Has the Bulgarian Market Collapsed because of the Import of Ukrainian Grain?

Industry | April 13, 2023, Thursday // 15:18|  views

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On July 22, 2022, the UN and Turkey signed an agreement to open a safe maritime humanitarian corridor in the Black Sea. Through the Black Sea Grain Initiative, around 800 ships filled with grain and other food products have left three Ukrainian ports. As of March this year, more than 23 million tons of grain and other food products were exported, according to data from the Council of the European Union. This is what BNR quoted today in its regular fact check column.

Almost 49% of the cargo was corn, the share of wheat was 28%, and sunflower products – 11%. The grain was mainly for developing countries, according to the data of the Joint Coordination Center of the Black Sea Grain Initiative.

The import of Ukrainian grain into Bulgaria has led to a sharp drop in the prices of wheat, corn and sunflower, and the Bulgarian production cannot be realized, say the Bulgarian grain producers, who went to protests.

Claim: Ukrainian grain imports crashed the Bulgarian market

"The prices fell drastically, there is no market for our production," commented the protesting grain producers in March.

"Ukrainian goods are coming in, we are not against them. There should have been a corridor, but the grain remains in Bulgaria."

"At the moment, the purchase price of our production is about 40% below the cost price. Measured in sunflowers, we can talk about losses of about 800 million BGN. In Bulgaria, about two million tons of sunflower are produced in a year. No more than 5-10% of it has been realized so far."

According to the data of the agricultural market information system maintained on the website of the Ministry of Agriculture, before the Ukrainian import of wheat, the average price of grain in our country last year was from BGN 515 per ton in January to BGN 705 per ton in June. After that, the prices go down again and in October they reach BGN 630/ton, and in November – BGN 644/ton and in December there is a drop again to BGN 570/ton.

In the case of oilseed sunflower, the highest price achieved was BGN 1,713/ton in April last year, at the beginning of the year with a level of BGN 1,117/ton. The price collapse after the Ukrainian import was in July – BGN 994/ton, months of fluctuations followed and the year ended with an average price of BGN 980 per ton of sunflower.

In corn, the trend is similar. The highest price is in May – BGN 624/ton and by the end of the year it drops to BGN 544/ton.

"The amounts of grain stored in the warehouses on the territory of the country without the possibility of realization and lack of trade are disturbing," stated the Minister of Agriculture Yavor Gechev in his reply to the National Radio dated April 4 of this year under the Law on Access to Public Information.

In front of protesting grain producers near Gorna Studena on March 21, Minister Gechev stated:

"Half of the sunflowers that entered Europe are in Bulgaria. I am not saying this to justify, but on the contrary - because the European Commission must understand that solidarity is comprehensive, it is not separate. I claim that the countries that are closer to Ukraine, to the conflict, they pay a much higher price".

The data from the Joint Coordination Center of the Black Sea Grain Initiative as of April 4 indicate that the total Ukrainian import of grain is close to 26 million and 900 thousand tons, with Bulgaria accepting as the final destination 68,800 tons, Romania - 685,000 tons, Greece - 156 000 tons.

The data of the Customs Agency and the National Statistical Institute, provided to the National Radio under the Law on Access to Public Information, show that the pressure of duty-free Ukrainian grain imports on the Bulgarian wheat market is the greatest. For the first three months of this year, Ukrainian wheat imported to our country was 470,900 tons, which is 24 times more than the whole of last year. In the case of sunflowers, we imported 149,722 tons of grain, which is 16% of the import for the whole of last year. The data on corn show that this year's amount of Ukrainian imports is 2372 tons and represents 14 percent of last year's amount of Ukrainian corn in our country.

After the Black Sea grain initiative, the Bulgarian state has implemented only one transaction for the purchase of Bulgarian grain, which can be interpreted as support for Bulgarian grain producers.

The data provided by the State Commission for Commodity Exchanges and Markets, according to the Federal Data Protection Act, indicate that one exchange contract for the supply of bread wheat was concluded at the Sofia Commodity Exchange last year. It was on October 5 for 15,031 tons at a price of BGN 719.50 per ton. The buyer is the state agency "State Reserve and Wartime Stocks". The deal is for BGN 10.8 million.

This price is significantly above the average market price for October, when wheat in our country was traded for BGN 630 per ton, according to data from the Agricultural Market Information System of the Ministry of Agriculture.

The purchase price of wheat is falling and by the middle of March it is BGN 483.50/ton, with an average price of BGN 605.40/ton for the same month of 2022.

We continue to import Ukrainian sunflowers. The price is falling and the average for the month of March is BGN 885.00/ton, while for the same month of 2022 it was at the level of BGN 1662.00/ton.

Conclusion

The statement that the Ukrainian import of grain in our country collapsed the market is TRUE. The prices of corn, sunflowers and wheat are lower than in the months before the Black Sea Grain Initiative, the quantities of unrealized Bulgarian production have also increased.

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/Bulgarian National Radio

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Tags: Bulgarian, grain, Ukrainian, sunflowers

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