Grains Com­mis­sion needs ur­gent facelift, says de­part­ing vice chair­man

Financial Mirror (Cyprus) - - FRONT PAGE -

The Deputy Chair­man of the Cyprus Grains Com­mis­sion, es­tab­lished in 1960 as a state-con­trolled mo­nop­oly to en­sure low prices for grain im­ports and main­tain the coun­try’s strate­gic re­serves, re­signed this week, but urged the gov­ern­ment to re­struc­ture it and make it more com­pet­i­tive to ben­e­fit farm­ers and con­sumers.

In his res­ig­na­tion let­ter sub­mit­ted last Wed­nes­day on the grounds of in­creased pro­fes­sional com­mit­ments, Alexis Tsielepis said that he worked hard dur­ing the past 13 months, de­spite the nu­mer­ous in­ter­ven­tions and un­der­min­ing of the Com­mis­sion’s work. His con­clu­sions are that the state should get more in­volved and make the Com­mis­sion more com­pet­i­tive to keep grain prices at low lev­els and to en­sure the un­in­ter­rupted sup­ply both to farm­ers and to house­holds.

Num­ber­ing the prob­lems at the Com­mis­sion, Tsielepis noted that those in key po­si­tions did not work in a proper man­ner to face the prob­lems, but with the bless­ing of past gov­ern­ments “kept the ship afloat, with the hope that it would some­day reach a safe port and not sink.”

“There is no free com­pe­ti­tion in the grains mar­ket, as ev­i­denced from the short­falls in the CGC’s stores. Un­til the next ship­ment is re­ceived, com­peti­tors take ad­van­tage and hike prices. There seems to be some col­lu­sion, a car­tel even.”

But Tsielepis said that the big­gest prob­lem was Com­mis­sion’s high op­er­a­tional cost.

“Us­ing sim­ple math, the CGC needs to at 25 eu­ros a tonne to its buy­ing price to cover wages. Of th­ese, 16 eu­ros go di­rect

the to the pay­roll. If the CGC’s com­peti­tors need a 5-6 euro mar­gin to cover their own costs, in­stead of adding a rea­son­able profit mar­gin and sell­ing their grains at 8 to 10 eu­ros a tonne, they sell 16 or 18 eu­ros a tonne, thus mak­ing su­per prof­its and still ap­pear­ing more com­pet­i­tive than the CGC prices. In other words, through its high pay­roll, the CGC is con­tribut­ing to main­tain­ing prices at high lev­els, with the whole of Cyprus bur­dened with higher prices for bread, milk, sou­vlaki, hal­loumi, etc.”

Tsielepis said that there is a need for a com­pet­i­tive grain’s com­mis­sion, but based on new foun­da­tions, and not nec­es­sar­ily shut­ting it down or pri­vatis­ing it, as some part of the me­dia have sug­gested.

“I am con­vinced that if the CGC closes down, the mar­ket will be­come an oli­gop­oly by some sup­pli­ers who will con­tinue to im­pose car­tel con­di­tions, with prices con­tin­u­ing to rise, as a re­sult,” he said, adding this would im­pact the con­sumer bas­ket by rais­ing the prices of bread and any flour-based goods, as well as dairy prod­ucts and meat.”

The “provoca­tive salaries” that some re­fer to as an ex­cuse to shut down the CGC are no dif­fer­ent from the ad­mit­tedly high wages in the public sec­tor, while the idea to change the CGC’s role to that of a reg­u­la­tor has a real risk of fail­ure, as is the case of other reg­u­la­tors, Tsielepis said.

He ex­plained that ac­cord­ing to the plan, the CGC would main­tain its strate­gic silo in Li­mas­sol and es­tab­lish a new CGC com­mer­cial en­ter­prise, both state-owned.

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