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bne June 2022 Companies & Markets I 7
Shortages force North Macedonia to change its farm policy
Valentina Dimitrievska in Skopje
Record-high food prices and shortages of cooking oil, wheat and flour amid the crisis stemming from the war in Ukraine have forced North Macedonia’s authorities to consider restructuring their farm policy.
The economy was already shaken by the COVID-19 crisis, and even though that is not yet over, a new crisis has emerged prompted by the Russian invasion of Ukraine, which has affected energy and food supply.
Agribusiness is one of the country’s most promising sectors, but North Macedonia is import dependent for many basic food products. Among the reasons for this are the poor organisational structure in the agricultural sector, insufficient use of farm land and accordingly reduced production.
The direct consequences of the Russian-Ukrainian conflict on North Macedonia’s agricultural production stemmed from the enormous jump in prices of energy as well as mineral fertilisers, but also the loss of Russian and Ukrainian markets for fruits and vegetables.
All this led to price hikes for basic food products such as oil, flour, bread, milk and meat, as well as a shortage of some products such as sunflower oil, which is mostly imported.
In turn, rising inflation has prompted protests as workers claim food is becoming too expensive for them and they are no longer able to afford their basic needs.
Sources from the country’s biggest dairy Bitolska Mlekara, told bne IntelliNews that there was a shortage of raw milk so this product was out of stock for a period of time in April.
“Simply there was no UHT milk due to the lack of purchase of raw milk,” they told us. After the supply was restored, the price of UHT milk and milk products increased again. Price changes have been frequent during the crisis.
Cooking oil crisis
Serbia lifted the ban on exports of edible oil, which put an end to the crisis caused by shortages of this product, which lasted for almost a month. But now a bottle of edible oil is being sold for MKD135 (€2.2), almost 40% higher than before. The price of cooking oil has jumped by as much as 125% since inflation started to rise back in 2021.
During the Serbian export ban, shelves in North Macedonia’s stores were emptied and people started to panic that this would last for a longer period of time.
“We received three packages of cooking oil (one containing 12 bottles) and they were sold out within few hours. We don’t know when to expect the next delivery,” a cashier in a Skopje’s KAM supermarket said in mid-April.
The situation was similar everywhere. Some people started stockpiling cooking oil, while stores limited purchases to only two bottles.
Now that the product is back in stores at much higher prices, the authorities are looking at making a serious policy adjustment to avoid such problems in future.
Boosting domestic production
“The Ministry of Agriculture is focusing on adopting measures to increase the domestic production of strategic crops,” the ministry said in a statement e-mailed to bne IntelliNews, adding that this also applies to production of sunflowers.
The ministry said it made changes to the programme for financial support of sunflower producers with the aim of increasing domestic production, which means that each producer that exercises the right to subsidies will have to sell their harvest to local processing facilities, not export it.
In March, North Macedonia imposed temporary restrictions on the export of sunflower edible oil to ease the pressure on prices on the domestic market, which will be valid until May 31. Later the ban was extended to include wheat, wheat flour, corn, barley and sunflower seeds.
According to some estimations, North Macedonia spends $45mn per year on importing raw materials for the production of sunflower oil. In the past three decades, the areas planted under sunflowers have been decimated to only 4,000 ha from 46,000 ha under sunflowers 30 years ago, Sitel reported.
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