Cereal prices fall, flour and bread hold

While the prices of cereals on the regional and world stock exchanges have been falling for months, in Montenegro there was a slight decrease in the price of flour, while the price of bread remained the same.

"Vijesti" interlocutors from this area say that the prices could soon be lower in Montenegro as well, but that it is necessary to first solve the problems that exist between the Government, traders and bakers.

During the summer of 2021, due to the drought and crop reduction, as well as after Russia's attack on Ukraine in the spring and summer of last year, the price of wheat reached 40 cents per kilogram. The decline began in the fall of last year, and a kilogram of this cereal now costs 18 cents on the Product Exchange in Novi Sad.

According to "Vijesti" information, a kilogram of wheat flour type 500 costs around 28 cents at the largest producers in Serbia, while Montenegrin importers and wholesalers sell it to bakers at prices of 35 to 40 cents. In retail in Montenegro, depending on the brand and retailer, a kilogram of flour of this type costs from 55 cents at the local producer, and imported brands usually cost from 70 cents to one euro.

A possible fall in the coming months?

Flour importers and traders with whom "Vijesti" talked unofficially said that some of them still have stocks bought at higher prices, but that if the trend with international grain exchanges is maintained, the prices of flour in Montenegro will also be lower in the coming months.

"Before the crisis, the price of flour in retail was about 40 cents, and during the periods of last year's shortages, it was over EUR. So there was a slight decline, but not a return to the old way. I think that the prices cannot be returned completely because the cost of electricity for mills in Serbia has increased, fuel and transportation prices are still high, and merchants and bakers had to significantly increase workers' wages last year and this year, in order to keep them. ", the interlocutor of "Vijesti" said.

He stated that, if the current prices of cereals and flour in Serbia remain, from where Montenegro obtains about 80 percent of its needs, the maximum retail price of a kilogram of flour of type 500, with importer and retailer margins of 20 percent each, transportation costs and taxes, will not should exceed 55 cents.

The price of an ordinary loaf of white bread of 500 grams at the beginning of 2021 usually cost 40 cents, but at the beginning of summer, due to the rise in flour prices, bakers would raise it to 50 cents.

The regulation from 2021 was illegal, bakers were harmed

The government of Zdravko Krivokapić then passed a controversial decree that froze the price of a loaf of bread at 50 cents until the end of the year, and VAT rates on flour and bread were subsequently reduced. However, after that, flour prices on the international market continued to rise, and the bakers suffered the entire loss. At the meetings, which "Vijesti" wrote about at the time, the Government announced extraordinary aid measures to compensate them for their losses, and the price of bread remained at 50 cents. However, that did not happen.

The bakers then announced that they would comply with the decree as part of their social responsibility in the crisis and help the most vulnerable residents. The regulation expired at the end of December 2021, and they increased the price of a loaf of white bread to 65 cents after the January holidays. After the outbreak of the Ukrainian crisis, when the prices of grain and flour were further increased and when it was difficult to obtain them, the price of a loaf was increased to 80 cents.

In recent months, representatives of the Government have again lobbied retailers and bakers to lower prices.

At a meeting with bakers on that occasion at the end of March of this year, with the Deputy Prime Minister and Minister of Agriculture Vladimir Joković, it was officially announced that the previous Government's decree on freezing the price of bread was illegal and that the Government does not have the legal ability to set prices on the free market. It was announced that they are still analyzing the possibilities of compensating bakers for the damage caused by the 2021 regulation, but without concrete indications.

An additional problem between retailers and bakers is that retailers condition bakers to supply them with quantities of bread to fill the racks, but that all costs for unsold bread fall on the bakers.

The prices of animal feed are not falling either, so there is no cheaper milk, meat and eggs either

The drop in grain prices on international exchanges should also affect the drop in animal feed prices in Montenegro, but, according to the representatives of livestock farmers, this did not happen to a significant extent.

After the outbreak of the crisis in Ukraine, the prices of fodder in Montenegro were doubled. Herders and milk producers protested then, while many farms were closed.

The government responded by partially increasing the premiums for the purchase of milk and livestock breeding.

The president of the Cattle Breeders' Association, Milko Živković, said that after a large drop in grain prices on international exchanges, there was a symbolic reduction in some animal feed prices.

"With concentrated food, there was no drop at all, because importers and traders keep very high margins. Our costs are still very high, so there are no conditions yet for domestic agricultural producers to lower the prices of milk, meat or eggs. Only if there is a significant drop in the price of animal feed can the price of our products be lowered," said Živković to "Vijesta".

He states that livestock farmers now have an additional problem because they could not mow grass and clover and prepare hay due to the incessant rain during the spring.

"For those who managed to mow something, it was of poor quality due to the moisture. All this has the effect that we have higher costs for feeding livestock. We hope that the weather will improve and the situation will turn around, otherwise we will be in big trouble", said Živković.