Wheat price and zero tariff

04 November 20203 min reading

durum wheat

Editor Namık Kemal PARLAK

Many countries started to stock wheat due to the deterioration in world trade balances caused by the Covid-19 pandemic as well as the rapid rise in global agricultural commodity prices. Since it is very difficult to forecast the future of this pandemic process, many countries have given weight to supply anxiously whereas countries such as Saudi Arabia and Egypt initiated import tenders.

Even Pakistan, which is not used to be a wheat importer, changed its attitude. With many countries starting to supply wheat from the international market, prices are experiencing an upward trend.

So much so that, today's imports exceed the ones made a week ago in terms of purchase prices.

The economy administration of Turkey declared war on the prices that have rapidly increased in the recent period through importing the grain products with zero tariff.

Within this scope, according to the President's decision published in the Official Gazette, it was announced that the tariff on the imports of durum wheat, common wheat, red wheat, white barley, malting barley and corn was set to zero until 31 December.

The corresponding tariffs used to be 45 percent on wheat, 35 percent on barley and 25 percent on corn.

Since the stocks made by non-sector players caused the prices to rise, Turkish economy management went into action and took a step in this line.

With the decision to import with zero tariff, the domestic prices of raw materials are anticipated to be suppressed to some extent.

The recent wheat imports of the Turkish Grain Board (TMO), which has imported over 1 million tons of wheat so far, are far above the purchase prices it had announced in advance of the harvest season.

TMO announced that they would buy durum wheat and bread wheat at 1800 and 1650 liras respectively.

Although the wheat import is being conducted with zero tariff, the prices of durum wheat reached up to 2500 liras per ton and bread wheat prices exceeded 2200 liras.

The increase in wheat is being reflected in the bread and feed as a price hike. The price of bread wheat imported from Russia has recently reached 260-270 dollars/ton.

Import costs are constantly increasing due to the increasing exchange rates within the country. When we calculate in the dollar exchange rate reaching 8.3 liras, wheat price reaches 2250 liras per ton.

This means that while we get products from our own farmers on the cheap during the summer season, we buy wheat and other grain products from abroad more expensively.

Acting as the regulatory body of the sector, the Turkish Grain Board continues to import wheat in order to balance the domestic market. TMO is worried about further price increases before the end of the year.

Because the traders and speculators who are keeping hold of the products continue to maintain their stocks expecting the prices will increase further.

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