February 2021 | Will wheat price increase further?
28 February 2021

In February 2021, the average cost of cooking one standard portion of Imeretian khachapuri stood at 4.69 GEL. This is 3.1% lower MoM (compared to January 2021) and 7.8% higher YoY (in comparison to February of 2020). On a monthly basis, at this time of the year, a downward trend in the index is not unusual, and simply relates to the decreasing price of cheese (due to an increased seasonal supply of fresh milk).

Although prices fell on a monthly basis, the price of every khachapuri ingredient increased in annual terms between February 2020 and February 2021: cheese went up by 9.5%, flour by 18.8%, eggs 7.0%, yeast 16.3%, milk by 6.9%, and butter increased by 14.6%.

The highest increase in yearly terms was observed in the price of wheat flour. Given that around 99% of the total 2020 imported wheat and meslin came from Russia (Geostat, 2021), the greatest factor behind this rise was the newly introduced export restrictions on Russian grains (a tariff-rate quota for exports of 17.5 mln. metric tons of grain and an export tariff – 25 euro per ton of wheat). Starting from 1 March 2021, the export tariff has also been raised to 50 euros per ton of wheat.

These recently introduced trade barriers are expected to increase wheat prices even further. Consequently, Georgia should find ways to diversify its wheat import market and minimize any risks and uncertainties related to Russian trade. At present, the most promising alternative markets able to partially substitute wheat imports from Russia appear to be the Ukrainian and Kazakh markets.