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Local flour, bread production expected to increase

15 January 2016 15:40 (UTC+04:00)
Local flour, bread production expected to increase

By Nigar Orujova

Azerbaijan that now fights with artificial overpricing aroused by depreciation of the national currency, has exempted import and sale of wheat as well as production and sale of flour and bread from the value added tax, which is expected to increase local production.

The abolition of VAT has greatly reduced the wholesale prices on wheat, flour and bread. Depending on the transportation expenditure, the wholesale price of one bag of flour of 50 kg varies from 21.5 to 22.5 manats ($14-14.3) and retail price – from 23 to 24 manats ($15-15.3).

The 500 grams of bread will be sold at 0.30 manats ($0.19), and 700 grams at 0.40 manats ($0.25) in accordance with the flour price.

The new action will increase local production and improve the competitiveness of the country’s products, said Taleh Gasimov, CEO of the Azerbaijani Karat Holding, engaged in the production of pasta and flour.

“Before, we sold a 50-kg bag of flour for 26 manats ($17), and now lowered its price to 22 manats ($14). By the way, it is not just we – other producers of flour in the country have also reduced the price which now varies between 21.5 and 22.5 manats ($14-14.3) depending on the location of the mill, that is, transportation costs,” he said.

Gasimov noted that this decision gave an opportunity to reduce the price of not only flour and bread, but all flour products.

The decline in prices is beneficial not only to the public but also local manufacturers, as the cost of goods produced in the country will get lower, and it will become cheaper for import, which in turn will enhance the competitiveness of local products, the CEO added.

“Of course, both entrepreneurs and the people are happy with this decision. Flour is a socially significant product, and the release of VAT is a vivid example of the care of the state,” he said.

Earlier in December, after the second devaluation of the manat, the Azerbaijani government said it does not expect price increase or bread deficit due to the devaluation.

The Agriculture Ministry reported in 2015 end that there is no reason to worry, as Azerbaijan has no problem with the grain supply, since the country has enough grain reserves.

About 3 million tons of grain was produced in Azerbaijan last year, and some 1.7 million tons of these products are wheat last year. The country with a population of over 9.5 million people is meeting its grain demand by 75 percent. Demand has increased proportionally to population growth.

The presidential order is aimed at improving the welfare of the people, the stabilization of prices for flour and flour products, MP Tahir Rzayev said.

“Today when I met with the residents of Agjabedi region, they said they are very pleased with this decision. It has already started to produce results. Prices for flour and bread have reduced in the region,” he said.

Rzayev noted that the presidential decree will also contribute to reduce the costs of entrepreneurs in the import of grain.

“This will create conditions for the stability of prices for bread, and businesses will not be forced to raise prices. Bread is a socially significant product, and the price for it should be stable,” Rzayev added.

Earlier it was noted that grain production in Azerbaijan increased by 30 percent compared to the year before. Irrigated grain is planted in the lowland regions of Azerbaijan while the highlands and foothills of the country are sown with grain without irrigation.

Azerbaijan produced over 2.4 million tons of grain in 2014. The record level of 3 million tons of grain production in Azerbaijan was achieved in 2009.

A number of flour-grinding plants of the national importance are operating in Baku, Gandja, Nakhchivan, Kurdemir, Agdash, Yevlakh, Shabran, and Gileri. These fields of the industry, as well as bread-baking, serve to meet the domestic demand of the country.

Currently, besides the large cities, there are small enterprises in the village and settlements including small mills and bread-baking workshops and their network is enhanced.

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Nigar Orujova is AzerNews’ staff journalist. Follow her on Twitter: @o_nigar

Follow us on Twitter: @AzerNewsAz

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