodities and services increased by 0.9 per cent in April 2016, as compared to Dec. 2015. However, Statistics Lithuania pointed to a 17.4 per cent hike of most popular vegetable and some fruit prices in April 2016, as compared to March 2016. The price of cabbage increased by 59.5 per cent, potatoes by 34.5 per cent, cucumbers and tomatoes by 14.6 per cent, garlic by 9.1 per cent, lettuce by 7.4 per cent, lemons by 3.8 per cent, and pears by 3.6 per cent.
Maxima blames Russia for consumer boycott
On May 6, the Maxima supermarket chain showed some signs of panic by blaming Russia for the coming boycott. Renata Saulyte, head of the communication department of Maxima, stated that her company will appeal to the Lithuanian State Security Department to find out if some pro-Kremlin forces are involved in the organisation of the boycott. However, on the same day, a few hours later, Maxima issued a press release quoting Maxima Secretary General Zydrunas Valkeris, showing that Maxima realised the danger of describing its potential shoppers as pro-Moscow activists. “Today’s information about intentions of Maxima to appeal to the State Security Department and other institutions to find out if discussions regarding rising food prices are initiated by Russia is a blunder. I would like to apologise (to the) Lithuanian people for such (a) statement,” reads the May 6 Maxima press release quoting Valkeris.
The boycott between May 10 and 12 manifested as follows: there were fewer people in supermarkets, but supermarkets were not empty. Spokespersons of supermarket chains and Internet surveys of the Lithuanian media presented different results — the truth lies somewhere in between. According to media reports, the boycott was the most successful in Lithuania’s port city of Klaipeda.
All of the supermarket chains’ spokespersons spoke out about the numbers of shoppers, which were just slightly lower than usual. For instance, on Tuesday, May 10, the first day of boycott, Rimi reported about 8 per cent fewer shoppers than on the previous Tuesday; Maxima reported about 5 per cent while Iki reported only about 2 per cent. With regard to May 11, the Rimi spokesperson estimated a slight increase of 10 per cent as a result of the boycott.
Food retailers slashed prices
On May 12, the third day of boycott, Rimi announced massive 20 per cent discounts — as a result, Rimi supermarkets seemed to be more popular than other supermarket chains. On May 14, the first day after the boycott, Maxima had massive sales with several 40 per cent discounts on many items.
In the summer of 2016 (the exact date is still a secret), Lidl, a German discount supermarket chain, is expected to enter the Lithuanian market with the massive opening of its supermarkets throughout Lithuania — it could possibly lower the food prices in Lithuania, at least during the early months when Lidl will need to attract shoppers.
Source: baltictimes.com