Up to Our Ears in Wheat

When Governor of the National Bank of Yugoslavia (NBJ) Dragoslav Avramovic in two news conferences (22 and 27 February) asked where were now, ahead of the spring sowing, those who earned fortunes by exporting wheat, or even by selling it on the domestic market, and when he realized he had no information on how much wheat was exported last year and by whom, many doubts appeared indicating that this was just one in a series of scandals concerning the role of Marjanovic's administration in the re-selling of wheat.

First, it is impossible to establish the exact quantities of wheat which were at the disposal of the Serbia's Reserves Bureau at the end of last year's harvest or what the Bureau did with the state reserves. Prime Minister Mirko Marjanovic in an official statement made for the state news agency on 29 June 1995 said that the Serbian Government decided that all "market surplus of the 1995 wheat crop, estimated at 1,850,000 tonnes" be sold at 0.28 dinars a kilo.

The number one problem in Marjanovic's statement was that he knew very well that what he had actually given the farmers, according to the real exchange rate applied in the transactions between publicly-owned companies, was the lousy 70 U.S. dollars per tonne. Since the farmers were to be paid in three instalments, the Government knew that the inflation would additionally dump the lousy price to as little as 50 dollars per tonne. Perhaps the Government did not know that at the same time the price of wheat of similar quality was raised to 160 dollars per tonne in the Danubian harbours.

The number two problem in Marjanovic's showdown with the farmers last summer was the qualification of excessive supplies of wheat, which he found to be "significant" and which he said we would be feeding on over a "long period of time." His Agriculture Minister Ivko Djonovic was at the time (24 July 1995) more precise concerning the supplies and told a delegation of the Independent Farmers' Union that the "surplus of old wheat has exceeded 1,300,000 tonnes."

When we add up the supplies with the last year's alleged 3-million-tonne crop, it turns out that there were 4.3 million tonnes of wheat in the Federal Republic of Yugoslavia last summer while the yearly consumption is about 2 million tonnes. This makes Marjanovic's price seem rather generous, or even economically unreasonable. According to the above figures, the Serbian Reserves Bureau owned 2.3 million tonnes. If one did not know how truth-loving our ministers are, one might think that somebody was lying, because it now turns out that we have eaten up almost all the wheat and exported only 338,000 tonnes.

In the overall confusion concerning basic facts, the Serbian Government on 25 December decides to halt the export of wheat, and the Federal Government on 23 January contingents the export of wheat to 500,000 tonnes and although that figure is still far beyond, the customs officers halt all the export convoys which do not have the signature of Serbia's Trade Minister Srdjan Nikolic.

If we go back to Avramovic's statement, it is scandalous that the National Bank of Yugoslavia, to which one must submit proof that one intends to export one's own (i.e. paid for) goods, and without whose approval goods may not be taken across the border, has no information on the exported wheat, let alone the figures concerning the foreign currency earned in the process.

It is also scandalous that the Serbian Trade Minister Srdjan Nikolic publicly admitted ("Politika Ekspres," 23 February) that the Serbian Reserves Bureau had organized via "Koprodukt," Novi Sad, the export of only 33,000 tonnes of wheat, while the company was allowed to organize the export of another 77,000 tonnes - and that this was all the state accomplished during the unprecedented conjuncture of wheat on the world market. He unconvincingly claimed that the Serbian Reserves Bureau last autumn organized a competition for the export of 400,000 tonnes of wheat, but that all the competitors, like Marjanovic's "Progres" and the Belgrade "Investkorp," gave up as soon as they found out that there was no way to evade advance payment.

The contradictory data might lead the reader to think that the Serbian trade minister is not very good at figures and trade logic, so we ought to go back to Avramovic's statement once again and explain why he posed his question now ahead of the spring sowing, after a disastrous autumn sowing, the worst one since World War Two.

Here is a simple calculation of the profit of those who "protected" our farmers last summer. If someone waited until October to pay for the 100,000 tonnes of wheat at 0.28 dinars a kilo (and most of the buyers did wait until October to pay), he paid 28 million dinars, or 10 million German Marks (or even less). If that someone then exported the 100,000 tonnes of wheat at only 140 dollars a tonne, he earned over 20 million Marks, which means his profit was 10 million Marks. Finally, if it is true that "some companies" exported 338,000 tonnes of wheat, they alone made the profit of 35 million Marks, which equals at least 126 million dinars.

And what about the sale of wheat on the domestic market - bought at 0.28 and sold at 0.60-0.80 dinars a kilo. Over one million tonnes of the surplus wheat is missing in our calculation and if it was on the domestic market this means that someone made the profit of an average 0.40 dinars per kilo - that is, a total of 400 million dinars. This hypothetical game leads us to the total profit of 526 million dinars and - what a coincidence - that is exactly how much the Serbian Government intends to collect by issuing bonds to finance the spring sowing. It is yet to be seen whether those who earned enormous sums of money will hurry up to invest their money into the new cycle of production, or whether their money was invested abroad a long time ago.

Prime Minister's Witnesses

"Politika" in its 2 March issue (coinciding with the Socialist Party of Serbia Congress) published four statements denying various claims made over the past few months against Serbia's Prime Minister Mirko Marjanovic. None of the statements were made by Marjanovic himself. He probably believed that the public is more likely to believe his associates.

The problem with all of the statements is that they mostly deny the unimportant details of the claims against Marjanovic. Dragan Kostic, for example, admitted that the fertilizer factory in Pancevo complained about the high price of gas and then said that the company was given gas? (We did not understand.) Milan Djakovic praised the establishment of the "Progres-Gas Trading" company and explained that "the imported gas is paid for with our goods and not cash" which was supported by the state bodies. However, he failed to explain why the Oil Industry of Serbia (NIS) did not carry this out through its "Jugopetrol" or NAP, the companies which had paid for gas by exporting goods from Serbia before Marjanovic's PGT emerged and why it is not good for Serbia to have its state-owned company make some 10 million dollars a year. PGT Director Tomica Nedeljkovic dared admit that he and his five colleagues took a 0.75 per cent commission for the import of gas in all of the Federal Republic of Yugoslavia, which means that the six of them cost more than what is being put aside for the future gas line. Federal Foreign Trade Minister Djordje Siradovic said that the public company "Progres" was not allowed to trade wheat for crude oil and gas in 1995 and 1996 and that "no such requests have existed," but forgot to say what "Progres" and "Progres-Gas Trading" were allowed to do, or to notice the relation between the two companies. All these statements may be parts of a more extensive file which has been submitted where it was supposed to be and, from there, sent to the well-informed "Politika". If this is so, the editor was not very lucky.