Monday, January 09, 2006

Producers abandon dairy price increase :: Gulf News


Dubai: Co-ops have resumed selling dairy products and fruit juices at December prices after producers gave up their attempt to raise prices to offset rising operating costs. After a meeting between the representatives of the dairy and juice association and co-op officials last week, the producers agreed to maintain the previous prices.

Dr Ahmad Al Tejani, Chairman of the Diary and Juice Producers Group, said all parties had agreed not to increase prices. "A meeting will be held after the Eid Al Adha holidays to discuss the need to reduce production costs and shelf fees," he said. "The group does no seek to monopolise the market," he said, adding that the problem was the rising cost of production. There is a need to find a solution to reduce costs, he said.
That sounds like doubletalk to me. Until the government took a dim view of the latest attempt to raise prices, the group was acting as cartel.

Official sources told Gulf News that the backdown by the dairy companies was a result of pressure exerted by the Ministry of Economy, the Ministry of Finance and Industry and the Ministry of Labour and Social Affairs. The three ministries stressed that the Council of Ministries decision regarding
price stability was non-negotiable. The source added that the decision by Saudi dairy giant Al Marai to maintain December prices considerably weakened the fruit and dairy association's case.
Isn't it interesting that a foreign dairy wanted to sell to UAE customers at prices lower than the UAE cartel had wanted to?
The agreement to keep the original prices was achieved after the co-ops said they would study the rate charged to producers for shelf space. The co-ops will also help to reduce production costs through combined marketing activities.
Ah, so the story is not simply that the cartel backed down.

Abdullah Al Saleh, Assistant Undersecretary for Economic Affairs and International Co-operation in the Ministry of Economy and Planning, warned that the ministry would take punitive action should a producer try to impose higher prices for its products.

"The Cabinet decision lifting protection on 16 commodities ended a monopoly."
That's cryptic. What does he mean?



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