Lebanon News

Hassan declares crackdown on large profit margins during food crisis

GHOBEIRI: The sharp jump in food prices in recent weeks should level off by the end of November, but the government is preparing for a long-term crackdown on merchants and middlemen who reap huge profits from price fluctuations.

Hussein Hajj Hassan, the agriculture minister, said Thursday that the weekly Cabinet session held the day before had endorsed the reactivation of a mechanism to set acceptable levels of profits on various agricultural goods.

Hajj Hassan, who held a news conference at his office to discuss the issue of food prices, said the country was facing a “true crisis” as a result of prices soaring on items such as tomatoes and other vegetables, as well as beef.

He distributed a number of press clippings that outlined similar problems in neighboring countries, as well as Argentina and Brazil, maintaining that a series of weather- and other supply-and-demand-related factors were partially to blame for the spike in foodstuff prices.

A ministry report noted that in the last four months, prices for tomatoes alone have risen by nearly 100 percent, and almost 400 percent in the case of one variety.

However, he said the government could no longer tolerate the huge mark-ups that merchants were adding to prices, describing how farmers might sell their crops for LL1,000 a kilo, with the good then sold for up to four times that much in local markets.

“We’re focusing on profit margins, profit margins, profit margins,” the minister said.

Hajj Hassan complained that several years ago, an unidentified minister abolished a legislative decree that permitted the government to set profit levels.

He was referring to a step by Economy Minister Sami Haddad in 2006, according to Zuheir Berro, the head of Consumer Lebanon, a watchdog group. Berro was on hand for the news conference to praise the minister’s actions.

Hajj Hassan said Haddad had issued a ministerial decision to cancel the legislative decree, which was blatantly illegal, since the latter is tantamount to a law. A “reasonable” amount of profit should be made, Hajj Hassan argued, but there was no going back on the need for state oversight.

Hajj Hassan also spoke out against people “exploiting” the rise in food prices to attack his recent decisions on strengthening oversight of chicken and meat imports. Hajj Hassan said a local newspaper had run remarks by a critic of his decisions – the minister distributed official copies of them, which showed that they would not come into effect in December.

Hajj Hassan also described being pressured by local merchants, who were lobbying against any state oversight. He said they opposed the formation of any oversight committees covered in his recent ministerial decisions on meat and chicken imports, as well as engaging in unfair practices to prevent imports from certain countries by rival merchants.

Hajj Hassan declared that businessmen could now import meat freely from countries like Australia, Romania and Sudan, pledging to break monopolies.

“In the past, at these news conferences, I haven’t mentioned anyone by name,” he said. “I haven’t ‘reacted’ [to the campaigns against me],” he said. “But I won’t be stepping back, either. Next time, I will name names.”

As for the crackdown on profit margins, Hajj Hassan said his ministry and the Economy Ministry were cooperating fully on the matter, and that meetings under the auspices of Minister Mohammad Safadi would begin tomorrow.

The original decree sets a maximum of 27 percent in profits to be made by various middlemen on basic foodstuffs and domestic goods.

Hajj Hassan said he expected prices of tomatoes and other vegetable to abate in the next few weeks, but said a return to more favorable conditions on the meat front would have to wait until the end of Eid al-Adha, which falls on November 16. High demand for meat should continue until then, he said.

The minister said the Cabinet, under President Michel Sleiman and Prime Minister Saad Hariri, was committed to enhancing the agricultural sector, and added that Wednesday’s Cabinet session included a historic decision on wheat production, but declined to go into the details.

Hajj Hassan said the long-term goal was to improve Lebanon’s food self-sufficiency, but without using bans on either imports or exports, which he said ended up hurting bilateral economic relations with trading partners.

From the current ratio of 80-20 in terms of imported food-to-locally produced food, Hajj Hassan said the objective should be arriving at a situation of 60-40 over the next three years.

Berro thanked Hajj Hassan for his recent steps and told the news conference that his consumer watchdog had received a stream of recent complaints about price rises on other goods.

He said merchants were taking advantage of the increases on specific foodstuffs and trying to raise prices on items like milk, sugar and cooking oil.

“We’ve had dozens of calls in the last three days,” Berro said.

 

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