Brutal overpricing: 159 HUF milk cost 516 HUF in an EU-funded package for the poor
We sued the Hungarian Directorate-General for Social Affairs and Child Protection and won: the organization had to disclose exactly what was in the annexes to the framework contract for food packages for the poor distributed with EU money. In 2017, these set out the prices offered by the winners of the public procurement contracts for the food put in the parcels for the most deprived. The figures show brutal overpricing.
The Hungarian government, through the Directorate-General for Social Affairs and Child Protection, has been distributing EU money to people in need. According to the Hungarian Central Statistical Office, one litre of milk cost 205 HUF in 2017, but it was possible to buy it for a cheaper price, according to the special offers catalogues. But not for those in need.
“The programme aims to alleviate the shortage of adequate food and basic consumer goods to reduce poverty, complemented by other accompanying measures. At the same time, it aims to achieve results on two fronts: on the one hand for the most deprived and on the other hand for sustainability” – the quote is from the government’s website.
The programme, coordinated by the Directorate General for Social Affairs and Child Protection, was launched in 2018 and Atlatszo has written several stories about it. For months, the Directorate General has kept secret exactly what is put into the increasingly expensive food packages for people in need.
They refused to release the clause to Atlatszo, which is a compulsory element of the RSZTOP-4.1.1 framework agreement, in which the three winning companies listed in detail what products they were bidding for and at what price. We won the FOI lawsuit at the first instance at the end of 2021 and finally won at the second instance in May 2022, so we finally received the requested spreadsheet very soon afterward.
Lawsuit over the content of the food packages
Earlier, we found out exactly what the packages contained and how their prices compared to market prices – at least according to our calculations. The first package, ordered in 2018, included 1.5% milk, flour, sugar, icing sugar, honey, rice, pasta, egg barley, canned green beans, canned dry beans, cooking oil, cocoa drink powder, jam, goulash cream, raisins, condensed milk, condensed tomatoes, canned luncheon meat, one of each.
Using 2020 prices, we showed that the cheapest wholesale offer was 33 percent lower than the public offer, but the most expensive basket was also 24 percent cheaper than the winning basket.
The website of the Directorate General for Social Affairs and Child Protection referred to a framework contract in the programme – this has since been removed.
As part of the HUF 9.5 billion framework contract, “the unit prices for each product are included in the Sellers’ offers, with a table of these prices annexed to this contract.” This was not what SZGYF wanted to disclose, but was ordered to do so by the court.
2023 prices in 2017
We received three spreadsheets that fixed prices in 2017, the year the contract was signed. Three companies submitted bids in the framework contract, Natur-Rost Kft., Enger Kft. and Káta-Mill Plus Bt.
According to the annex sent by the Directorate General for Social Affairs and Child Protection, this is how the prices for each product were calculated. The framework contract was signed in 2018, but the procurement was in 2017, so we have added the 2017 prices from the KSH for comparison.
From the prices, it is clear that there is a brutal overpricing.
To offer oil for 1 333 HUF in 2017, which was 489 HUF at retail at the time, is simply outrageous, as is the pricing of other products. In 2017, Metro sold 1.5% Riska milk for HUF 159 gross. In the public procurement, the price of milk jumped to 516 HUF. More than three times the price of the market offer.
The figures allow us to reinterpret the victory report on the government’s website. Much more help could have come out of the programme if the products had been sold at market prices – even at a profit – to those in need.
Translated by Zita Szopkó. The original, Hungarian version of this story was written by Csaba Segesvári and can be found here. Cover photo: Fidesz MP Béla Mihálffy distributing an EU food package in October 2021. Source: Facebook