The prices of bread and flour in Armenia have risen by roughly 20 percent in recent days as a result of the Armenian government says is a significant decrease in global wheat output expected this autumn.
Agriculture Minister Gerasim Alaverdian said on Thursday that the drop will be particularly sharp in Russia, Armenia’s leading wheat supplier grappling with its worst drought in decades.
“There is a lot of concern that it will become much more expensive, that this year’s harvest will fall well short of the 2009 level,” Alaverdian told journalists. “Our businessmen work with those [wheat-producing] states and have credible information that wheat prices will rise. So they are adjusting their pricing policy accordingly.”
Government critics dismissed this explanation, arguing that wholesale importers are still selling wheat and flour which they purchased last fall at much lower prices. They said this is made possible by a de facto monopolization of wheat import by two companies.
The largest of them, Aleks-Grig, is controlled by Samvel Aleksanian, a wealthy businessman close to Armenia’s leadership. Aleksanian also controls lucrative imports of other basic foodstuffs to the country.
“Our businessmen often blame international price rises, while still selling their old stuff,” Hrach Berberian, chairman of the Armenian Agrarian-Peasant Union, told RFE/RL’s Armenian service. “They are just making huge profits.”
Berberian said the State Commission on the Protection of Economic Competition (SCPEC) should immediately step in and impose sanctions envisaged by Armenian anti-trust legislation.
However, the chairman of the SCPEC, Artak Shaboyan, indicated on Wednesday, that the regulatory body will not rush to take any punitive measures against the importers. “The commission is not a price regulation body,” Shaboyan told journalists. “Our job is only to deal with abuses of competition legislation.”
Alaverdian, for his part, said the best way to guard against price fluctuations in international markets is to ease Armenia’s heavy dependence on wheat imports. According to the National Statistical Service, Armenian farmers grew just over one third of about 600,000 tons of wheat consumed by the country last year.
Earlier on Thursday, the Armenian government formally approved a five-year program which it says will boost domestic wheat output to over 350,000 tons by 2013. The program puts the emphasis on use of new, more productive sorts of seeds to be imported from Russia or grown by local agricultural firms.
The Ministry of Agriculture is to import 1,000 tons of Russian “elite” seeds and distribute them to farmers this year. The government allocated 558 million drams ($1.5 million) for that purpose.