Azerbaijan's introduction of VAT on imports of grain and flour affects supply of Kazakh grain

Business Materials 12 August 2011 19:52 (UTC +04:00)

Kazakhstan, Astana, Aug. 12 /Trend, A.Maratov/

Azerbaijan's introduction of VAT on imports of grain and flour affected the supply of Kazakh grain to this country, a source in a large grain company in Kazakhstan told Trend.
From July 10, Azerbaijan once again introduced VAT on imports of grain, meslin (a mixture of wheat and rye), wheat and rye flour. The VAT rate in Azerbaijan is 18 percent.

Azerbaijani Agriculture Ministry's Plant Products Production and Processing Department Chief Sabir Veliyev said that the decision on exemption of the import of these products from VAT last year was associated with the need to import grain to meet domestic demand, since the yield was at low level because of natural disasters last year.
"Yes, of course, regular introduction of VAT on imports of grain and flour by the Government of Azerbaijan has affected the supply of Kazakh grain to Baku," said the source.
He explained that Azerbaijan, previously canceling the VAT, introduced it as soon as Russia lifts ban on export of grain.

"As soon as Russia imposes a ban on the export of grain, Azerbaijan automatically removes all restrictions. But when Russia lifts ban, Azerbaijan automatically introduces the VAT, giving preference to Russian grain and flour, as the price and transportation are cheaper than our goods," said the company representative.

The ban on grain exports from Russia was lifted from July 1 this year. The restriction on the export of wheat, barley, rye, corn flour abroad was introduced in August last year because of the unprecedented drought that led to the loss of millions of tons of products.

Russia is the third largest producer of grain in the world, so the embargo on exports has led to a sharp rise in grain prices on world markets. According to the source in a grain company of Kazakhstan, today the cost of one ton of Russian grain is about $ 260.

The Caucasus corridor is one of the export routes for Kazakh grain. The grain is delivered to a grain terminal in Baku, which is on a parity basis is owned by two parties - Kazakhstan and Azerbaijan.

Last year, Azerbaijan produced 2.1 million tons of grain, and imported 1.4 million tons. Of this amount, one million tons of grain was not used and remained in that year.

Veliyev said this year, there is no shortage of grain, because the country has reserves from last year, and this year it imported about 500,000 tons of grain. Also the grain production projected to increase.

Today, Azerbaijan imports grain from Russia and Kazakhstan.

Azerbaijan is expected to produce 2.5 million tons of grain in Azerbaijan, which is 500,000 tons more than last year. "We forecast production of 2.5 million tons of grain given favorable weather conditions, 1.7 million of which will account for food grain," the Minister of Agriculture Ismet Abasov said.
Barley is planned to yield 800,000 tons in 2011.
Today the country's demand for grain crops is 3-3.2 million tons