Банкеръ Weekly

Briefs

GRAIN MARKET FACES A CRISES OF OVERPRODUCTION

Grain problems will be the first ones which the new government will face in agriculture, branch experts claim. The situation on that market is quite complicated already and a crisis may follow unless urgent, professional actions are undertaken by the State. The old grain, stored in warehouses, remains the big problem. It should be sold out within two months in order to make place for the new crop. No officially confirmed data have been released, but most experts estimate the stored quantities at about 350,000-480,000 tons as of the beginning June. And as the domestic market does not need that wheat, the only possible solution is to sell it abroad. Here we meet with the sluggishness of officers from Nihat Kabil's team. Mr. Kabil has been appointed Agriculture Minister not long ago, but he has been working in the ministry for four years. The country's export is anyway difficult due to the inferior quality of Bulgarian wheat and the low prices. Moreover, there is an export tax which practically makes impossible to agree deals with foreign companies. At the same time, countries from our region are acting much more resolutely. Ukrainians, for instance, decided to revoke the state taxes, which grain exporters used to pay. And the Turkish Government released a subsidy of USD50 per ton of exported wheat. These actions have been dictated by the real conditions on the Black Sea grain market and greatly relieve local producers. Bulgaria, however, does almost nothing in that direction, although the problem is not a new one. The Association of Grain Traders believes that an export subsidy from the State is the only possible solution. According to the organization, the Cabinet should decide if it wants to protect the farmers from bankruptcies and find money to assist the export. Presently, only intentions to cut down transport and port fees have been announced. Rulers, however, are not giving any signs of worries. Deputy Agriculture Minister Boyko Boev said no jolts were expected on the grain market as everything was within normal limits. Last year's crop totalled 3.8 million tons. 1.3 million tons of wheat are used annually for baker's products; 900,000 tons have been exported, and about 300,000 tons will enter the new crop. The data for the last ten years show that the quantity of old grain that remains before the new crop is between 150,000 and 300,000 tons, Mr. Boev specified. But unlike this year, during the past years of rich crop, export began still from the fields and a considerable part of the grain did not reach warehouses at all. It's hard to be said if that will be so in two months. Everything depends on the supply on the European and Black Sea market where countries like Ukraine and Turkey play a significant role. They not only offer bigger quantities, but also a better quality of grain. So, the opportunities of Bulgarian exporters are quite limited. In addition to the quota for the European Union, we stand some chance to export to the Middle East and Northern Africa. At that, if we offer wheat at competitive prices. Therefore, concerns remain despite the optimism of the incumbent agricultural execs. In a few months bankruptcies of agricultural cooperatives and private farmers may be expected. Much more efforts and money from the State will be necessary then in order to get out of the situation. But that problem will remain for the new government.

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