Estonian food industry also wants price caps on energy carriers

  • 2022-08-31
  • BNS/TBT Staff

TALLINN – The Estonian Chamber of Agriculture and Commerce and the Estonian Food Industry Association have sent a petition to the government, proposing to limit the prices of energy carriers not only for households but also for the food industry.

The sharp increase in energy prices has had a devastating effect on the food industry and the sustainability of the business of food producers on the existing scale is largely under question, Roomet Sormus, head of the Chamber of Agriculture and Commerce, and Sirje Potisepp, head of the Food Industry Association, say in a press release.

They say that increases in food and agricultural prices caused by rising gas and electricity prices have reduced the competitiveness of Estonian food producers, while the sales of lower-priced subsidized imports are on the rise in retail here.

"Considering the very difficult situation that has arisen, we again proposed on behalf of the Chamber of Agriculture and Commerce and the Food Industry Association to introduce price caps for energy carriers for food industries and producers of food as providers of services vital for the lives of all people, above which the price will be compensated, similar to the caps applied to prices for household customers," Potisepp said.

She said that in their view, the acceptable cost limit still enabling the continuation of the business of food producers could be around 120 euros per megawatt-hour for electricity and around 90 euros per megawatt-hour for gas.

In addition to the high price of electricity, food producers are concerned about both the exorbitant price of natural gas and its availability. Sormus explained that the food industry uses nearly 30 percent of the total amount of natural gas consumed by Estonia's industrial sector. 

The associations say that the introduction of price caps is not necessarily the only way to alleviate the situation for food producers, and the introduction of lower renewable energy and network charges is certainly worth considering as an alternative to reduce electricity costs.

The authors of the petition point out that the excise duty on natural gas used for industrial purposes in Estonia is nearly seven times higher than in Latvia and Lithuania, which apply the minimum rate allowed in the European Union. However, according to the petition, lowering the excise duty on gas would have a relatively small effect when it comes to alleviating the situation of the food industry. 

The heads of the two associations suggest that for both agricultural and food producing entities, taxes and excise duties on inputs for production, including energy inputs, should be permanently set at a level similar to those valid in the countries that are our competitors, so as to ensure the competitiveness of our entities in both domestic and export markets.