By Trend

Upper limits of flour and bread prices have been determined in Azerbaijan, Trend reports via the joint statement of major flour and bread producers of Azerbaijan.

According to the statement, the upper price limit in Baku for a bag of flour weighing 50 kg is now 40.7 manat ($23.9).

In accordance with this, the retail price of traditional (round) bread weighing 500 grams will be 55 gapiks (32.3 cents), weighing 600 grams - 65 gapiks (38.2 cents), and the retail price of bread weighing 650 grams - 70 gapiks (41.1 cents).

The statement also noted that against the background of global economic processes, the consequences of the COVID-19 pandemic, growing demand for food wheat in world markets, as well as various protectionist measures taken by wheat-producing countries to protect the domestic market, and prices for food wheat continue to rise.

Political and military conflicts in the countries which are the main producers of food wheat have caused serious risks in the field of pricing and supply, as well as restrictions in world trade in this product on world markets, the statement said.

The uncertainty caused by conflicts, soaring logistics costs for food wheat, export restrictions and export bans imposed by producing countries have led to reduced supply in the world market and higher prices.

According to the Food and Agriculture Organization of the United Nations (FAO), the increase in world food prices in July 2022 compared to the corresponding month in 2021 was estimated at 13.1 percent. The organization has forecasted a decline in global production in 2022 as a whole.

Besides, one of the important issues for Azerbaijan is that the high export tariffs introduced in February 2021 by one of the largest producers of food wheat and the main exporter of wheat to Azerbaijan, Russia, are still in force.

Due to the situation on world markets and export restrictions, business entities importing grain and flour into the country faced serious price pressure. In July this year, the average import price of food wheat into the country amounted to $402.46, which is 67 percent higher than in the same month of 2021 ($241), and 18.4 percent higher than in December ($339.89).

Nevertheless, according to the statement, wheat and flour prices were kept below real prices last year by government subsidies to mitigate the impact of a sharp rise in world prices for milling wheat in Azerbaijan.

It’s impossible that this situation will continue in the long term, due to which since the beginning of this year, business entities engaged in the supply of food wheat and flour production have adjusted flour prices in accordance with the prices for imports of food wheat since the beginning of the year.

Flour producers have mobilized all their efforts to ensure that the prices of bread and flour products do not rise above the level indicated until the 2022 cereal harvest period, and although there was an increase in the price of food wheat in the past period, there the price of flour didn't increase. However, the ongoing dynamics of growth in grain prices on the world market necessitates adjusting the prices.

In the current situation, taking into account import prices (the average monthly import value of food wheat over the past three months was at the level of $365) and processing costs, an upper price limit has been set: the upper limit for the cost of a bag of flour weighing 50 kg in Baku will be 40.7 manat ($23.9), concluded the statement.