Something is wrong in statement of flour millers and bakers
Baku/08/19/12/Turan: Large flour mills and bakeries have issued a joint statement justifying the need to raise prices for flour and bakery products.
The upper limit of prices for a 50-kilogram bag of flour in Baku is set at 40.7 manats. The price for bread, regardless of weight, has been raised by 5 gepik. The retail price for a loaf of bread with a traditional (round) weight of 500 g is 55 gepik, a loaf of bread weighing 600 g is 65 gepik, and a 650-gram loaf of bread is 70 gepik.
The statement notes that owing to the current situation on world markets, business entities importing grain and flour into the country faced "serious price pressures." In July, the average price for food wheat imports into the country was $402.46 per 1 ton, which is up by 67% from the prices in an appropriate month of 2021 (average import price is $241) and by 18.4% - December 2021 (average import price is $339.89).
This statement is surprising, to put it mildly.
Azerbaijan traditionally buys grain from Russia. According to the website zerno.ru the average price for wheat on July 19, 2022 was: grade 4 – 9,000 rubles ($152); grade 3 – 10,000 rubles ($170).
A question arises, where did the price of $402.5 per ton come from, which suppliers and millers are talking about.
Note that grain and grain processing products imported for the reserves of the State Grain Fund since January 30, 2022 have been exempt from customs duties in Azerbaijan. This is about 700.000 tons, that is, most of the annual demand for food wheat, nearly 80%. The demand for wheat is about 900.000 tons per year.
At that, the country is able to purchase at least 70.000 tons per month. When adjusted for the situation on the world market, it is possible to increase monthly deliveries and thus to stock up on cheap grain.
Also, CIF grain delivery to Baku may amount to $30 per ton. In total, the delivery price of grain to Baku should be within $180 per ton of Class 4 and $200 per ton of Class 3. Our country mainly use grade 4-5 wheat for bread, which was severely punished in Soviet times, up to execution.
To the history of the issue: Prices for Bread in Azerbaijan are Speculative
Economics
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