ECONOMY

Serbia mulls grain imports as specter of more expensive bread draws near

BELGRADE (Reuters) – Serbia could allow some wheat imports in order to tame record high domestic prices on fears that they could result in more expensive bread and flour, an Agriculture Ministry official said yesterday. But analysts said the only way to clamp down on soaring prices was to abolish a 30 percent import duty. «The ministry has made no decisions yet, but stands ready to intervene in order to maintain stable prices of wheat, flour and bread,» state secretary at the Agriculture Ministry Danilo Golubovic told Beta news agency. The ministry is now considering all options – exports, interventions from commodity reserves and imports, he said. Spot wheat traded at 25.36 dinars/kilo or -305 per ton at the Novi Sad Commodity Exchange yesterday,-30 per ton more than ten days ago. The surge in wheat prices has been fueled by fears that Serbia will not have enough wheat for at least a year, after 460,000 hectares to the crop last autumn – the lowest since World War Two. If yields remain at a 16-year average of around 3.3 T/ha, Serbia will have just about enough wheat for domestic consumption, industry officials say. Srbislav Dencic, the head of the Novi Sad-based Farming Institute, said traditionally low wheat yields meant the market would not calm down this year. «Considering that only inventories dictate the price, this crisis will last a long time,» he said. Vukosav Sakovic, the head of the Grains Fund, said domestic wheat prices were only tracking global trends, and the options mulled by the government would have little if any impact. «They could intervene with around 110,000 tons of wheat from commodity reserves, but there would be no lasting impact,» Sakovic told Reuters. «The only thing that could impact the market is to abolish the 30 percent import duty and allow the imports of 200,000 to 300,000 tons of wheat,» he said. Although imports could not arrive much cheaper, Sakovic said wheat imported without the duty could sell at 21-23 dinars/kilo.