Wheat price and production in 2020
In the last three agricultural years (2017-2018-2019), Romania recorded an annual wheat production of approximately 10 million tons. This year, however, the harvest was about 40% lower. Sowings were affected because autumn 2019 was rainy, followed by a dry spring and a summer full of floods. In addition, the coronavirus pandemic also influenced the decrease in wheat harvests.
Drought and floods affected not only the Romanian wheat production, but also the European one. Because of this, the EU will drop to third place among the world's largest wheat exporters. Russia will become the breadbasket of the world, respectively the world's largest exporter. Russia's cheap wheat supplies have allowed this country to dominate sales to countries such as Egypt - the world's largest wheat buyer. In the current season, Russian wheat won about 80% of the auctions.
Returning to the national wheat production, it was 2,9 tons/hectare in 2020, 1,9 tons/hectare less than in 2019. The wheat harvest in the 2020 agricultural year was 5,4 million tons. This year's wheat production can ensure Romania's domestic needs, estimated at 2,2 million tons/year. However, the Romanian state bought 100.000 tons of wheat for baking, as a state reserve stock. On August 20, 2020, an Emergency Ordinance was published in the Official Gazette, which provides for the purchase of the amount of wheat necessary for the consumption of bread per capita for a period of at least 4 months. The ordinance also states that the rapid addition of the state reserve stocks is required as a result of the state of alert in which Romania was, but also because the wheat harvest is seasonal. In case of shortages or economic crises, the state reserve is imperative. It should be mentioned that the state tried to make a wheat purchase of 600.000 at the end of May. This failed because the price offered was too low compared to the grain price at that time (minimum 480 lei/ton, maximum 900 lei/ton). The normative act on the purchase of August does not specify the price offered for wheat.
According to the National Institute of Statistics (INS), in the period January - July 2020, the average price/kg of wheat was 0,01 lei/kg higher compared to the same period in 2019 (0,76 lei/kg vs. 0,75, XNUMX lei/kg).
The price of wheat influences the price of bread
There are rumors that the price of bread will rise due to this year's poor wheat harvest. The price of bread is expected to rise from this autumn. The reasons behind the increase are: the high selling price of wheat, the drought faced by farmers this year and the coronavirus pandemic. The Alliance for Agriculture and Cooperation (AAC) believes that 2020 was the most difficult year for Romanian agriculture in the last half century. That is why he asked the authorities to support the farmers and declare the state of calamity in agriculture by the end of October this year.
The price of bread will increase from autumn by about 10%, according to one news circulated in the press. Mircea Ureche, the Company's representative Boromir, also believes that "the low production of wheat, while the exported quantities remain the same, will cause an increase in the price of bread and implicitly a decrease in consumption". Furthermore, "low wheat production will also drive up flour prices. Good quality flours will win", added representative Boromir. Industry experts say the raw material accounts for 60% of the shelf price. Considering that the price of wheat has increased in 2020 compared to the previous year, the increase in the price of bread is quite likely, even if an official percentage increase is not yet known.
Even if bread will become more expensive, we must not forget that, in 2019, in Romania, bread was sold at the lowest price from the European Union. Romanian bread was 47% cheaper than the European average, and consumption among the highest (source: Eurostat).
The evolution of the price of bread, bakery products and bakery specialties in 2019 and 2020
INS statistics provide current information on the consumer price index (CPI) for milling and bakery products. The CPI is a method of measuring prices and determines their evolution over time. In August this year, the price of bread, bakery products, bakery specialties and flour was higher than at the end of last year.
Comparing the consumer price indices from January to July 2020 with the corresponding month of the previous year, a monthly increase in the price of bread, bakery products and flour can be seen. The most significant monthly increase was recorded for flour, i.e. an increase of 2,48 percentage points in the analyzed period.
Romanians consumed more bread in the first quarter of 2020 compared to the first quarter of 2019
According to the INS, in 2019, the average annual consumption of bread and bakery products was 95,1 kg/person. In the first quarter of 2020 the average monthly consumption was 7,772 kg/person, 0,056 kg/person more than in the first quarter of 2019 (7,716 kg/person). Flour consumption also increased during the same comparative period. Also, in the first quarter of 2020, Romanians consumed 0,008 kg of bread and bakery products/person more than in the first quarter of 2019.
Although the increase is not very high, it should be borne in mind that the data provided by the INS represent the figures for the first 3 months of 2019, respectively 2020. If the upward trend will continue throughout the current year, then the average annual consumption of bread and products of bakery in 2020 will exceed the value of 2019.
Romanians spent more on bread in the first quarter of 2020 compared to the first quarter of 2019
Average monthly expenses of a person for the purchase of bread and bakery products increased in the first quarter of this year compared to the same period in 2019. A Romanian paid an average of 3 lei more/month in the first quarter of 2020, the highest growth being recorded in the Bucharest - Ilfov region (+ 4,59 Lei).
Flour expenses also increased during the period mentioned above, the difference between the first quarter of 2019 and the first quarter of 2020 being 0,82 Lei/kg.
