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WHOM CHEAP WHEAT FAVOURS
Norayr Hovsepian. 31-08-2005
Azat Artsakh Nagorno Karabakh Republic [NKR]
31 Aug 05
Today it is the market that determines prices, moved by the forces of
supply and demand. The reality is simple and very practical. The market
sets its rules, and the buyer may choose which product to buy. However,
there are cases when this "alternative" does not work. The price for
a number of products is almost constant; these products are necessary
for everyone. We would not be mistaken to include bread among these
products. But in this case we come across something that is difficult
to understand (for ordinary people) even in a market economy. A
lot of factors determine market price, among these the price of raw
materials. Now let us come back to our reality. In the past one or two
months the price for wheat dropped by over 25 per cent. In 2004 the
price was between 90 and 120 drams, while this year it is hardly 65 -
70 drams. If we imagine the price to be a thing that is supported by
a great number of springs, it will remain steady if one of the springs
fails. Who suffers and who is to blame? Naturally, the dropping price
for wheat is a blow to the interests of grain producers. Besides,
keeping the price for bread unchanged injures the interests of the same
producers. Now in more simple terms. Today those involved in grain
production can be divided into two groups: part of them produces for
their needs (mainly the village population), the other part for the
market (city dwellers comprise a significant number among them). For
the former the decrease in the price for wheat and the unchanging
price for bread means very little (they neither sell wheat nor buy
bread), whereas the situation is different for the latter. They
lose both as wheat sellers and bread buyers. The picture acquires a
funny shade. Now if we add to it the pensioners, sole parents and,
generally, the whole population, we will have the whole of the people
who are worried by the problem of bread. To whom can one turn to? The
question is urgent and concerns many people. Is there a mechanism
of control the citizen can rely on? The NKR Ministry of Agriculture
found it difficult to answer this question. The Ministry of Finance and
Economy gave a similar answer. As a result, the producer, the retailer
and the consumer (the latter involves everyone independent of their
living standards and public status). We tried to attend to all the
three. One of the largest bread producing factories in the country is
Stepanakert Bread Factory. According to the executive director of the
company A. Hayriyan, the factory supplies 40 per cent of requirements
in the capital. Besides, a significant amount of bread is sold in the
regions. 3.4 - 4 tonnes of bread are produced daily. The company daily
distributes 13-14 thousand loaves of different kinds of bread to shops
in Stepanakert. The executive director of the company assured that the
price for bread is not going to change. "The bread price dropped in
February and March of the current year. But I do not think that the
price will again go down," said Mr. Hayriyan. As to the reason of
the decrease in February and March, and why the low price for the raw
material does not affect the price for the production, he only said
that this is private business and has its own rules. The answer of the
retailers is more than clear. "We get the bread from the producers at
the same price. How can we sell at a lower price?" they say. For the
consumers' part, we were asked different questions such as what they
can do, whom they can turn to. They wonder if they can be sure that the
price for bread will remain the same if the price for wheat goes up.
Norayr Hovsepian. 31-08-2005
Azat Artsakh Nagorno Karabakh Republic [NKR]
31 Aug 05
Today it is the market that determines prices, moved by the forces of
supply and demand. The reality is simple and very practical. The market
sets its rules, and the buyer may choose which product to buy. However,
there are cases when this "alternative" does not work. The price for
a number of products is almost constant; these products are necessary
for everyone. We would not be mistaken to include bread among these
products. But in this case we come across something that is difficult
to understand (for ordinary people) even in a market economy. A
lot of factors determine market price, among these the price of raw
materials. Now let us come back to our reality. In the past one or two
months the price for wheat dropped by over 25 per cent. In 2004 the
price was between 90 and 120 drams, while this year it is hardly 65 -
70 drams. If we imagine the price to be a thing that is supported by
a great number of springs, it will remain steady if one of the springs
fails. Who suffers and who is to blame? Naturally, the dropping price
for wheat is a blow to the interests of grain producers. Besides,
keeping the price for bread unchanged injures the interests of the same
producers. Now in more simple terms. Today those involved in grain
production can be divided into two groups: part of them produces for
their needs (mainly the village population), the other part for the
market (city dwellers comprise a significant number among them). For
the former the decrease in the price for wheat and the unchanging
price for bread means very little (they neither sell wheat nor buy
bread), whereas the situation is different for the latter. They
lose both as wheat sellers and bread buyers. The picture acquires a
funny shade. Now if we add to it the pensioners, sole parents and,
generally, the whole population, we will have the whole of the people
who are worried by the problem of bread. To whom can one turn to? The
question is urgent and concerns many people. Is there a mechanism
of control the citizen can rely on? The NKR Ministry of Agriculture
found it difficult to answer this question. The Ministry of Finance and
Economy gave a similar answer. As a result, the producer, the retailer
and the consumer (the latter involves everyone independent of their
living standards and public status). We tried to attend to all the
three. One of the largest bread producing factories in the country is
Stepanakert Bread Factory. According to the executive director of the
company A. Hayriyan, the factory supplies 40 per cent of requirements
in the capital. Besides, a significant amount of bread is sold in the
regions. 3.4 - 4 tonnes of bread are produced daily. The company daily
distributes 13-14 thousand loaves of different kinds of bread to shops
in Stepanakert. The executive director of the company assured that the
price for bread is not going to change. "The bread price dropped in
February and March of the current year. But I do not think that the
price will again go down," said Mr. Hayriyan. As to the reason of
the decrease in February and March, and why the low price for the raw
material does not affect the price for the production, he only said
that this is private business and has its own rules. The answer of the
retailers is more than clear. "We get the bread from the producers at
the same price. How can we sell at a lower price?" they say. For the
consumers' part, we were asked different questions such as what they
can do, whom they can turn to. They wonder if they can be sure that the
price for bread will remain the same if the price for wheat goes up.