Will there be corn-rebel?

Sophico Sichinava

Despite the attempts of the Georgian Government, increase of bread price is inevitable. There is corn deficit in the world. The corn price has, in fact, tripled everywhere.

Bread price grows in Europe and in Russia, Ukraine and even Kazakhstan where harvest is 5 tons higher than consumption. In this case, artificial preservation of bread price in Georgia is nothing more than incompetent approach towards strategic issues of the country as the country might face a crash unless necessary measures are taken as soon as possible. Experts estimate the situation as follows: State policy is absolutely clear. Such policy is necessary for the protection of social interests, yet it is impossible to avoid unpopular processes. Georgia consumes about 700 thousand tons of corn and flour. It is possible to produce only 80-100 thousand tons of corn at best, the rest 600 thousand should balance business through corn import from America or Russia. Each year America supplies 30 thousand tons of corn for humanitarian aid, yet the imported corn also has another destination – it is a high-quality one used for improving the sort of Georgian wheat. Today, only humanitarian corn is considered in Georgia, the rest corn is smuggled. Corn resource of the country’s internal market is 40 thousand tons while resource of corn and flour (converted into corn) is 60 thousand tons being half a month’s reserve of the country (in the conditions of contraband). Russia established export duty on corn in the amount of 25 Euro per ton while Kazakhstan unofficially prohibited corn export. This year Ukraine has to purchase corn due to poor corn crop in the country. Turkish corn is traditionally weak and of poor quality whereas high-quality one is fully dependent on import.
The Ministry of Agriculture says, the government has long worked on the problem of providing country with corn and flour. Meetings were held with the State minister Zurab Zhvania and particular measures were outlined. In particular, the main thing is that state will allocate additional funds to replenish supplies of corn. This has been a significant problem for many years due to lack of funds. Added to this are principal agreements with the US government on the gratuitous supply of 50 thousand tons’ corn to Georgia. The corn will be imported to the country in spring of this year. The American non-government organisation “Finka” plans import of 15 thousand tons in the nearest future. With there being no corn-related problems, supplies of raw materials will become regular. As for the price, it will depend on the market. Experts do not share government’s optimism as far as corn situation is concerned. Gela Khanishvili (“Agrosystem” ltd) says:
“Government’s expectations of additional 50 thousand tons’ corn export are, certainly, real, but the 50 thousand tons will be imported to Georgia half a month later as this is connected with particular agreements. As for the 15 thousand tons of American firm “Finka”, we do not yet know exactly when the corn will be imported to the country. Unfortunately, we only know exactly what problems can arise in the country half a month later. The matter concerns such model of economic development when state makes interventions in the market. Intervention means low price and the necessary quantity of corn for satisfying the existing market demand. Intervention is really a noble business, but at the same time it contradicts general regularities of market development. The reason of the limited corn quantity is that development of business has, in fact, lost sense in the conditions of intervention.