Who is Responsible for the Increase in Bread Prices in Armenia?

“It’s another blow to the head of our consumers: the price of bread jumped about 20 drams,” said Consumers’ Union of Armenia Chair Armen Poghosyan, speaking to journalists in Yerevan today and taking as his basis findings from a study conducted by the consumer group.

According to Poghosyan, those responsible for the situation are the RA State Commission for Protection of Economic Competition and the ministries of agriculture and economy.

“In Armenia, in terms of the provision of bread, local production can provide 40% [of the market] at most,” he assured.

Poghosyan noted the reason for the increase in price is the lack of (state) control and reprimand. “If there’s a chance of receiving additional income, and it is not controlled, if there isn’t inevitable punishment when violations have been committed, those are ways out which are occasionally used. This is [simply] the next one.”

At the same time, according to the chair of the Consumers’ Union, a trend to decrease prices is already noticeable.

Economist Samvel Avagyan, in turn, speaking on international developments, noted that the situation in Armenia has a direct relation with the global market.

“According to Friday’s numbers, the global price of wheat reached $330 US per one ton, while at the Paris Stock Exchange, it’s up to $350. This is the highest international price of wheat in the last 30 years,” he said.

Avagyan also informed the press that 1 ton of wheat is being sold for $400 at the seaside Georgian town of Poti. This, according to the expert, is determined to some extent by the wholesale price of flour.

“The main reason are those statements which are being made by different EU analytical centers that the European Union will export less wheat in 2011 than in previous years,” he said, noting in this context, a sharp increase in demand has been recorded by Mediterranean countries.

“But a food crisis, in a global sense, is not expected in 2011, because during the last fall harvest season in 2010, wheat was planted in larger plots than any other previous year,” he added.

Avagyan said state reserves of wheat in Armenia amount to 50,000 tons, which, according to him, “is a month’s supply and has been amassed for a black [rainy] day.”

“There are a few reserves kept by private importing companies, Manana Grey, Mancho Group and Alex Grig — they have about a 1–1.5 months’ supply. But the government does not have any leverage to force these companies to see wheat or flour to the public at a favorable cost,” concluded the economist.

Note that Mancho Group LLC Executive Director Ivan Mosoyan was also invited to the press conference; however, he declined from attending, saying he is out of the country.