New anti-inflation measures

Minister of Agriculture, Bakur Kvezereli spoke about the prices of agricultural products at the Agrarian Issues Committee on February 11. Summarizing the effects of the world economical crisis on Georgian cereals the Minister said that no more increase in prices is feasible in our country. Explaining that the country has mobilised around 119 000 tonnes of wheat (“a historical figure”) Kvezereli said this would be enough protection from possible complications. Despite the fact that there has been no grain in eastern Georgia for quite a long time, Kvezereli said the climate conditions have improved in the region and this year’s wheat harvest will be greatest.

To ease the affect of rising prices for their people the Georgian Government started special programmes from September 2010. The most important mission of the authorities was to ensure more cereal supplies for the country. This would, according to Kvezereli avoid high prices on products caused by a deficit on local market. “Prices on products are higher than in other states because they have failed in establishing the food safety,” the Minister said talking of the affect of global processes on Georgia.

Kvezereli also welcomed the fact that the peasants would have 7 months to pay for the hybrid corn seeds. Nika Laliashvili from the Christian-Democratic Movement wondered why the peasants had to pay GEL 17 for one kilogramme of corn seeds. But the Minister explained that this wouldn’t cause the peasants problems because they would be able to cover the fee after their harvest. In addition they get both the seeds and the fertilizers free of charge, ensuring companies would cover risks from drought. This project according to Kvezereli would make Georgia “a corn exporting country from 2012.”

Talking of the Georgian Government’s plans to buffer against increasing prices in the local market, Kvezereli shared with MPs a few projects that the Government plans to launch soon. One of the projects will be the distribution of a GEL 30 allowance covering the food bill. During his annual address to Parliament, President Saakashvili said that from March this year every family in Georgia will receive 30 GEL in food vouchers according to their permanent place of residence. These vouchers also will be transferable, so that their owners can decide if they want to give them to those in greater need.

Economic analyst Shota Murghulia doubted that distribution of food vouchers would create a risk of inflation. Stressing that it would be better for the Government to give this allowance only to those with the greatest need Murghulia said it would now be more social support rather than part of the anti-inflation economic project. “Despite the fact that the owner of the vouchers will be able to give their allowance to anyone else, who will refuse a present? Moreover an additional GEL 30 million will deepen the risk of inflation on the local market,” Murghulia stated. Calling it “more of a social project” another expert Emzar Jgerenaia supposed that it would be small relief for the “desperate people” while also threatening the local market.

Jgerenaia told The Messenger Georgia’s wheat harvest needs to rise seriously. “The Georgian Government has to find some way out of the situation. It’s a fact that today’s harvest doesn’t satisfy the demand of the local market,” the analyst told us. Worrying about the lack of technological innovations in the local agricultural market Jgerenaia stressed the necessity for a complete improvement within the Ministry of Agriculture.