Wheat Prices Spiral in Armenia
Anti-monopoly commission looks into grain sellers as bread becomes luxury item.
Wheat Prices Spiral in Armenia
Anti-monopoly commission looks into grain sellers as bread becomes luxury item.
As a sharp rise in wheat prices leaves Armenians struggling to afford bread, economists are criticising the companies that control the domestic food market.
In the last month, bread prices have risen by more than 40 per cent, while porridge prices have doubled. A 50-kilogram sack of flour which would have cost the equivalent of 21 US dollars a month is now selling for as much as 38 dollars outside the capital Yerevan.
Grain wholesalers said that a rise in the price of natural gas on April 1 raised their running costs and forced them to increase the price of flour and other wheat products. This in turn led to panic buying by consumers, they said.
“The sharp rise in prices has caused an artificial shortage,” Armen Manukyan of Manana Grain, which controls 34 per cent of Armenia’s wheat market, said. “Traders have spread rumours that there will be no more flour, so people have felt forced to buy large quantities of flour at high prices.”
He insisted, “There is enough flour and grain in the country.”
With Aleks Grig, a company which controls more than 47 per cent of the market, Manana dominates Armenian grain sales.
While the ownership of the companies is unclear, some have accused them of profiting from their dominant position.
“Regardless of whether one or two people control the market, they have a dominant position all the same,” Bagrat Asatryan, a former head of the Central Bank, said. “They can agree not to compete, thus raising prices on products coming into the country. That’s what is happening now.”
Asatryan said the relentless upswing in price rises did not correspond to movements on the global market, where grain prices had gone down as well as up in recent months.
He said, “In Armenia there is only one economic law – if world prices rise, things get more expensive here too. And when prices fall, things get more expensive here anyway,” he said.
Hovsep Khurshudyan, an economist with the Armenian Centre for National and Strategic Studies, is among those who believe the government should be doing more to regulate the market.
“Our government does not serve the people, but rather a few importers. It takes no steps to curb their appetites, and as a result power lies with a few groups which receive these high profits,” he said.
The government’s Anti-Monopoly Commission is currently looking into the way grain companies have been operating. The commission’s spokesperson Nelli Danielyan said it was likely to report on its findings sooner than the mandatory deadline of 90 days.
However, deputy agriculture minister Samvel Galstyan told IWPR the problem was caused not by domestic firms, but by a halt in imports from Russia.
On August 15, Russia, which has suffered a bad drought this summer, blocked exports of grain, flour and other agricultural products.
Galstyan said Armenia normally imports 70 per cent of the grain it consumes, most of it from Russia.
The rising prices have hurt for Armenian consumers, particularly those living on fixed incomes.
“It's just a nightmare. They have raised prices for bread and porridge. Earlier in the summer, it was a bit easier to live thanks to cheap foodstuffs, but now prices have gone up,” Lyudmila Grigorievna, 65, said. “I’m on a pension of 38,000 drams a month [100 dollars], and there are people on even less. How can you live on that?”
Naira Melkumyan is a freelance reporter in Armenia.
