The Czech Republic grapples with a significant challenge in its food market— the dominance of oligopolies, hindering healthy competition and contributing to the rapid increase in food prices. While the country still boasts some of the lowest food prices in the European Union, the recent surge in prices has outpaced other European nations, raising concerns among consumers and experts.

Agricultural analyst Petr Havel identifies the lack of market competition as a key factor in the Czech Republic’s food market dynamics. A handful of major producers exert substantial control over the market, limiting options for consumers and presenting challenges for regulatory bodies. The issue is further complicated by the historical emphasis on industrial agriculture and food production.

Despite the recent price increases, Czech food prices remain relatively affordable in the long term, ranking fifth in the European Union according to Eurostat. However, the pronounced growth in food prices over the past two years is attributed to various factors, including higher energy prices, accelerated wage growth, and the impact of inflation affecting the costs of food production components.

Addressing the problem of oligopolies, the Czech antitrust office faces limitations, as existing laws do not classify any food company or retail network as a monopoly. The critical challenge lies in the collective influence wielded by a small number of significant food producers or sellers, creating an oligopolistic structure that limits market competition.

To tackle this issue, experts highlight the crucial role of the state in creating conditions conducive to increased competition in all aspects of food production and sales, spanning agriculture, food production, and retail. The primary tool for fostering competition is seen as a targeted reduction of bureaucracy, particularly measures that extend beyond the scope of EU legislation.

Looking ahead, the trajectory of food prices in the Czech Republic will depend significantly on the development of production costs. While certain factors, such as falling flour prices, may alleviate the cost of specific items like bread, challenges like adverse weather conditions impacting vegetable and fruit production may contribute to increased prices in the coming year. Addressing the oligopoly issue remains a priority to ensure a more balanced and competitive food market in the Czech Republic.

Article by Prague Forum