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Russian grain embargo is expected to increase the bread price in Greece

17 August 2010 / 09:08:43  GRReporter
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Temporary ban on exports of cereals and flour, which Russia imposed until the end of the year, is expected to raise the price of flour on the Greek market. The decision of the Russian government caused panic on the international commodity exchanges and the price of wheat shot up to the highest level this year.

“Price increases on the Greek flour market are unavoidable,” said Dimitris Halatsoglou, President of the Greek Union of producers of flour. According to him, however, the embargo imposed by Russia is pretext that caused surge in prices on the world and the Greek market. “I do not think there should be an increase in this period at least as far as the domestic market is concerned. But traders who have cereal stocks in silos increase the prices” said the representative of the manufacturers of flour, adding that the price producers receive is really low and amounts to 0.12 euros/kg wheat. The stocks mentioned above were bought at this price but immediately after the announcement of the Russian embargo the price jumped to 0.22 euros/kg and some of the producing countries like Russia, Germany, France and Hungary now sell even their last year production at 0.28 euros/kg.

With regard to Greece, lack of space and financial reasons do not allow mills to store large quantities of wheat. That is why some traders raise flour prices by 20% -25% today, and this will inevitably increase the price of bread and other goods for daily use. The increase is expected to be in the range of at least 30%.

Traders said that after the huge rise in grain prices during the food crisis in 2008, when the price was 0.50 euros / kg, there was a decline that has reached the lowest price for the last 10 years. But the fact is that this decrease was not reflected in the price of bread.

As GRReporter wrote a few days ago, the potential increase in the value added tax on foodstuffs from 11% to 23% lays further fears for the bread price.

The Union of producers of flour is hoping that the situation will get normal and that prices will return to their logical values for both consumers and producers of cereals. It is also mentioned in their message that “opinions and judgments made under conditions of panic serve dubious interests and create a negative market environment.”

Tags: Bread priceRussian emargoFlourCerealsEconomyStock news
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