The government blamed the unprecedented shortages on increased consumer demand stemming from household preparations for the New Year and Christmas holidays. Its critics claimed, however, that they were caused by a de facto monopolization of yet another sector of the Armenian economy.
Buying eggs in Yerevan shops became all but impossible on Monday after their retail prices of jumped by at least 40 percent, to between 80 and 120 drams (33 U.S. cents) apiece, in a matter of days. The situation hardly improved the next day.
The government and the country’s leading egg producers and food retailers have still not clearly explained the reasons for the crisis. The businesses declined comment on Tuesday.
In a statement issued on Monday, the Economy Ministry said only it both producers and trading companies have begun importing eggs from abroad to satisfy “the population’s additional demand.”
The State Commission for the Protection of Economic Competition (SCPEC) said it has launched an inquiry aimed at determining whether the shortages resulted from any anti-trust practices. Still, a SPEC official, Aram Sahakian, suggested that “speculative commercial demand” is to blame for them.
“Some people, capitalizing on this opportunity, are not putting up eggs [purchased from manufacturers] for sale and are selling them in markets instead,” Sahakian told RFE/RL’s Armenian service.
But Armen Poghosian, chairman of the Armenian Consumer Association, alleged collusion among local poultry firms. “We have very substantiated suspicions that they are withholding eggs to sell them at higher prices on the last two days [of the year,]” he claimed. “I have no documentary evidence of that, but that is very logical.”
Speaking to RFE/RL’s Armenian service, Poghosian said this was made possible by this year’s recent consolidation of the domestic poultry industry.
Armenia -- Eggs on sale in a supermarket amid unexpected shortage ahead of New Year festivities, Yerevan, 28Dec2010
According to the SPEC, two companies now account for 80 percent of Armenian egg production. One of them, Yerevan Poultry Factory, reportedly purchased several other firms this summer after cutting the price of its eggs to below 20 drams. Government critics said at the time that the “dumping” paved the way for the takeovers.
“There was a time when Armenia exported eggs,” said Poghosian. “Now we are in a situation where middle-aged people can recall the Soviet times when people lined up for butter and other foodstuffs.”
Vahagn Khachatrian, an economist affiliated with the opposition Armenian National Congress (HAK), had a different explanation for the crisis. Khachatrian claimed that earlier this month officials from President Serzh Sarkisian’s administration warned the egg firms not to raise the prices above 50 drams despite their increased production costs. The producers have sharply cut their output as a result, he said.
That the authorities are trying to rein in higher-than-projected inflation with administrative methods was implied by Vahan Kerobian, the executive director of Armenia’s largest supermarket chain, Star, on December 15.
“The state is trying hard to restrain inflation but that could lead to even worse consequences,” Kerobian told the Yerevan business daily “Kapital.” He specifically warned of impending shortages of key foodstuffs, including eggs.
Whatever its real causes, the egg crisis will raise more questions about the Armenian authorities stated efforts to ensure fair business competition and improve the country’s broader business environment.
At least some lucrative sectors of the Armenian economy, notably food and fuel imports, are controlled by wealthy individuals believed to be close to the country’s leadership. Analysts say this explains why a more than 6 percent appreciation of the Armenian dram against the U.S. dollar, observed this year, has had little impact on imported foodstuff prices.