Azernews.Az

Azerbaijani President Ilham Aliyev on Thursday enacted a decree on drafting a state program on reliable food supplies. The document stresses that fully meeting the demand for basic foods in the country on account of domestic production has not been possible so far.
It said the fact that the demand is considerably above supply in world markets has led to hikes in prices for food, which is taking a toll on the Azerbaijani market. This adversely affects food supply and living standards of the population, in particular, low-income people. The situation requires maximally reducing dependence of the domestic market on imports and creating food reserves.
Considering all this, President Aliyev instructed the government to develop a draft of the mentioned program over three months to ramp up agricultural production and to improve food supply to domestic consumers. Although preparation of the program has been vested in the Cabinet of Ministers, non-governmental organizations and the world's leading experts will be drawn to the process as well.
The program envisions support to the National Fund for Assistance to Entrepreneurship and streamlining its activity. It will also outline priority fields and future activities.
"President Aliyev's decree is a pivotal document that should be assessed highly," said head of the Economic and Social Development Center, economist Vugar Bayramov.
He emphasized that food shortage has turned into a serious problem worldwide. Food producers have either reduced or stopped exports, which is making things worse.
"Kazakhstan has already suspended grain exports, while India reduced rice exports by up to 40 per cent. The price for grain in world markets has risen 130 per cent in the past year alone, while the price for rice increased by more than 20 per cent in March alone. Exporting countries are primarily trying to meet domestic demand now."
The expert said it was important to create grain reserves while taking into account the needs of the population for at least half a year ahead.
Azerbaijan's annual demand for grain is 3 million tons, of which 30 per cent is imported from Kazakhstan and Russia.

Bread prices rise
The price of bread in local stores in Azerbaijan has risen by a third to 40 Gapiks (about 50 cents), in a development sellers explain with the increase in the cost of flour.
The Agriculture Ministry official Sabir Valiyev said bread prices were free of state control and some entrepreneurs were therefore responsible for the increase. He added, however, that the Grain Fund to be set up by the government would prevent price rises in the future.
The prices for bread in the country have doubled in the past year alone. A loaf of bread cost only 20 Gapiks before the hike in prices for energy, housing and transportation services early in 2007.
Head of the Economic Research Center, Gubad Ibadoglu, says the rise in bread prices was anticipated. He said two methods have been used so far to artificially prevent such increases. "One of them is reducing the weight of baked products, while another one is decreasing the quality of bread. In the past few days, we have seen both."
Ibadoglu said the psychological factor has also contributed to the price increase, as the broad public is aware of the food shortage and rallying prices in world markets. Moreover, news have come out in the past few days that Kazakhstan suspended grain exports to a number of countries, including Azerbaijan.
"If the weight of a loaf of bread stays the same (400 grams), and no other changes take place, the price of 40 Gapiks will allow to ensure profitability of the bakery business. However, if informal and additional expenses emerge, this price level will not keep bakeries profitable. I therefore believe that steps should be taken to cut expenses in this field," the analyst said.
Commenting on the tax breaks provided for the imports of flour, he said the measure will not have a tangible impact on the prices.
"Therefore, I don't think 40 Gapiks is the final price of bread. The increase will be continuous, and the price will ultimately be set at 50 Gapiks," Ibadoglu said.
The government passed a decision last Wednesday to lift the Value Added Tax and customs duties from the imports of flour and rice, saying the measure would lead to a reduction in prices for the two products in the domestic market.