Czech consumers are grappling with the impact of soaring food prices, even as numerous food and agriculture companies report record profits. The energy and inflation crisis of the previous year led to substantial price hikes in food items, including bread and butter, causing financial strain on households.

Despite the struggles faced by many Czech consumers, several food and agriculture companies are enjoying remarkable profitability. Olma dairy company, a subsidiary of the Agrofert Group, reported record profits of CZK 215.8 million, while the Hlinsko dairy’s post-tax profits more than doubled to CZK 163 million in the same period.

Agrofert Group, led by former Prime Minister Andrej Babiš, achieved profits of nearly CZK 13 billion in the past year, marking a year-on-year increase of 124 percent. While Agrofert’s diverse business interests contributed to its profitability, agriculture and the chemical industry were highlighted as particularly successful sectors.

However, smaller firms and sectors, such as bakeries, faced challenges due to rising energy costs and wages. Some food companies found that food prices increased more than the cost of production, often due to a lack of domestic competition. This allowed certain food and agriculture companies to raise prices more significantly than supermarket chains, a phenomenon confirmed by recent antitrust investigations.

A concentration of market power among a few supermarket chains further exacerbated the situation, making it difficult for smaller businesses to compete. Economist Petr Bartoň from Natland noted that consumers often bear the brunt of such market dynamics.

Apart from limited competition, high energy costs have also contributed to the surge in food prices. Government intervention, such as capping energy prices, has enabled companies to maintain their profits. However, Jan Doležal, President of the Czech Agrarian Chamber, emphasized that the impressive profits of certain companies and sectors do not necessarily reflect the underlying structural issues faced by individual segments.

As food and agriculture companies flourish, many Czech households are struggling to afford essential food items. The rising cost of living, particularly food prices, is straining family budgets. Calls for actions to address the escalating food prices are growing louder, highlighting the need to balance profitability within the industry with ensuring accessible and affordable food options for consumers.

Article by Prague Forum