TODAY.AZ / Business

Azerbaijan needs to increase wheat production amidst predicament in global trade: expert [COMMENTARY]

27 November 2023 [13:45] - TODAY.AZ
Qabil Ashirov

Due to the war in Ukraine, the uncertainty of prices in the world continues. As is known, reciprocal embargos imposed by the Western countries and Russia caused a soar in the prices of food, oil, and gas. The last such ban was imposed by Russia last week on the export of durum wheat. Previous week the Subcommittee on Customs and Tariff Regulation of the Russian Federation has adopted a resolution to impose a temporary ban on the export of durum wheat for a period of 6 months, from December 1, 2023, to May 31, 2024. According to experts, the ban on exports of durum wheat did not impact the prices too much because it is used in the production of pasta, and the main buyers of Russian durum wheat are Turkiye and Italy.

Besides the ban on durum wheat export, Russia also established a tariff quota for the export of major grains – wheat, barley, corn, rye – in the amount of 24 million tons which posed more anxiety. The quota is expected to be in effect from February 15 to June 30, 2024. It is worth noting that previously the quota was 25.5 million tonnes. Besides, the quota does not apply to supplies to the EAEU.

Speaking to Azernews on the issue, Dean Shmuel Elmas, an analyst and expert on Geopolitics and Energy from Tel-Aviv, Israel noted that global wheat prices have sunk last month to their lowest level in about three years. The market price became 60% lower than in March 2022, when the Russo-Ukrainian war started. He noted that before that, In July, Russia withdrew from the U.N-brokered deal of the Grain Corridor, and because of the same war. Ukraine lost about 300,000 tonnes of grain since July.

“On the other hand, Russia’s wheat exports reached all-time highs a few months ago. In May, the US Department of Agriculture predicted that Moscow would export 45 million tons of wheat in the 2022-23 season. That tallies with the S&P Global data, which has 46.1 million for that season, a figure forecast to be exceeded by the amount to be shipped in 2023-24. However, the main point is, again, the prices. The world is in a silent trade “war.” We saw that in the energy sector, then with the grain corridor and the durum wheat quotas right now. Russia is trying to find any way to hurt the Western world and durum wheat is the new tool,” Elmas said.

As regards Azerbaijan, the pundit stressed that the country's dependency on the import of wheat from Russia creates another burden. Given the fact that some 81 percent of wheat is imported from Russia, the expert pointed out that it is not advisable for any country to be dependent on any other country at such a level. It would be better for Azerbaijan to increase its wheat production or at least diversify its wheat source. In this case, the country will not be fugitive against any risks.

“During January-September, 2023, Russia accounted for 81% of wheat imports to Azerbaijan, while Kazakhstan stood at 19%. Azerbaijan increased the import of wheat from Russia. According to the data, in the initial three quarters of 2023, the import of wheat from Russia increased by 10% to 639.281 thousand tonnes. The supply from Kazakhstan stood at thousand 149.955 tonnes (down 6.4%) at the same period of time. Azerbaijan's main wheat import source is Russia, so Baku is exposed to the risks. In Fact, Azerbaijan is almost completely dependent on one source, so it will soon be required to find alternative sources of imports - otherwise, in its case too, it will be "fuel" for inflation,” the expert added.


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