A significant weakening of the Russian ruble appears to have been the main cause of the price collapse. The ruble has lost more than 40 percent of its nominal value against the Armenian dram since June 2022 amid a barrage of Western sanctions imposed over the Russian invasion of Ukraine.
According to Hunan Petrosian, a wholesale trader from Armenia’s leading grain-producing region, Shirak, the sanctions have also cut the cost of transporting Russian wheat to non-Western countries still buying it. This has made it even cheaper in the local markets, he said.
“Quite cheap wheat is imported from the Russian Federation. This is the main reason,” Petrosian told RFE/RL’s Armenian Service.
The downward trend does not seem to have reversed yet by this month’s 15 percent rise in global wheat prices, which followed Moscow’s decision to quit a deal allowing Ukraine to export grain via the Black Sea.
Russia meets about 70 percent of Armenia’s domestic wheat demand estimated at 500,000 metric tons per annum.
In Petrosian’s words, a kilogram of wheat now costs an equivalent of 40-45 drams (10-11 U.S. cents) in Russia. The wholesale prices of the essential crop in Armenia range from 70 to 90 drams per kilogram.
Armenia - Workers at a wheat storage facility in Shirak province.
Farmers in Shirak complain that this is below their current production costs. One of them, Garnik Marzetsian, has 50 tons of grain left over from last year’s harvest and expects to harvest another 90 tons this fall.
“I’ll rather let it rot or burn it down than sell [at the current prices,] Marzetsian warned on Thursday.
The 69-year-old farmer and other residents of the Shirak village of Meghrashen demanded government intervention. The Armenian government, they said, should set a higher minimum price.
Last year, the government provided Shirak farmers with more subsidies to encourage them to grow more grain. As a result, they planted the crop on an additional 5,000 hectares of land. Many farmers are now thinking about shrinking their next wheat plantings.
This is an alarming prospect for Petrosian. The grain dealer too called for urgent government support to the farmers, saying that Armenia must not become even more dependent on wheat imports.
“This [domestic grain] production is of strategic importance and it should be at the center of the state’s attention,” he said.