Price Against Panic

Although the peasants calculated that 1kg of wheat should cost about 6.5 dinars this year - the majority of them are, however, satisfied with the promised price, set by the state, of 4 dinars per kg - the price which was announced 'five minutes after twelve' (by the end of last week), when combines and threshing machines already began collecting this year's early matured yield from about 640,000 hectares of cultivated land.

The peasants, who are used to Milosevic's governments (both the federal and the Serbian one) and their political pressure applied to remedy each economic nuisance, are this time satisfied with the small average profits of about 2.8 tons per hectare and the likelihood that they may 'cover' at least the costs of production, while those in the state sector and the more adept private owners (those who got hold of soil fertilizer at prices set by the state) are almost surprised that they will make a decent profit from this year's wheat harvest.

Although this year's price in dinars is twice as higher than the one last year (when it was 1.5 dinars per kg), it is about a real 'increase' in wheat price for about 1pf per kg (from 15-16 to about 17-18) or, in reality, less than 5%. The average income is about 20% less (the Hungarians and Romanians enjoy even less auspicious average income this year because of drought, about 40%). However, the investments were even, mostly due to the fact that the fertilizer could not be purchased, no one had enough money.

Of course, it is not recommendable to compare this Milosevic's 'good price', of about 18pf per kg, with the 'bad price' of Ante Markovic from ten years ago, when the purchase price was 30pf per kg, so the then Yugoslav Prime Minister had to raise it to 35pf, as a result of political pressure - he was accused of supporting an anti-Serbian and anti-agrarian policy - and of a blockade of roads in Serbia (which was helped and regulated by Serbian police, and which was filmed and dramatically flavoured by RTS - the Radio Television of Serbia). Yet, when peasants and, above all, the agricultural plants (which also have better average incomes), recall their last years' profits, they seem to be happy with the current situation. Still, this 'good price' is lower than the one at stock markets, where one ton of wheat is supposed to be no less than 101.7 dollars, which means that a price per 1kg of imported wheat would cost about 25pf per kg (depending on the costs of transport).

However, it is most likely that Serbia won't appear at the stock market this year, neither as exporter, nor as importer. The authorised ministers regularly speak about sufficient supplies, which may not be far from the truth considering the fact that last summer about 30 million dollars were gained from wheat export. The expected overall yield this year, of about 1.8-1.9 million tons, however, hardly 'covers' the domestic consumption, which should not be too alarming - on condition that the promised purchase price is paid off. The so-called market surplus (that amount of wheat which the producers sell to the state, as to the institutionalised purchaser), and which has fallen in decline during the last couple of years - much below 1 million tons - cannot be taken over in any other way.

Since it is being estimated that about 300,000 tons of this year's wheat are already purchased, it would theoretically be necessary to prepare about 2.5 billion dinars for purchase (if the purchase plan is, for example, 900,000 tons) - i.e. in reality, it is necessary to prepare three times less amount of money - considering the turn of the same capital during three months of payment of the yield. Dusan Vlatkovic, director of the National Bank of Yugoslavia, in an interview for the press in the Topcider coin factory (on June 26th), stated that this year's purchase prise for wheat would not exceed one billion dinars, and that the necessary 'money is secured from real sources'. Telling the truth, he also added that the 'National Bank of Yugoslavia will partly support the Head Office of Merchandise Supplies', and that the rest of the money would be procured by allowing the earlier credits of business banks to agriculture to be revolve into new ones which are necessary for purchase. (Someone who is studying monetary politics from books might think that Vlatkovic, as Mollier's Mr. Jurden talks, without even being aware of that, about printing money for wheat purchase.)

What is most important to both peasants and all of us, and what is likely to be the essence of Vlatkovic's statements announcing new 'projections' of monetary politics for this year - is the question whether dinar can survive the burden of the mentioned wheat purchase, together with credits for the building of new flats and motorways, for reconstruction of electro-industry and for the pre-election financing of social peace, along with the gradual payment of the long-standing foreign currency investments (on that occasion Vlatkovic promised gold coins instead of foreign currency funds). Here, the inflation always used to begin at the time of the harvest, so there is a general fear (though quite reasonable) that it might happen again, and that the inflation might eat the price of the wheat.

Talking about analogies, however, the latest experience promises certain tranquillity. Namely, when in 1991 the greatest amount of wheat was produced in the former Yugoslavia, ever since the World War II (six million tons) - as since the sated are usually very greedy - there has burst out an internal war and the state has fallen apart. Now when we expect the smallest amount of produced wheat in the last half of a century, we should, contrary to that experience, expect a year without a war. Yet, we can never know.