Armenia’s Twisted Reality: Bread Prices Rise as Wheat Gets Cheaper Globally

Wheat futures have tumbled 17 % in the past year as global production and inventories headed for all-time highs. A further 7% decline in world wheat indicator price is expected this year and the price is expected to average at around 275$ a ton. Meanwhile in Armenia the price of bread and cereals rose 11% in December 2011 year on year, according to eMedia.

Global Wheat Prices Based on Index Mundi data
Global Wheat Prices Based on Index Mundi data

According to the same source, the cost of imported wheat in Armenia rose 23.5% in a market dominated by two companies: “Alex Grig” LTD and “Manana Grain” LTD.

Bread Prices in Armenia based on National Statistics Service Data
Bread Prices in Armenia based on National Statistics Service Data

Cereals constitute up to 30% of the official consumer price index in Armenia, so its no wonder that wheat is considered to be the most important crop here.

Although wheat is dominating in cereal crop areas, it still cannot meet the local demand. Hence, on average 55-70% of aggregate demand is covered by the imported wheat, so even the 20% rise in wheat production in 2011 (220 thousand tons compared to 183 thousand a year earlier) couldn’t offset the substantial price hike in the cost of imported wheat.

PS: I’ve got a personal solution to the problem of more expensive bread at hand. Eat less bread! Yep, it is said to be good for health too. But I have no clue what should be done for those in Armenia, who can’t afford anything other than bread. Breaking up grain import oligopoly could be a solution, but the Armenian government neither has desire, nor the guts to do it.

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8 thoughts on “Armenia’s Twisted Reality: Bread Prices Rise as Wheat Gets Cheaper Globally

      1. But your solutions of the problem are also valid. It all starts with the change of behavior and demanding proper solutions from gov-t.

  1. One other solution would be to eat less in general. Judging from the pictures of the Armenian officials seen on the internet, there seems to be an obesity pandemic in the country.

    1. loool :))

      I bet they’re getting bread for free or at discount prices.

      I’ll tell you more – one of the cheapest places to eat in Yerevan is the canteen of the National Assembly (it is actually big and diverse enough to be called a restaurant).

      I’ve had the chance on a couple of occasions when visiting the Parliament to eat there. The MPs can have good food for half the price that you’d pay at any crappy restaurant in Yerevan.

    2. Well, as good citizens, the Armenians need to subsidize the caloric intake of their deputies as they toil to create laws to move the country forward. But I think they need to go further. Judging from the poor quality of the legislative output (short-sighted and sometimes anti-Constitutional even), 50% discount may not be enough. They may also need to add some dishes made of cow or sheep brains to bump up their intellectual capacity to the capacity of those respective animals.

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