Government Guilty of Rise in Price of Bread

The Cabinet of Ministers must urgently decide on the direction of the grain stocks to sale in order to stabilize prices, before deciding on the transition to the regime of "floating rate" of the manat. Experts report the government’s carelessness in the extreme conditions, which has affected the country's citizens.

The price of flour has risen in Azerbaijan by 47% due to the devaluation of the manat in relation to the dollar. A 50-kg bag of flour was worth 18 – 18.50 AZN before the second devaluation, while today it is sold in retail at 26-27 manats.

This year, the Cabinet has raised the limit of state reserves of wheat from 500 thousand to 750 thousand tons. The state reserves of wheat are controlled by the Ministry of Emergency Situations (MES). The Executive Director of the State Grain Fund (SGF) Zulfugar Mammadov, explaining the reasons for the rise in prices for flour and bread, told Turan that this is a direct result of the devaluation of the manat. However, he declined to comment on the issue of slowing down market intervention by SGF to stabilize prices. Neither MES nor the Ministry of Economy and Industry (MEI, which controls unfair competition in the market) reacts to the situation.

Moreover, MEI regards higher prices of flour and bread as an artificial effect of business representatives.

According to the regulations of the SGF, the Fund reserves in emergency situations (sharp rise in prices, the deficit, etc.) are to be sold by special resolution of the Cabinet of Ministers. Despite the rise in prices, which caused the dissatisfaction of consumers, the government is in no hurry to take an adequate decision.

At present, Azerbaijan is buying wheat from Russia at $ 175-180 per 1 ton with a condition of delivery to the customs border. That's $ 60 less than last year. In the retail wheat flour now costs about 500 manat or $ 320.

The Director of Neon (engaged in the import of wheat, production of flour and bread) Arif Hasanov told Turan that in these circumstances, the government should immediately release the state reserve for sale, as well as to waive the VAT on the import of wheat.

According to independent estimates, Azerbaijan’s grain industry daily uses at least 3,500 tons of first-class flour. The annual consumption of wheat flour in the country is estimated at about 1.5 million tons. ----08B