Beef price puzzle
11 November, 2010
Beef price puzzle

Georgian government believes the recent price-hike on fresh meat will be changed by unprecedented price slump in November-December thanks to stronger market administration scheme. The scheme introduces licensed slaughterhouses as an obligatory chain between butchers and cattle breeders. Butchers claim the slaughterhouse involvement complicates the life in fact and jacks prices up.
The fresh beef must get on the market counters and shelves of supermarkets of Tbilisi only via slaughterhouse staring October 18, 2010 in compliance with the governmental regulation.

Government tries to set the beef quality in line with the international standards in this way and insure foods security. Four licensed slaughterhouses equipped with the art-of-the-state technologies will insure cattle slaughter and beef processing in due sanitary conditions prior the product gets the counters and is sold to consumers. However as much as the slaughterhouse infrastructure is underdeveloped at the moment in Georgia the obligation exempts regions as of yet and refers only beef distributed to the capital of Georgia, Giorgi Chaduneli, PR Manger of the Ministry of Agriculture (MOA), informed Georgian Journal.  Due to the very reason the restriction covers only beef and exempts mutton and pork at the moment. But slaughterhouse is planned to become obligatory to all sorts of meat gradually and cover the entire country.
Farmers and cattle-breeders can slaughter and trade by any sort of meat between themselves without new legislative restrictions. Governmental understanding is that the meat distribution chain from the cattle-owner in villages to supermarkets in cities and specifically to Tbilisi included speculative chains that jacked meat prices up. Besides, the meat was slaughtered and traded in unsanitary conditions that posed food safety risks. 
According to Bakur Kvezereli, Minister of Agriculture of Georgia, meat price accounted for GEL 2.50-3.50 per kilo however it was distributed to consumer via several mediating chains [including the farmer who breeds cattle, than distributor to regional market, distributor from the regional market to Tbilisi wholesale market, and distributor to supermarkets finally] that increased price artificially. Now when only slaughterhouse will be mediating between farmers and supermarkets the price is supposed to reduce by 20-25% actually. As an aftermath the average price on beef accounts for GEL 7.50-8 at slaughterhouses, Kvezereli accentuated. 
However butchers who run counters at supermarkets claim the new scheme rather complicates than eases situation and prices are jacked up actually. The thing is that beef price stood at GEL 6-7 per kilo at Bazaar before the stronger administration scheme was enforced and the best quality beef was sold for GEL 8 per kilo in summer and September of this year as far as the wholesale market price accounted for GEL 5-7 per kilo, now slaughterhouses fix GEL 8.60 per kilo actually. And the first effect of the novelty was that the price on beef jumped to GEL 13-14 per kilo starting November 18, 2010 when the new meat market administration mechanism entered into effect.
Kvezereli believes this was a speculative deal practiced by about 70 entrepreneurs who decided to derive as much profit out as possible and promised to research each chain in the meat distribution system so as to protect consumers’ rights.
“We made administration of meat market stronger and some dishonest entrepreneurs took an advantage out of the situation and increased prices artificially, but we will do our best to remove this kind of chain so as to make beef prices get back to the previous figure,” Kvezereli pledged on November 4. 2010. 
Kvezereli belives that the situation will be stabilized soon after Natakhtari  slaughterhouse will develop its own shops-network under Iberula brand in Tbilisi where the beef price will be equal to the starting price fixed at slaughterhouses. Iberula opened its first shop on November 6, 2010 and plans to open 6 shops within two months and enhance the number to 25 within 6 months, Davit Barabadze, Chairperson of Natakhatari slaughterhouse and Iberula network, told Georgian Journal. Prices at the newly opened Iberula shop varies between GEL 4-9.50 depending on categories. Barabadze swears that farmers are happy over the governmental initiative and there is a big run of cattle-breeders at the slaughterhouse for they  pay to farmers GEL2.50-3.50 per kilo immediately.
However a butcher [who prefers to be incognito] who runs a small counter in the outskirts of Tbilisi, assures that farmers face transportation problem in fact because earlier distributors were transporting the slaughtered cattle to trade outlets, while now a farmer needs to transport his cattle to slaughterhouse that costs GEL 200 from Tianeti, a mountainous region, for example to Natakhtari that is scarcely available. Besides slaughterhouses fix GEL 1.20 per kilo as a service price and all these is built in price ultimately.
“I used to go to Karajala [a slaughterhouse near Tbilisi] myself and bought beef from cattle-breeders at first hand actually for GEL 6-7 per kilo, now I pay GEL 8.60 to slaughterhouse and fix GEL 10 per kilo when I sell it. I do not think that the price will reduce more than that,” He told Georgian Journal.
Barabadze assures that they gather cattle among pheasants themselves and they face no transportation problem in fact.
“Quite the reverse, they are happy that they need not go to market anymore and we solve the beef slaughter and distribution problem,” He said.

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