The prices for wheat and bread will not be increased!

Since yesterday, Russia has suspended the export of wheat, barley, rye, corn and sugar. In particular, in response to the sanctions of the West and the EU, Russia has suspended the export of grain and cereals to the Eurasian Union and sugar to third countries. After this information, there were some concerns about the rise in bread prices in our country. And although the main reasons for this are not indicated, the signals that caused these fears are quite obvious.

The second reason for this is that the recent rise in world wheat prices of about 40% is a problem that is of great concern. The third reason is the war between the largest wheat exporters in the world. This is a war between Russia and Ukraine. Because each of the two countries has a special share in the production of wheat in the world. Thus, the combined share of Ukraine and Russia in world wheat production is 29%.

Thus, Russia believes that it strikes back with this "grain weapon" on the sanctions imposed against it by the civilized world. As already mentioned, Russia is one of the largest producers of wheat in the world. Wheat production in Russia in 2021 was in the range of 85 million tons, which is twice its needs. Russia exports 36 million tons per year, which is 14% of world wheat production. 

Wheat production in Russia for the year, thousand tons

Russia ranks third in the world in wheat production. The sequence is as follows; China (134.3 Mt), India (98.5 Mt), and Russia (85.9 Mt)

Will wheat prices rise in Azerbaijan?

Against the backdrop of rising world prices, let's try to analyze whether there are economic prerequisites for a rise in price of wheat in Azerbaijan?

Azerbaijan buys 1.3 million tons of wheat from Russia for baking bread. After the civilized world has imposed economic sanctions on Russia, she, using her advantage, wants to put the importing countries before a fact by raising duties on exported wheat. In this regard, the question arises whether prices for wheat can rise in our country.

Firstly, this year Azerbaijan has already imported a certain part of the grain from Russia. According to the terms of the contract, its remaining part will be delivered to our country in the coming months. At the same time, no increase in prices due to imports is expected. So, if in January last year wheat was imported in the amount of 5-6 million dollars, then in January of this year wheat was imported to our country for more than 32 million dollars. This will satisfy our wheat needs at least until the summer. So we already have stocks of grain.

On the other hand, in the next 3 harvesting season will begin. This means creating opportunities for own production and "sinks" (reserves - approx. Ed.). The implementation of import operations along with our own production gives reason to believe that there are no economic grounds for raising prices for wheat in our country. There are no adverse weather conditions for domestic production, and import operations were carried out in accordance with the schedule. If the price rises, it will mean that the oligarchs did not want to miss the opportunity.

Mammad Talibli