(MENAFN- Trend News Agency) BAKU, Azerbaijan, August 16. Amid concerns
about a shortage of supply, prices for wheat flour are rising on
the global market, reports.
In particular, preliminary forecasts of the Food and Agriculture
Organization of the United Nations (FAO) show that in 2022-2023
volume of wheat worldwide will not be enough to meet the expected
demand.
Among the factors that lead to an increase in flour prices are
restrictions on the part of the world's main grain exporters -
Russia and Kazakhstan. Russia imposed a temporary ban in March 2022
on grain exports to the countries of the Eurasian Economic Union
(EAEU) until June 30, 2022. The monitoring of the Russian Grain
Union showed that Russia exported 5.6 million tons of basic grain
crops (wheat, barley and corn) for a month and a half of this year
(beginning on July 1), which is 12 percent less than in the
previous year.
Restrictions have been imposed on Kazakhstan on the export of
wheat, flour and sunflower seed since July 8, 2022. It's forbidden
to export more than 550,000 tons of wheat or meslin (a mixture of
wheat and rye), more than 370,000 tons of wheat or wheat-rye flour
and more than 15, 000 tons of seeds from the country. Quotas will
be valid until September 30.
In addition, Ukraine, which is one of the world's most important
grain producers, was also unable to provide supplies due to the
blocking of ports. And only after the signing of the agreement in
Istanbul with the mediation of the UN and Türkiye on July 22,
exports resume. Given that Ukraine accounts for 10 percent of the
world wheat market, 15 percent of corn and 13 percent of barley,
the suspension of supplies from this country for such a long time
could not but affect the grain market.
Another reason for the increase in flour prices is that the
COVID-19 pandemic has raised concerns about food shortages in many
countries, so several large countries are stockpiling such
essential products.
All these events, in addition to an unprecedented drought in the
world, lead to an increase in flour prices both at the wholesale
and retail levels. It should also be emphasized that along with
disruptions in the supply chain, increased transportation costs and
delivery times also affect prices.
The following link shows the prices of flour in various
countries of the world:
prices are determined by the market and all the previously
mentioned factors, the shortage of these essential products makes
further increases in price inevitable.
The ongoing unfavorable geopolitical situation in the world will
sooner or later lead to a rise in the price of flour in Azerbaijan,
where the self-sufficiency rate of grain amounts to 62 percent as
of January 2022.
According to the latest data from the Azerbaijani State
Statistics Committee, wheat imports to Azerbaijan amounted to
400,748 tons from January through June 2022, which is 0.5 percent
less compared to the same period in 2021. The total value of wheat
imported into the country amounted to $142.9 million (an increase
of 39.7 percent).
Nevertheless, in Azerbaijan's case, the increase in grain prices
seems to be a temporary phenomenon, as the country is actively
working to reduce dependence on wheat imports. In order to
significantly increase the production of milling wheat, a special
program has been developed in the country, and new types of
subsidies are applied.
President of Azerbaijan Ilham Aliyev signed a decree on July 19,
2022 'On a number of measures to increase the level of
self-sufficiency in milling wheat'. In accordance with the decree
at the initial stage, as a pilot project for food grain produced by
persons who assumed obligations to produce food wheat on farms
using modern irrigation systems and handed it over to the State
Reserves Agency of Azerbaijan and flour mills in line with the
contract concluded with the Ministry of Agriculture, starting from
2023, a subsidy will be applied for a period of 5 years.
In addition, the state purchase price for milling wheat will be
determined annually until August 1, 2022, and in subsequent years -
annually until July 1, taking into account the production cost of
milling wheat and the possible profit of the producer.
The liberated territories of Azerbaijan also have a huge
potential in the field of grain production.
In particular, the Fuzuli, Aghdam and other districts of the
liberated territories were among the advanced grain production
areas and contributed to the formation of the grain fund. Given
that wheat cultivation is carried out using new technology, it's
possible to organize grain production with higher productivity in
these areas.
Preliminary estimates show that after the restoration and
reconstruction process, agricultural products worth 1 billion manat
($588 billion) can be grown in these territories at the initial
stage, a significant part of which is expected to be cereals. From
this point of view, the liberated territories of Azerbaijan will
have a special share in meeting the need for bread. This will
reduce dependence on imports and at the same time minimize the
impact of price changes on the global market. It is expected that
more than 85 percent of the grain demand will be met by local
production.