At the first sitting of the Interim Parliamentary Commission studying the structure of pricing of food products, medicines and fuel, members heard from representatives of local producers of essential consumer goods, including meat products, dairy products and eggs.

Company representatives discussed the production process and the placement of finished products in retail chains, and informed commission members about the problems and challenges associated with these processes.

Issues related to egg production were addressed by representatives of Poultry Georgia LLC and Dila Products. It was noted that one of the significant challenges for producers is value-added tax (VAT). According to them, product price increases are also driven by the so-called "cash-back", which amounts to approximately 22–25%.

Irakli Dumbadze, Director of Leaderfood LLC, a meat products manufacturing company, spoke about operational costs, including the issue of "cash-back". According to him, the company refunds up to 35% of the value of products sold to retail chains, and this expense increases annually. While discussing existing problems and challenges, Irakli Dumbadze also drew attention to the shortage of labor and issues related to the disposal of expired products.

According to Revaz Vashakidze, Director of Chirina, it is important for the development of local production to introduce quotas on imported products, which would protect the Georgian market from excessive imports.

The representatives of dairy product manufacturers - Sante GMT Products LLC, Kvarlis Baga, and Wimm-Bill-Dann Georgia - reviewed issues existing in their field. It was noted that one of the main challenges for dairy producers is the price of milk, which is linked to imported feed raw materials for cattle. According to producers, if local production of feed raw materials is developed, the cost of milk production would significantly change and the sector would become healthier.

The sitting of the Commission was conducted in a question-and-answer format, during which commission members received additional information from local producers.

"The purpose of the commission is to study the problems facing the sector, and it is important that business representatives are positively and constructively engaged in this process. We agree that the markup on products is high, which indicates structural problems requiring a systemic approach. We aim to introduce changes that will systemically improve the sector and lead to lower product prices. During the meeting with local producers, five key problems were identified. Correct identification of these issues is extremely important because once we understand the nature of the problem, we will be able to activate appropriate mechanisms through proper analysis. This will ultimately lead to a healthier sector and satisfied consumers", - said Chairman of the Commission, Shota Berekashvili.

According to him, the following challenges were identified based on the information presented at the meeting:

-Producers are significantly dependent on imported raw materials, which in turn creates inflationary pressure from imports.
-A significant share of operational costs is attributed to sales and marketing expenses. This includes "cash-back", listing fees, shelf fees and other charges, all of which substantially increase the final price of products.
-Asymmetrical relationships are observed between producers, distributors and retail chains, giving the upper tier greater leverage in determining commercial terms.
-The volume of working capital, the cost of capital and delayed payments directly affect production costs. Payment delays increase financial expenses and ultimately create additional pressure on product prices.
-Inefficient inventory management and the accumulation of stock, which increases financial burdens.

At the end of the meeting, Shota Berekashvili spoke about the initiative to invite an international company to study pricing in the sector of essential goods and food products. The company will be selected through a tender process.

"We intend to appeal to the Speaker of the Parliament of Georgia so that, in parallel with the work of the commission, Parliament engages an international company with strong experience in studying the sector of essential goods and food products. The company would examine the structure of our sector, business processes, existing problems, and prepare recommendations. I believe this would be a positive step, as alongside the commission`s work, we would have an externally assessed document offering a different perspective, which would significantly assist the Commission in its work", - he said.

The initiative of the Commission Chair was unanimously supported by the members of the commission.