Where Do Legumes Become More Expensive?

At the ninth session of the specialty commission of food and tobacco wholesalers at Iran's Guilds Chamber, the price gap for legumes between the supply stage and store shelves was discussed. What factors cause a product's price to change from production to store shelf?

According to Ambassador Arjan, Mohammad Ali Khorasani, the head of the National Union of Chain Stores, explained the factors affecting the price of beans, and announced the dispute over how to apply new rates to the goods available in the stores and emphasized that the price review of these items should be done according to the production conditions, packaging costs and the supply process.

The price of beans depends on various factors and cannot be explained by only one factor. Part of the price changes is related to production conditions and harvest season, and another part is related to the degree of dependence of the product on imports and its supply status. Therefore, to analyze the price of this product group, the entire chain from production to final supply should be examined.

For example; This year, based on the information presented in the meetings, the level of legumes has increased and there has been a good production. It is natural that when the amount of production of a product increases, it is possible to reduce the price in the market if the supply continues and it is appropriate to the market's needs. On the other hand, the decrease in the production of an agricultural product can lead to an increase in its price. For this reason, the conditions of production and the decisions made before the cultivation season play an important role in the future state of the market.

With the increase in the production of pulses, it is expected to see a decrease in the price in the consumer market. Does this decline occur equally across all delivery methods, from bulk to packaged products?

Not necessarily. In bulk sales, the price of the product is calculated according to the rate of the day of purchase and its base price, and a proportional profit is also added to it. When the price of the raw material decreases, this decrease can be reflected in the wholesale price. But in packaged products, the matter is different. The final price is not only dependent on the price of beans and packaging costs also contribute to it. At some point, the price of raw materials had decreased, but this decrease was not reflected in the same proportion in the price of packaged products, and this issue led to consumer protests and the sensitivity of regulatory agencies.

Following this issue, the consumer and producer support organization entered into the investigation and decided on how to calculate the price of packaged products, taking into account the daily price of beans, packaging cost and proportional profit. The goal was to make the price of the final product more suitable to the new conditions of raw material supply.

When did the new prices become the basis of action and what is the main difference over the implementation of these prices?

The issue was discussed since the beginning of the year and the investigations related to it started around June. Finally, in September and based on the notification, the new price ceiling was announced. The basis of calculation was the daily price of beans, packaging costs and other related costs to determine the price of the packaged product according to the price of the raw material.

With the announcement of the new rates, the problem that arose in the stores was the existence of goods that were previously bought at higher prices and were still on the shelves. For example, in the case of pinto beans, the new prices announced were different from the purchase prices of some previous shipments. As a result, the stores were faced with the question of whether they should offer the goods purchased at the previous price based on the new price or use the previous price as a criterion to determine the assignment of the old inventory. This is not just an accounting dispute; The store must comply with the pricing rules and regulatory regulations, and must clearly understand the price of the goods it has purchased before.

Given that some goods were purchased at a higher rate before the new prices were announced, are the stores able to supply them at the previous price?

According to the explanations that were raised in the meetings with the support organization, a time interval of several months was considered for collecting the old goods and adjusting the market balance with the new rates. From this point of view, it was expected that in this interval, the previous stocks will be sold and after that, the new prices will be the basis of the supply.

However, some of the goods purchased at previous prices are still available in stores. We also corresponded with the supplier companies to determine the assignment of these goods and demanded that they either replace the desired goods with a new price or provide a specific solution regarding the price difference. Some companies accepted this issue and announced that the store can offer the product at a new price and the difference will be settled in the accounts of the parties. But some companies did not accept this mechanism and this issue is still a point of dispute.

In this situation, what problems do stores face in the field of supervision and inspection?

Stores must comply with the announced regulations on pricing. If there is a product on the shelf whose supply price does not match the standards and rates announced, it may cause problems for the store during the inspection of the support organization, government sanctions or other regulatory authorities. On the other hand, the store cannot ignore the cost of the difference between the previous purchase price and the new rate without determining the financial relationship with the supplier company. For this reason, we have asked the companies to have a clear position about the available goods; Either replace the product with a specific mechanism or accept the method of calculating and paying the difference. Currently, the main dispute is over these old balances and how to settle them. Determining the task of this issue should be done through a clear agreement between suppliers, distribution network and authorities responsible for pricing.

Considering these differences, what action is necessary to prevent the continuation of multiple prices and reduce the pressure on the consumer?

The most important issue is that pricing decisions should be made with respect to the entire supply chain. You can't just consider the price of the raw material and ignore the packaging costs and other related costs. Besides this, there should be a clear instruction from the beginning about how to implement the new rates and the status of the goods that were purchased before the price was announced. When there is a time gap between the purchase of goods, the change of the price of the raw material and the notification of the new rate, the responsibility of each link in the chain must be clear so that the store and the supplier do not face different perceptions about how to sell and settle.

On the other hand, the sustainable management of the bean market starts from the production stage. Planning for the cultivated area, estimating the market needs, paying attention to the amount of domestic production and managing the supply of products dependent on imports, can prevent the formation of extreme fluctuations. If this process is accompanied by clear pricing policies and coordinated monitoring, it will increase the possibility of rationally reflecting the reduction in the price of the raw material in the consumer market, and also prevent the occurrence of disputes in the distribution network.