In Bulgaria: 'A Single Politician Is Setting Out to Build State-Owned Stores with the Help of the State'

Nikolay Valkanov, executive director of the Association for Modern Trade, has criticized the new draft law on the supply chain of agricultural products and food, revealing what he calls a lobby behind the bill. The draft proposes a cap on retail markups and mandates that 80% of dairy products on store shelves be domestically produced. Speaking on BNT, Valkanov pointed out that the law attempts to increase the powers of the Consumer Protection Commission, similar to earlier attempts seen in the Euro Adoption Act. He noted that both laws seem to come from the same source, though they are officially from the Council of Ministers.

When asked about a possible lobby, Valkanov said it is clear that the state is entering the retail sector through politicians aiming to build state-owned shops. He questioned the purpose of such stores (the so-called "people shops"), which he described as "shops for our people," funded by taxpayers to offer cheaper products to a specific electorate (referencing the connection between the state shops and the Bulgarian oligarch, sanctioned under the Magnitsky Act, leader of "DPS-New Beginning" Deyan Peevski).

Valkanov further explained that recent changes to the Law on the Introduction of the Euro have essentially rendered the draft bill ineffective, granting the Council of Ministers broad and uncontrolled powers that could override the new law.

Regarding the mandatory 80% domestic dairy products, Valkanov highlighted a serious shortfall in Bulgarian milk supply, which makes it impossible to meet the quota. Notably, yellow cheese and butter were excluded from the requirement. He clarified that if one calculates milk consumption based on various dairy products, only about 59% of the needed raw milk is produced locally.

The draft law’s proposal to cap markups also drew criticism from Valkanov. He argued that it is problematic for the state to dictate uniform prices and suppliers across all retail outlets above a certain size or turnover. Such a move would eliminate competition among traders, robbing consumers of choice, quality, and affordable prices. He described it as a system that forces everyone to sell the same products at identical prices, which makes little sense.

From a European legal perspective, Valkanov said the new law contradicts EU rules because it imposes non-tariff barriers restricting the free movement of goods within the single market. He warned that favoring domestic products in this way could harm export-oriented agricultural industries in Bulgaria, distorting the market and damaging businesses that depend on foreign sales.

Responding to criticism that milk purchase prices have not risen since 2022, Valkanov cited an investigation by the Competition Protection Commission, which found no prohibited agreements in the supply chain. The commission’s analysis showed significant price differences for the same cheese brands between retailers, with delivery prices rising by 23% to 38% and by 16% to 62% depending on the retailer. This disproves the narrative that retailers are unfairly squeezing suppliers.

He also stressed that product quality, such as compliance with label content, is primarily the responsibility of producers, not retailers. Valkanov referenced consumer studies by Active Consumers, which periodically test products like cheese for compliance with standards like water content. Around two-thirds of cheese brands on the market fail to meet these standards, although the situation is slightly improving.

Interestingly, Valkanov noted a recurring paradox: whenever such consumer reports are released, debates arise claiming that rising prices or retailer practices force a decline in product quality, but the facts show otherwise.

Source: BNT interview