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Republican Oligarch Urges Businesses Not to Import Flour to Avoid Hurting Local Producers: Press

Citing own sources, Haykakan Zhamanak daily paper reports in an article entitled “Looting for the sake of the homeland” that last week, MP from Armenia's ruling Republican Party Samvel Aleksanyan (Lfik Samo) held a dinner at his Parvana restaurant for head of businesses that are engaged or plan to engage in flour import.  In the warm atmosphere of the luxurious dinner, the daily writes, Aleksanyan informed the businessmen that “it's not advisable” anymore to import flour to Armenia.

“Aleksanyan noted at once that 'the advice' was not coming from him but from the highest authorities of the state. He explained thoroughly why there was no longer the need to import flour from other countries. The problem, Aleksanyan said, is that in Russia, for instance, the price for flour has decreased significantly, and if it's imported to Armenia, flour of local production will not be able to compete with it. If there's no demand for Armenian flour, flour mills will stop operating, there will be downsizing, 'etc, etc.' In other words, the ban on Russian flour import is imposed to ensure the safety of the nation, the homeland, and the country.”

The paper stresses that the main flour producer in Armenia is Baghramyan Flour Mill which “belongs directly or indirectly to Aleksanyan himself: that is, the import of cheap Russian flour affects Aleksanyan personally.”

“In Russia's Krasnodar region, the wholesale price for a kilo of high quality flour is 19 rubles – 115 drams. Add the 20% VAT, and we get 137 drams. Including shipping, transportation, storage and other logistic costs, the final price averages between 180 and 190 drams. This would be the objective price for a kilo of Krasnodar flour in Armenia if there were a free competitive environment for its import. Currently, a kilo of flour in Armenia costs AMD 240 – a difference of 60-70 drams or about 25%.

“According to official data, an average amount of 290 tonnes of bread is baked in Armenia in a year. As evidenced by the above mentioned, our 'flour kings' earn unjustified 60-70 drams per kilo of flour. Baking one kilo of bread requires 700 grams of flour, which means that flour makes 70% of bread prices.

“Bakeries could reduce prices by 17-18 percent if they bought 25% cheaper flour. A basic arithmetic operation shows that only the sale of flour to bakeries [with its current selling price] allows our 'flour kings' to loot about 20 billion drams, or USD 40 million, yearly. If we took into account the flour used by business entities producing pastry or pasta, the looted sum would amount to USD 60-65.”