The price of domestic wheat has reached its five-year maximum, as opposed to what's happening on other markets. Last week, a kilogram cost 23.5 to 24.1 dinars, not including the VAT, which is 35.6% more than in the same period last year.
– Serbia currently has the most expensive wheat in the region, and probably in Europe too. This sort of price has not been recorded since 2013 and is good for local producers, but at the same time it makes our wheat not competitive for export – said Vukosav Sakovic, the director of the Serbian Grains association.
He explains that last year's harvest was record-breaking when it comes to amounts, but that the quality of the yields was low.
– We have seen the consequences in the past month. The offer of quality wheat is small, which has drastically raised the price. According to him, it has come to the point that, it is more cost-effective for mills, even taking into account the customs fees, to import wheat from Hungary.
Serbian Grains recently announced that it expected that there would be more than a million tons of wheat for export in 2019. The biggest competitors in the market are Croatia, Hungary, Romania and Bulgaria.
– This year's harvest has been postponed and is supposed to start in around ten days. As for the amounts, this will be an average year. It's still early to talk about quality. There's potential, but it remains to be seen whether it will be realized – Sakovic says and points out that a good harvest is expected globally as well, which means that there are no special reasons for the price of wheat to increase in the world market.
He adds that local markets, such as the Serbian one, react to the law of supply and demand, but he believes that this is not sustainable in the long run if producers want to export.
– We are not competitive at the moment and we practically can't sell anything. There will have to be a price adjustment in the market sooner or later. It's more realistic for us to expect to adjust to the changes in the international market.
According to this association's data, Serbia currently has supplies of around 500,000 tons of wheat of poor quality, which is not used in mills and which will end in animal feed factories or be exported as animal feed at lower prices.