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In 2014, Georgia to Import about 90% of Wheat from Russia

Information about limitation of wheat exports from Russia creates problems in the international market, Georgian importersspeak about the possible dangers in this regard as well.

According to the head of the Grain Growers Association Levan Silagava, the risk of rising prices for bread is associated not only with the decision of the Russian government, but the new system of payment of VAT which was introduced on  July 1, 2014.
Georgia is one of the regular buyers of Russian grain.

In the words of  Silagava,  grain prices hike    will affect Georgia, but there are other reasons to  raise the price of bread – in particular, the devaluation of the GEL, crop damage in Russia and the political crisis in Ukraine. Accordingly, on the Chicago grain exchange price of wheat has increased from $ 250 to 280 per ton.

“All this is reflected in the price of flour, but it will not happen quickly and directly. We are talking about the period of about 1 month. The blow can be softened by  the stocks of wheat, which was bought at a cheaper price, “- he notes.

At the same time, in his words, a new system of payment of VAT prevents the creation of stocks – if before the major importing companies with a turnover of GEL 200 000 per year could  enjoy a delay in the payment of the VAT, from 1 July privileges were abolished.

Given these circumstances, the Association asks the government to return preferential treatment for the companies operating in this sector, as an exception.

“The purpose of the changes was the improvement  of the provisions of importers  and local producers, but the country is dependent on imports of cereals. The Committee on Sector  Economy promised that law would  not apply  to our industry because of its strategic importance, but the law is valid. We intend to submit a request to the Parliament. Preferential taxation allows importers to create certain stocks, which allows  not to raise prices in the case of a sharp rise in grain prices on international markets. Because of the new VAT regime,  our reserves decreased by 20%, “- said the head of the Association  Levan Silagava.

According to him, it is very important in an environment when  grain prices are expected to rise in the future.

“In order to  keep prices as much as possible, we must have great reserves, but to have more reserves, we need a delay in the payment of VAT,” – he  stresses.