The Temporary Commission of the Parliament of Georgia, which is studying the structure of food, medicine, and fuel pricing, is holding its third session.

At the start of the session, the Chairman of the Commission, Shota Berekashvili, summarized the first two meetings and highlighted the key issues identified so far that significantly impact the pricing chain.

“We had meetings with dairy, egg, and meat producers, as well as with fruit, vegetable, and beverage producers. Several problems were identified, which play an important role in the price chain and increase the unit cost at the producer level. A large part of the companies emphasized that their production heavily relies on imported raw materials, which creates import and inflation risks. If imported raw materials become more expensive, this will be reflected in the unit price.

The second significant factor we observed concerns operating expenses, particularly in sales and marketing, including relationships with distributors and chain stores. These expenses are notably high. Companies indicated specific payments with chains under marketing and sales expenses, such as shelf placement fees, cashback, and shelf taxes, which increase operating costs.

Regarding the relationships within the value chain—between manufacturers, distributors, and retail network operators—we observed asymmetric relationships. The upper links in the chain have more negotiating power and determine commercial terms, including payments and product turnover. Some companies reported that they cannot even monitor the turnover of goods with network operators, which is a major problem. This asymmetry puts companies at a disadvantage and needs to be addressed.

The fourth issue stems from the third: working capital deficits. Many companies are forced to supplement working capital with credit, which is often expensive, sometimes 15–16 percent, impacting the unit cost. In addition, several companies reported challenges with balance management and losses in their dealings with retail networks. Without proper control over product turnover, managing balances and minimizing losses is difficult. This, too, requires correction.

Overall, evaluating all these factors, the existing value chain and business operations put local production in an uncompetitive position. This affects the competitiveness of the final products. Our goal is to discuss these issues with you and, together, increase the competitiveness of local production. This is particularly important because local producers compete with imported goods. By ensuring healthy competition, improving business processes, and increasing operational efficiency, we aim to make local production competitive, which ultimately reflects in competitive prices. We want production, especially by medium and small businesses—the backbone of our economic growth and economic inclusiveness—to be protected and efficient. Only by understanding these problems can we implement effective mechanisms,” said Shota Berekashvili.