Another big hoax? A well-known economist explains why food price caps actually risk causing huge price increases

The proposal of the Minister of Agriculture for capping food prices is criticized by the economic analyst Adrian Negrescu. It argues that far from preventing rising food prices, the new measure would bring even worse imbalances and could be counterproductive.

Prices in supermarkets are increasing in Romania from one day to the next. PHOTO: Freepik

The Minister of Agriculture, Florin Barbu, came up with a new proposal for capping the prices of food products. Barbu supports the idea of ​​an intervention mechanism on the food market, which would consider capping the commercial addition to food, when inflation exceeds the 5% threshold. The measure would only be applied when there is 5% inflation. In reality, in Romania inflation was constantly around 10 percent. Not by chance, Romania is the country in the European Union with the highest inflation in 2025 as well.

The ideas of Minister Florin Barbu are criticized by economic analyst Adrian Negrescu. In a post on Facebook, he says that the minister's solutions are unlikely to give good results, but rather risk leading to an even steeper rise in food prices.

Criticism from Adrian Negrescu

“The Minister of Agriculture, Mr. Barbu, is launching a new downright hallucinatory formula by which he tries to “control” the prices of agri-food products. Mr. Barbu proposes to create a mechanism for capping the addition to all food products to be applied when inflation exceeds 5%. In other words, the Minister of Agriculture wants to establish an automatic mechanism of the “mercurial” type intended to solve, with a pen, the price dynamics of economy. It seems that the minister does not understand how the market works, how prices are regulated according to demand and supply, how businesses are financed”says Negrescu.

In his opinion, Minister Barbu's ideas contradict the principles of the market economy.

“By asserting loudly that he wants “decent prices” for poor Romanians, Mr. Barbu slips into an extremely dangerous type of discourse that has nothing to do with the values ​​of the market economy, with European legislation. Beyond the extremely obvious contradiction with competition legislation, with the Community acquis in the matter, this “Don Quixote in the fight against inflation” approach will certainly have negative effects in the market“, adds the expert.

At the same time, the minister's statements could inflame investors, who have no way of looking favorably on the impositions that could be imposed on them. This is after the government took measures that seriously affected the investment climate – the increase in VAT and other taxes and fees that caused negative reactions from investors and pushed many small and medium-sized companies to collapse.

Another slap in the face to investors

“The declarations of this minister do nothing but fuel the concern of investors in the Romanian agricultural and retail sector, areas increasingly affected by the decrease in sales and capital outflows. This is beyond the obvious fact for years that capping the addition means, in essence, hitting the Romanian capital in agriculture, distribution and trade, practically increasing the economy's dependence on imports”. says Negrescu.

Adrian Negrescu

Minister Barbu's speech would be incorrect, and reality contradicts it. In fact, although the government tries to present its program as a great success, Romania has suffered from decisions like that of the Minister of Agriculture, and food prices have risen more than anywhere else here.

“In the almost 4 years since he has been the Minister of Agriculture, Mr. Barbu has kept delivering this capping of the commercial addition as a universal solution to the problem of price increases – the effects being inherent. Despite Mr. Barbu's efforts to present us with a parallel reality, the prices of food products have continued to rise – food inflation is at a record level in the EU. This is beyond the “water bed” effect that the minister does not seem to understand (the increase in the price of other products that are not on the government list.) Is there no specialist in the entire Ministry of Agriculture capable of coming up with other solutions aimed at supporting and not burying agriculture and the food sector in Romania?”asks Adrian Negrescu rhetorically at the end.