Toilet and kitchen paper rose in price by about 40 percent in a year – both as an effect of the pandemic and due to a double increase in the prices of raw materials, the increase in the price of energy carriers and transport costs and the depreciation of the euro against the dollar. Large enterprises in Bulgaria have announced that they are shutting down due to the shortage of raw materials, and at least 1,000 people will be left without a livelihood. Among the possible solutions is the partial resumption of felling in centuries-old forests.
The onset of the COVID-19 pandemic in March 2020 and the announcement of a lockdown in a number of countries caused panic among people whose first reaction was to stock up on essential goods. Among them, and in Bulgaria, one of the most sought-after goods were toilet paper and kitchen paper. These are products that are produced from processed and unprocessed cellulose, which in turn is produced from wood. The rise in the price of these commodities began in 2021 as an effect of the pandemic and supply chain disruption and continued with nearly 100% growth in 2022 alone under the influence of accumulating factors, among them the war in Ukraine.
According to data from an NSI study that looked at the average prices of a well-known and unknown brand of toilet paper by month, the price of the well-known brand rose by nearly 40% for the period from January to December 2022. The study shows that the difference in the average price of the recognizable product between January 2021 and December 2021 is only BGN 0.04, while between January 2022 and December 2022 it is BGN 2.85. The trend in price change for the unknown toilet paper brand is similar – BGN 0.16 difference in 2021 versus BGN 2.29 difference in 2022.
What are the reasons for last year’s price increase?
Representatives of leading manufacturers and suppliers of toilet and kitchen paper, who wished to remain anonymous, commented to Bulgarian media “Dnevnik” on the subject, and according to them, among the main reasons for the price increase are:
Almost 100% increase in the price of the raw materials from which paper is produced;
The price of gas, electricity and transport, including that by sea;
The ratio between the dollar and the euro, since the pulp (wood pulp) is traded in dollars. Thus, the increase in the price of toilet paper coincided with the record decline in the exchange rate of the euro against the dollar in the third quarter of 2022.
According to the manufacturers in the industry, the policies of the chain stores also have an influence on the final reflection on the price that the end consumer sees. After the increase in the price of raw materials and the updating of prices by manufacturers, the chains have increased the prices of the finished product in stores with some delay. By the time the chains have implemented the price increase anyway, manufacturers have already made a new one. Thus, traders had to raise the prices of toilet and kitchen paper several times within a short period of time, representatives of the sector commented to “Dnevnik”. This has led to the increase in the price of some types of products by more than 40%.
According to a merchant, owner of a medium-sized business outside Sofia, whom the contacted, toilet and kitchen paper are not the only products from this group that have increased their price. Diapers, laundry and cleaning products, as well as soaps have increased in price by up to 30% within a year, according to the business representative.
What is the price of toilet paper today?
According to a representative of a producer company, the price of products is currently falling minimally, and this is due to the normalization of the exchange rate of the euro against the dollar, as well as the lowering of gas prices. Manufacturers of tissue (a type of light paper) are still concerned about how permanent this is and how long-term a trend it can be.
Although partial, producers say that electricity offsets have succeeded in helping to stabilize the price and adapt to rising costs.
How is it in other countries?
Converting wood into pulp and then into toilet paper is an energy-intensive process. In January 2021, the price per metric ton of tissue paper in Europe was less than €900, with prices reaching €2,200 per metric ton in September 2022, reports Bloomberg. The publication added that from January to June 2022, raw material costs rose by about 3% to 5% per month, and after July by nearly 10% per month.
According to data from the Federal Statistical Office of Germany, from July 2021 to July 2022, prices for pulp production rose 4 times more than the increase recorded in the period from 2010 to 2020. Data from the National Institute for French statistics and economic research show that wood pulp prices peaked in October 2022 and then began to decline. However, today their levels are still higher than in January 2022.
source: tradingeconomics.com
Graph of prices in industry in Germany: production of pulp, paper and paperboard total.
Industry reaction
Against this background, in Bulgaria, key factories in the wood processing sector announced that they were shutting down because of the high prices of wood. Among them are “Kronospan Bulgaria EOOD” and “Fazerless AD”, and “Svilosa AD – Svishtov” is in the process of stopping work due to the “speculative increase in wood prices” in 2022, which has led to unaffordable prices for the industry, it is said in a press release from the Branch Chamber of the Woodworking and Furniture Industry.
The suspension of work affects over 1,000 people employed in the sector, and indirectly over 5,000, including professionals in the field of transport, mining and services, the branch chamber calculated.
The problem, according to the representatives of the sector, has come about because of the imposed restrictions on the extraction of wood – the order to reduce by 30% the felling in centuries-old forests of the acting minister Hristo Bozukov from the end of 2021. The result, according to them, is less harvested wood for both businesses and households, as well as unbearably high raw material prices.
A number of institutions have signaled an increase in the price of wood, only for firewood, at the end of 2022. The Ombudsman of the Republic of Bulgaria, Diana Kovacheva, presented statistics that the price of wood increased by 100% from May to October (from BGN 110 to BGN 220) with a 10% increase in yield for the country. According to NSI statistics, industrial wood at the end of 2022 was also more expensive compared to 2021.
Source : Novinite.com
