The major companies importing grain and flour assure that very soon the price of bread will be increased. Since August 5 Russia has prohibited the export of grain and grain products from the country. The reason is the fact that according to the Russian government the hot weather and fire spoilt more than 11 million grain fields this year. This unexpected decision of the biggest exporter of grain was a negative thing for many countries, including Armenia as well. The grain produced in Armenia covers only the 30% of the domestic demand. This rate is going down year by year as last year the domestic grain production covered about the 40% of the domestic demand. The grain exporting companies such as Manana Grain, Mancho Group and Alex Grig have been in contractual relations with the Russian exporters mainly. Till June about 140 thousand tons of grain was imported, and in order to meet the domestic demand, there is a need to import more 270 thousand tons of grain. Besides the fact that the price of the Russian grain is cheaper, it is also worth mentioning that the quality of the Russian grain is better than that of the Bulgarian or Iranian grain. Armenian companies have to look for new partners in new countries. They will have to pay extra money for the increased price in the international market and the additional transport expenses as well. This will result in the increase of the price of bread and other products. The price of transporting one tone of grain to Georgia from Russia used to be 20-25 dollars, and we paid more 50 dollars to transport it to Armenia. These expenses will be higher if we export from other countries. The price of bread and flour is higher now. The largest importers of grain say that the price increase will not be limited with this phase and the existing prices are tentative. The owner of Mancho Group Mr. Vanik Mosoyan says, “The price we are asking for flour now is not a real price. These are artificially reduced prices. In these conditions the price of one sack is 10,000 now but it should be around 12,000. This is not scary because Armenia has always sold the flour for lower prices than even the countries that are producing that grain. The recent growth of prices in Armenia are corresponding to the demands of the market and now the millers of Armenia are working with losses.” Mr. Mosoyan says that because of the limitations of export on part of the Russian government many contracts have been invalidated. “We brought a lot of cargo but could not import ten thousand tons and it was left there. We may import from Ukraine. We had a ship with grain for exporting but they stopped us, however there was no official notification about that,” he said. Mr. Mosoyan says that alternatives may be Kazakhstan, Hungary and Bulgaria. He says that the best one among these grains is the grain produced in Kazakhstan as the other ones don’t have good quality. “It will make bread but it is not like the Russian grain. I have a meeting with the representatives of Kazakhstan on the 29th and we must work out a final route and import grain,” he said. Yesterday Mancho Group imported grain from Iran. He complains that Armenia has a little capacity of grain and it does not have a good quality either. Concerning the rumors that there may be deficit of bread Mr. Mosoyan says, “There will not be deficit for sure. I have a reserve of six months in accordance with the quantity of my import. I know that the other two importers have reserved grain in their stores too. Price growth is one thing, deficit is another thing. There will always be bread in stores with normal prices. If the price of one sack of flour goes up by 2,000 drams, the price of one bread will go up by 20 drams.” Manana Grain company is a large importer of grain too. The miller and bread factory of Armash belongs to this company too. This company owes the 34,4% of this market. He owner of the company Gurgen Nikoghosyan says that according to their agreements the contracts with Russia are still in force for 90 days, but there are many contracts which have been failed, as a result of which his company has got a lot of losses and he expects that Russian party will compensate. Mr. Nikoghosyan says that the explanations of the Russian government to stop the export are not justified. “There was information that the prices of grain would fall and the tendency was going in that direction. But everything changed in ten days. The Russian government says it is a reason of bad weather conditions but in fact these are the manipulations of the Russian big companies. The weather was not good this year but not to the extent of stopping the export. This is the fourth case in my experience but this one is faster than the others and technically wrong.” According to him alternative of grain import can be Croatia, Bulgaria, Serbia, which are not too far and the transport expenses will not be that much. Concerning the assurances that the increase is not justified as the importers had imported the necessary quantities before that change in the market Mr. Nikoghosyan said, “With such baseless rumors they are stimulating the chaos in the country, thus creating grounds for speculators to enter the market and increase the price. If those people can prove what they are saying, we are ready to pay the necessary penalties to the state. Before the price would go up we had a little capacity of grain, which would be enough for a half month only.” Says that such people can calculate the prices offered in stock markets, add the transportation expenses and taxes, and they will see that the selling price of flour is lower than the established market price. Concerning the domestic grain production he said, “Our agriculture people have calculated that they will have losses if they cultivate grain. That is why they are doing other things and we don’t have much grain. Today farmers prefer selling tomatoes and buying bread with that money than cultivating grain.” He says that people should not worry as they will always have bread, “Now we are looking for alternatives but there is a reserved grain in the country, which can be used for three or four months. There will be bread, but the price will be formed by the rules of the stock market.” The director of Alex Grig company’s miller in Baghramyan village Sayat Gasparyan assures that the grain reserves are enough and there will not be any crisis of bread. Says that definitely they will import grain either from Kazakhstan or Canada instead of Russia. He did not say anything about the price changes and advised not to discuss this topic in newspapers generally as people panic because of such articles in newspapers. As it is spoken about the high rates of grain as they say the main companies dominating in this market are selling the grain they have bought for lower prices at higher prices we tried to get explanations and justifications about the price increase from the state committee of economic competition protection. The press secretary of the committee Nelly Danielyan told us that they had researched the market of grain and flour and asked questions to the importers about the prices and capacities of import. “We have already received the answers from the companies. Now we are analyzing the situation, after which we will draw conclusions. According to the law, the committee procedures should be finished within 90 days, but in consideration of the civic interest and noise around this issue, the experts of the committee are working faster and in the near future we will come up with an announcement about this issue.” The situation of grain was also discussed during the visit of the Russian president Dmitri Medvedev to Armenia. After the discussions the government gave some instructions to the ministry of agriculture. We were informed by the ministry that currently this issue is discussed at the ministry as well. We will write about the opinions of the ministry of agriculture about the situation in the grain market in our future publications.
