In Serbia, wheat represents one of the most important agricultural crops. However, the war in Ukraine caused global disruptions in the market, so the silos in our country are still full, despite the fact that the new harvest is approaching.
The aforementioned conflict did not cause problems only in Serbia, but wheat prices began to fall and affect producers throughout Europe.
An additional problem was caused by the previous ban on exports, leaving these goods in warehouses and reducing their quality.
Russia and Ukraine participate with about 29 percent in the total world export of wheat.
Nevertheless, although Ukrainian wheat was imported in many countries, which caused difficulties for domestic producers, experts claim that this is not the case here.
Namely, this cereal is not imported from Ukraine, but the global problem of the market situation spilled over into Serbia.
Does Serbia import wheat from Ukraine?
“We do not import wheat from Ukraine.” We have been an exporter ourselves for years, and every year we have surpluses. When we talk about the storage problem, it only occurs when we don’t have a place to store our supplies,” Sunčica Savović, director of the Serbian Grain Association, explains to Danas.
Savović claims that there will be no problems with storage in our country, because in the years when we have a normal harvest, and when we produce 13 million tons of grain in Serbia, the farmers manage to put everything away.
“There could just be a problem with the way the wheat is stored.” Not all silos and all warehouses are conditional. When the goods are not properly stored in them, if the warehouses are crowded and the wheat is standing in them, it loses its quality.
All this has nothing to do with imports from Ukraine, and is nothing new. We are not expecting a huge crop at this point – it is too early to say with certainty that the wheat crop will be huge.
The only problem is the fact that the owners did not sell the goods before, and now, two months before the harvest, we have a slightly larger stock than usual,” says the director.
Speaking about the price of wheat per kilogram, Danas’ interlocutor explains that our producers and owners of goods are not satisfied with the current price, which is quite low, but it is also difficult to find buyers.
“Last week, the lowest price recorded for wheat was 23.5 dinars per kilogram, and during the harvest it was sold for 34 dinars.” In October and November, it was even 40 dinars at certain moments, and certainly over 35. In January, it was 32 dinars per kilogram and they still did not sell it.
If it were up to the manufacturer, they would sell it now, but I believe that the current price does not suit them. As for the price on the world market, which inevitably affects the price on ours, we cannot expect it to go up. To what extent it will go down, that remains to be seen,” Savović believes.
The stagnation of exports from Ukraine – an opportunity for the region
The director of the Serbian Grain Association claims that the only factor that could influence prices to rise would be Russia’s withdrawal from the agreement on grain transportation through the Black Sea Corridor.
“If Ukrainian goods were physically prevented from leaving all the ports covered by the agreement, then it would be a chance for the region.” “Not only for us, but for Bulgaria, Hungary and Romania, which also have surplus goods that they have nowhere to market – to finally get rid of,” says our interlocutor.
And agroeconomic analyst Žarko Galetin agrees with the director of Zita Serbia that, despite the claims of MP Jelena Kalajdžić that wheat is imported from Ukraine at a lower price, this is not the case.
As he claims, if wheat from Ukraine really reached the Serbian market, it would be very bad for domestic producers, because there is already a problem of entering the new harvest with large stocks.
“It is necessary to improve export, because it is the biggest generator in the consumption and sale of wheat. How necessary it is to realize this is shown by the fact that we had a significantly small export in February, only somewhere around 25 thousand tons,” explains the agro-economic analyst, noting that over a million tons of wheat are currently operational on the Serbian market.
Although, as he says, there is no information that wheat from Ukraine has appeared in our country, it has overwhelmed the entire market of Europe and beyond. Also, it suggests that Ukrainian wheat is of poor quality and stored unconditionally, for objective reasons caused by the war.
Galetin says that it is possible that the story about imports exists because of the idea to acquire the so-called “improver” – high-quality wheat, which will be mixed with domestic wheat, increasing its quality.
“The bakers’ union asked the state to remove the customs duty on high-quality types of wheat. A few years ago, we already imported about 30 thousand tons from Hungary.
This has some basis in reality for the state to implement, given that high-quality wheat is mixed in small doses with ours, which is within the Serbian standard, and which is rather poorly defined.
Namely, he harvests good wheat as well as less good wheat. I believe, if the state does it, it will do it for relatively small amounts. With that move, millers and bakers would get quality flour”, explains Galetin, noting that approving this import in some scenario could increase the liquidity of wheat on the domestic market, and increase demand within the country.
Opening of exports – the only solution
While director Žito Srbija believes that the closure of exports from Ukraine could empty domestic and regional warehouses, the agro-economic analyst sees the solution in a significant opening of exports.
“It is necessary for the pressure of large stocks to decrease in order for the international wheat market to start.” As much as the world market was crying out for wheat a year ago, when the problem arose, so much is not heard now.
Port terminals are full, as well as silos and warehouses. At some point the demand will increase. That is the only solution that I see as essential. For example, the European Union is already thinking about how to disincentivize the import of Ukrainian wheat. Some countries even received help, because wheat from Ukraine lowered the domestic price.
For example, Poland, Romania and Bulgaria received financial assistance. On the other hand, Hungary, the Czech Republic and Slovakia, which also sought EU protection, did not receive help,” Galetin believes.
Our interlocutor reminds us that the Republic Directorate for Commodity Reserves bought 131 thousand tons in the summer and that this is the largest amount that the Republic Directorate bought in the last 10 years. Also, that it is now going to the stock market with a request to buy 50 thousand tons.
“These are some mechanisms that are trying to open the wheat market.” We share the fate of all other countries in the world, so the situation is as it is. Although I believe that the market will function in the next period, in a month or two”, concludes Galetin optimistically.