“Uniagroprotect” solicits a price of 2 lei for buying wheat for the state reserve. IPN economic analysis

The association of agricultural producers “Uniagroprotect” intends to ask the Government to set a minimum price of 2.10 lei for the purchase of alimentary wheat for the state reserve. The deputy chairman of “Uniagroprotect”, Alexandru Slusari, declared for Info-Prim Neo that this price was estimated by the association after analyzing the growth tendencies of the price of wheat both on regional and world markets. The trendy of price increase is generated especially by the situation of Ukraine and Romania were a bread-related crisis is expected, because big areas of autumn wheat frozen the last winter. Many experts foresee wheat’s increase in price in the next month, although traditionally at the beginning of the harvest period it drops. According to the quoted source, in Ukraine the price of wheat will be set between USD 125-130 per tone, while in May the price constituted USD 116. In Romania, the acquisition price is of USD 120. Romanian producers intend to ask the Government for an acquisition price equal to MDL 2.35, Slusari said. Moldovan agricultural producers are at present waiting for the traditional announcement of the price for wheat’s public acquisition, because it determines the increase in price of wheat on the internal market, being usually by 10-20% higher than the market one. Although the state buys relatively small quantities for influencing the internal prices, the price set by it can be representative for other market participants. “Producers understand that the state’s necessities are not high, and the financial resources – limited, but some countries, having surpluses of money, use public acquisitions in order to contribute to wheat’s increase in price, because the role of the state is to apply all the admissible leverages in order to support the local producer”. The quoted source mentioned that this increase can not be much higher than the average price on the market, because this fact could influence the price for bread, and this is against the state’s policies. Over the last 3-4 years, public acquisitions in Moldova do not exceed 35 thousand tones while the total production varies between 150 thousand (2003) and 1.1 million tones (record volume of the last year). At present, the wheat’s average price on the market constitutes 1.5 lei. Taking into consideration the tendencies of price increase on the regional and international markets, “Uniagroprotect” welcomes the engagement of the Government to change until September 30 the decision from 2004 which stipulated that all export operations with wheat must be performed through the Universal Commodity Exchange of Moldova (UCEM). In this way, the state will liberalize the export of wheat, Slusari states. Even if the transactions are performed quicker through UCEM, Slusari said that some exporters are not very pleased with this method, because the exports through UCEM require supplementary expenses when registering export contracts. The most dissatisfied are the producers of the border zone, who consider that the terms within which they are forced to register the contracts are an impediment due to which they can lose advantageous contracts. The best method for exports’ improvement is the direct sells mechanism, Alexandru Slusari emphasized. Because of the weather, the harvest of wheat will start after July 15, with a delay of 10-12 days comparing with the last years. 31 ingathering enterprises, with a depositing capacity of 1.116 million tones will work on the territory of the Republic. For 2006, it is planned to purchase 30 thousand tones for the state reserve. The approximate price for wheat will be estimated by a group of exports of the Ministry of Agriculture and Alimentary Industry. The area of fields cultivated with wheat in Moldova constitutes about 250 thousand hectares, and the experts foresee an average harvest of three tones per hectare.