Bread prices rise in Georgia

The Georgian Journal reports that bread prices have risen by 5 tetri (3 cents) since the beginning of July.

Globally, bread prices, over the past four years have increased slightly due to low harvest forecast. Russia (that produces 60% of Georgia's wheat import) reduced its harvest forecast by 5 million tons - from 90 million in 2009 to an estimated 85 million tons. In addition to Russia's 60%, Georgia imports 35% from Ukraine and Kazakhstan.

There is also heavy competition among mills in Georgia. The working capacity of Georgian flour producers is 3,000 tons per day while Georgians consume 1,000 tons daily. Another problem is the lack of locally produced wheat - it is just 5% of the entire consumption of the country - with 100-200 thousands tons per year. Georgia consumes 800 thousand tons per year. If wheat producers yield 200 thousand tons per year, it's considered to be a rich harvest. Last year they produced 100 thousand tons.

During Soviet times, Georgia harvested 300-500 thousand tons of wheat per year. But now, the integrated Soviet farming system has been dissolved. Not all land used for wheat farming is productive - some land is not ploughed due to lingering privatization disputes.

The Government of Georgia plans to increase wheat production from 5% to 30-35% by 2012.

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