The FINANCIAL — Georgia, which uses 20,000 tonnes of wheat per year escaped the Russian-Georgian conflict with no serious damages and no deficit is anticipated. The country reserve was filled by the government and as for the crop exporting companies, negotiations are still on. Arkadi Meqerishvili, General Director of the wheat exporting company in Georgia Alaphi, expects wheat costs of USD 420 per tonne might decrease to USD 100.
A price increase on flour products in Georgia is expected in October, say Georgian bakeries. Due to the negotiations with foreign export companies, which are still active, Georgia will receive 15,000 tonnes of wheat from Russia and Kazakhstan.
“We are working only on importing wheat mostly from Russia and Kazakhstan. During the recent war, since transportation was made difficult, Azerbaijan became our target county to import from,” Kate Kublashvili, Director of the Analytical Department of wheat importer Agrikomi, told The FINANCIAL.
The raised prices reached a maximum last year when global inflation doubled prices on the harvest.
“Prices for wheat generally reach their peak in May, when the crop is running out. For example, at that time the price of one tonne may reach USD 420. At this time the prices are stable and we must expect its increase by the end of year,” added Kublashvili.
According to Kublashvil, both Russia and Kazakhstan are the main wheat exporters. “Usually 50% of our wheat comes from import from these two countries. However force-majeure situations are not the best of times. Last year Russia interrupted exporting wheat abroad till the first of July and later, Kazakhstan did the same during the two months. The reason was that a big range of their native sources flew away as export and they became afraid of leaving their own people without wheat.”
Agrikomi uses both sea and railway transportation means. They use only railway for transportation of the goods from Kazakhstan and both sea and railway (usually Poti-Batumi) while importing from Russia. When the company imports wheat by sea its common price is USD 325 and when by railway – USD 340-360 per tonne. Russian wheat is sold for GEL 610 and Kazakh – GEL 620.
“Russia has made some artificial difficulties for the Caucasus region. During the war our company found consolation in importing wheat from Azerbaijan by railway. But now Russia has complicated receiving wheat for Eastern countries on purpose, by focusing all their exported goods on the West, were they’ll sell for better prices,” Director of the Analytical Department of Agrikomi noted.
The crop reserves helped Georgia to avoid a wheat crisis. As Kublashvili explained, in August Georgia’s reserves of wheat were 15,000 tonnes. 10,000 tonnes from it were imported by the Georgian Ministry of Agriculture from Turkey and Azerbaijan and the rest by Agrikomi.
Another Georgian crop importer company Alaphi was also concerned because of the import pause.
“We had some problems because of the war but the company didn’t suffer any losses, as it didn’t last for a long time and besides, most of us had reserves to last for a minimum of one month. 80% of the wheat we import from Russia and Ukraine. We get 3-4 tonnes of wheat per month. There’s no big difference in prices between Georgian and foreign crop. Our native harvest helps us to keep prices and moreover to lower them till bread factories combine them together, after which prices get higher,” Arkadi Meqerishvili, General Director of wheat exporting company in Georgia Alaphi, told The FINANCIAL.
Megrelishvili expects prices to decrease since the beginning of the new season. Today a tonne of wheat costs USD 420 which might decrease to USD 100.
As for bread baking factories, it isn’t possible for them to avoid increasing prices considering that everything around them is being made more expensive.
Dika bakery bakes about 3,000 loaves of bread per day. In summer the number of loaves decreases as people leave for the holidays. In summer the price of one sack of flour coast GEL 48-50. Today it is GEL 45 (USD 32). Dika expects a reduction of prices by about GEL 3-4.
Today bread bakers are oriented only at keeping themselves afloat. The reason is not only increased flour prices, there are other aspects like: expensive electricity, goods and more. The world’s inflation influences everything like a chain reaction,” Levan Kvizhinadze, General Director of Dika, told The FINANCIAL.
The actual value of bread is 55 Tetri and the sales price – 60 Tetri. In Kvizhinadze’s words, there is another problem when shops highly increase sales prices.
Increased prices came to a head last year when the country had GEL 20% rise.
According to Levan Devnozashvili, General Director of Etaloni, the company was supplied by local mills. They use about 7-8 tonnes of wheat every day. The actual value of Etaloni bread is 50 Tetri and the company sells it for 55 Tetri.
“As for price changes, in the middle of October they’ll increase by about 10 or 15 tetri. Prices on flour will increase because of international tendency and world market inflation. We carry flour from Kazakhstan, Canada and Azerbaijan. In our market bakers combine native wheat with foreign ones which usually lowers the price,” said Devnozashvili.
From 15 October Etaloni is going to increase prices on its products. The company uses 5 sacks of flour per day, not only for bread, also for cakes and other confectionary.
“We have information that a bag of flour, the price of which was GEL 47, will increase by GEL 1 at the first stage,” claimed Maia Jolokava, pastry cook of Swiss Baker.
As she said, if summer is the period of the cheapest prices for crops, spring is the most expensive one.
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