What to remember from Sobatkoz “how to bring down prices sustainably in Reunion?”

How to bring prices down sustainably in Reunion? The SOBATKOZ show broadcast on Réunion la 1ère Thursday November 21, and co-hosted by Jean-Marc Collienne and Gaëlle Malet, allowed several points of view to be expressed.

For Séverine Rahout of the “pou la dignity lo pep réyoné” collective, we have been talking about the high cost of living for too long. This problem will not be resolved in one broadcast. What she is now asking for is a major consultation with all Reunion Islanders. According to her, it is necessary to convene elected officials and local authorities to resolve this problem of the cost of living.

Towards territorial continuity for imported products?

Raphaël Morino-Ros is a member of the Observatory of Prices, Margins and Revenues (OPMR). He notes a lack of trust between citizens, different economic players and public authorities. There is distrust at such a level that when someone asserts something, there is a necessary challenge. This distrust is amplified when everything cannot be revealed.

This is what Séverine Rahout accuses him of having signed a confidentiality clause within the OPMR. However, thanks to this, he was able to have access to the elements which lead to the manufacture of the prices of the products sold in supermarkets in Reunion.

For him, strong action from the State is needed to reduce the costs linked to transport between France and Reunion. This would amount to establishing territorial continuity of products between territories.

Raphaël Morino-Ros

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©Reunion the 1st

However, he is not in favor of implementing the protocol planned in the Antilles. It is not adapted to the economic fabric of the island. If there is a 20% drop in the price of 53 families of imported products, some would be in direct competition with local production, if this were applied to Reunion. According to him, innovative solutions should be found applied only to the territory of Reunion Island.

The economist Jean-Yves Rochoux notes that if the poverty rate is still as high with 36% of Reunion Islanders affected, their share has been decreasing since 2007.

For prices to fall, production would have to be local agricultural and industrial growth, with an increase in employment. The problem is that the market is small.

It is also not possible to act on prices, unless you are in an administered economy like for fuel. That is illusory because there are too many actors and parameters to take into account. What is needed, according to him, is a real competition authority. It should continually endeavor to check the prices and presence of products on the shelves, particularly for those with the price-quality shield (BQP).

Large-scale distribution, represented by Philippe Maillard, secretary general of the Fédération du Commerce et de la Distribution, undertakes to display the same prices as in France, if a solution is found.

Philippe Maillard – general secretary Federation of Commerce and Distribution

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©Reunion the 1st

Between the mainland producer and the arrival of the products on the shelves in Reunion, there are no less than 14 intermediaries. With one exception, they are all essential. They operate at different levels, here and there.

Food products like yogurt produced locally are produced in factories that are not suited to the local market. There is only one manufacturing line for several products, where each product has its own manufacturing line which runs 24 hours a day in Europe.

This creates additional costs in production. Furthermore, to avoid any monopoly, there are two manufacturers where economic logic would not leave room for just one.

Local chicken costs more than that of France. But bringing fresh chicken from France is more expensive.

Thus, a poultry sold to a store in France for €2.80 excluding taxes is sold in the store in France for €3.53, a price difference of 62%.

Chicken of the same category is sold in a store in Reunion for €4.55 excluding tax, and is sold in the Reunion store for €5.49, i.e. a price difference of 55%, lower than that of France.

If chicken from France were to be imported by plane, because it is a fresh product, it would arrive in the store's cold room at €8.69 excluding taxes, to be displayed at €10.49 on the shelves.

To maintain costs on essential products, the Lurel law implemented the Price-Quality Shield.

In 2018, it concerned 109 products with a trolley costing €288, or an average of €2.64 per product.

In 2019, the cost for the 109 products fell to €253, or an average of €2.32 per product.

In 2021, 153 products joined the standard cart for an amount of €349, or an average of €2.28 per product.

Since this date, the representative of the large distribution sector has noted that there have been the same number of products for 4 years, and that the minimum sales price has not changed, despite inflation.

Séverine Rahout, from the “pou la dignity lo pep réyoné” collective, to remind him that fresh products are not affected by this BQP.