Experts say increased customs duty on wheat by Russia might cause flour price fluctuations in Georgia

By Nika Gamtsemlidze

Friday, January 15

There are several reasons that influence increasing wheat price in Georgia and around the world as well

The rising prices of wheat can lead to increased bread prices in Georgia

According to the statement of Leval Silagava, Chairman of the Georgian Wheat and Flour Producers Association, the increased customs duty on wheat by Russian can cause price fluctuations of flour in Georgia.

As Silagava noted, Russia intends to impose a special type of customs quotas on countries that are not members of the Customs Union. The customs quotas will be imposed starting from today, January 15.

Silagava also said that Russia announced two months ago that the duty for these countries would be set at 25 euros per ton of wheat. However, as of today, Russia is discussing a further increase of the tax.

The Chairman of the Association said that the price of wheat has increased by about 70 US dollars in the last 4 months. As Russia intends to introduce the new tax, the price will further increase.

“The price of the wheat per ton in September was $200, today, it is $270. Once Russia introduces the new laws, the effect of it can increase the price up to $300. This will cause a lot of problems for local businesses in Georgia,” said Silagava.

Silagava said that there also are other reasons contributing to the increased price of wheat. He said that one of the major factors is the increased price of electricity. Although the government of the country has introduced different types of stimulus packages for business, they still are not enough to guarantee stability.

Another reason is the exchange rate of the Georgian Lari, which has been devaluating for a while now, which Covid-19 exacerbated even more.

Earlier, the government of Georgia announced a new decision, saying that 50% of the electricity tariff increase will be subsidized for certain categories of food producers. According to the Minister of Economy, Natia Turnava, the decision will ease the pressure on important parts of the business sector.

In 2020, from January to July, Georgia has bought wheat exclusively from Russia. Country has purchased as much as 223,000 tons of wheat, worth more than $49 million.