Банкеръ Weekly



The Ministry of Agriculture promised that grain prices will grow higher in November and December. That was one of the topics discussed on the meetings of the Deputy Minister Svetla Buchvarova with farmers in Veliko Tarnovo. But the sowing of the winter wheat is the priority task right now, grain producers claim unanimously. Because of the bad weather the machines are unable to step into the fields and the people have no sufficient resources. Provided that wheat is purchased at BGN100-120 per ton and its cost price goes up to BGN140-150, no profit can be expected at all. Fuels, seeds, fertilizers and chemicals grew expensive and there is no market for the grain after September. Some agricultural producers threaten that they are not going to sow next year because of the low purchase prices. Most of them unite in requesting that they be given a chance to buy diesel fuel at preferential prices, but no reaction followed the proposals.A market intervention unseen for 15 years is planned to take place next January, Deputy Minister Buchvarova added. The state is going to launch BGN35MN for the purchase of bread wheat. The unutilized resources of the Zemedelie State Fund may be reallocated in order to help farmers applying for financing. But it is not clear what the wheat purchase price will be at that time - BGN160-179 per ton that would guarantee a minimum profit to the grain producers, or BGN130-145 which the price of the State Reserve is at present.As to the exports, the situation is even more confusing. Minister Nihat Kabil said several months ago that due to the good crops Bulgaria's export might reach 1 million tons. By September 25, however, according to official data provided by the Customs Agency and the agricultural ministry, only 370,000 tons have been exported from the country. And the months until November are usually considered the best ones.Another problem is at what markets Bulgarian wheat could be sold, since much of it is on the borderline between bread and fodder one. Even if we believe in the promises for BGN35MN government intervention in the grain market, simple calculations indicate that the money will be sufficient for the purchase of some 230,000 tons at about BGN150 per ton, VAT not included. Since there are about 700,000 tons deposited in yards and warehouses, that amount will be extremely insufficient.

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