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October 3, 2022

Sugar, more expensive in Romania than in all countries in the region

In Romania, the average retail price for a kilogram of sugar is 1.6 dollars, over four times higher than that traded on the stock exchange, 35.9 cents per kilogram (at the end of June), according to an X-Trade Brokers Romania analysis . The retail price for sugar has been continously increasing since 2006, even though the stock exchange quotations for sugar have been constantly dropping over the past two years. For example, in early June this year, sugar was traded on the stock exchange at its lowest level in three years, with 28.6 cents per kilogram, about 40 pc less compared to 2011. During this period, contrary to the evolution of the stock market, the retail price has increased by around 25 pc. However, even under these circumstances, the sugar sales have continued to rise in Romania, both to retailers and soft drinks manufacturers. For example, Agrana, one of the greatest players on the sugar market, registered a sales increase of 19.8 pc last year on the local market.
The same trend of retail price increase can be observed also in other European countries, but not at the same magnitude as in Romania. Moreover, in all these countries, sugar is sold more cheaply than in Romania. Thus, the average retail price for a kilogram of sugar in Poland is 1.2 dollars, in the Czech Republic 0.9 dollars and in Bulgaria 1.4 dollars.
The price in stores is high in Romania because of the VAT rates, undifferentiated for basic goods, which are taxed similar to other goods, by 24 pc. Unlike our country, most EU member states apply a reduced VAT rate on basic goods, which vary between 5% and 20 pc. However, even excluding the contribution of the VAT, the price in Romania is the highest in the region (1.3 dollars in Romania compared to 1.1 dollars in Poland, 0.8 dollars in the Czech Republic and 1.2 dollars in Bulgaria). Even in Hungary, the only European country to have a VAT level higher than in Romania, undifferentiated for basic goods as well, sugar has a lower price, 1.4 dollars per kilogram.
Another factor that contributes to the price increase that the final consumer pays are the administrative and production costs. However, practice shows that this component does not normally exceed 20 pc of the final price. Also, in Romania, productivity is relatively low compared to western countries – the average local production is of 40 tons per hectare, while the western countries obtain 60 tons per hectare.

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