Business
Posted: 2 months ago

Distribution and Food Stocks

The coronavirus’ spread has triggered a growing demand for food and other essentials. Business Partner analyzed this issue.

 

As noted by Iva Chkonia, head of the Distributors Association, photo materials with empty shelves at supermarkets do not reflect reality, because even the smallest retailers have no problems with supply. The country has no problems with imports, and there are no grounds for panic in our society, he said. 

 

“Do not succumb to unfounded panic. We have no problems with reserves in our country. The public shouting just weakens the GEL’s exchange rate, and triggers inflation”, Iva Chkonia pointed out. 

 

The government is actively working to ensure efficient logistics.  The recently established coordination board unites the efforts of the Finance Ministry, Economy Ministry and Agriculture Ministry, he noted. 

 

“Naturally, there are countries from risk groups, such as Germany, Austria, France and Italy, from which we have been importing products as normal. All products are examined and controlled at the state border, and the police service delivers these products to the economic zone of registration, where cargo is loaded onto trucks owned by a Georgian transportation company. Then, these products are disinfected, and only after that all cargo is delivered to the storehouse. We have arranged a very smartly-constructed logistical chain, and supervision is carried out in real time. As for the reserves themselves, we have no grounds for panic. 

Somebody shared photos from the same supermarket, where the photos focused on products from the same brand, and I believe that this artificially provoked panic that will have  negative effects visible in 2-3 months”, Chkonia said. 

Artificially growing consumer demand negatively affects the national currency, and promotes the inflation of prices, he said. 

 

“Excessive demand badly affects the GEL exchange rate, while there are no grounds to worry about such a situation. I declare, in all seriousness, that we will have no deficit of food products, because we have no breaks in supply. If this artificial hysteria lasts, the situation will worsen, because the growing demand will cause imports to grow, and accelerated imports will further burden the GEL. As a result, product prices will hike, and this process will badly hit distribution companies. 

We should show public responsibility and solidarity to each other to secure our economy from heavier future. We have no problems with the reserves and it is only upon you whether products rise in prices or not”, Iva Chkonia pointed out. 

 

The National Bank of Georgia (NBG) should intervene timely, otherwise the inflation rate will be worse than in 2019, Chkonia added. 

 

The ungrounded growth in consumer demand makes negative impact on the GEL exchange rate and prices increase. Therefore, the NBG should interfere as soon as possible to prevent worsening the inflation rate in the year on year context, Iva Chkonia noted. 

 

“If the National Bank does not intervene in this process and does not apply the currency intervention instrument, amid this panic, we will receive the 2019 situation, when the inflation rate surpassed 7%. Therefore, they should show reasonability and intervene in this process timely, because this hysteria will pass away, but when you buy products with the exchange rate of 1 USD=3.20 GEL, you will have to sell the same product with the same prices even if the GEL strengthens to 2.00 point”, Iva Chkonia said.