To Sow but not to Reap

A German Mark (DM) was selling on the streets for about 950,000 Dinars on June 24th, when the state harvest plan was rounded up and the initial purchase price for 1st class wheat was set at 240,000 Dinars (Din) per kilo. That day Dusan Jovanovic from Novi Sad, who had produced 150 tons of wheat, figured out that his gross profit would roughly amount to 40,000 DM. Only ten days later his yield was worth only 12,000 DM, with a further declining tendency, even though the Federal Government had, in the meantime, raised the price to 290,000 Din. Like many other farmers in Vojvodina, northern Serbian province, at one point he thought about setting his entire crop on fire, but, instead, he got into his car, for which he is not entitled to collect the "harvest coupons" for fuel, and drove to buy some rope for baling straw. The salesman told him that he had to pay 5 DM per kilo of rope and make his payment in DM's. In the name of the "Dunav" Share holding Company he wrote out a receipt at 110 DM and even officially stamped it. The very same day Jovanovic tried to lodge a complaint with the Province's Market Inspection regarding this case of "introducing a foreign currency into the domestic cash flow." He was told that they would draw up a report if he really insisted on it and if that would appease him. But, he calmed down only that evening after the prime time news full of reports on a successful start of the harvest and on the events in Johannesburg when he sealed up his television set.

Everything was properly thought out by the Federal and Republic Ministries, and even better promoted on television. It was assessed that 804,000 hectares would yield about 3.1 million tons of wheat. It was planned that close to 20,000 combine harvesters would over two weeks fill 68 Serbian silos with a capacity of 2.9 million tons. In order to avoid "brokerage", the purchase of wheat was monopolized in favor of the Serbian Office of Commodity Reserves. This office received money for the purchase of 1,220,000 tons, while the authorized milling firms received funds for the additional 650 tons. Montenegro is to buy 380,000 tons. The National Bank of Yugoslavia presented 315,000 trillion Din to Serbia towards this deal as a loan at a trivial 30 per cent interest rate. Theoretically speaking, the fuel was secured as well, and in villages the lists for distribution of 35 liters of diesel per hectare were drawn up. The Federal Government also came to aid by approving 10,000 tons of crude oil and 5,000 tons of diesel from the reserves. A half of the promised fuel did reach the farmers after all. When all this had been charted, the estimated were made as to how much wheat would be left over for export. Milan Milanovic, Deputy Federal Agriculture Minister, stated that an average Yugoslav annually consumes 153 kilos of wheat, so that the country need 1.124,000 tons until the end of the year, and that 1.995,000 tons would be available during that time period, this according to the balance sheets. All in all, we would consume 1.7 million tons in the newt year, 300,000 tons would be stocked, while 800,000 would remain for export. Everything has been conceived well, but it is a question what will actually be realized. A simple fact was overlooked that there was an attempt to sell real goods for real money, but our Governments lost control of the real money long time ago.

Money has "leaked" onto the streets somewhere, which is why it did not reach the farmers (many bankers claim that they only dispose with 10 per cent of the cash they are supposed to pay out to the farmers). But, this is not a problem as Radoje Kontic, Federal Prime Minister, and Nikola Sainovic, Serbian Prime Minister, tend to believe. The problem is that the state clerks may have thought that 350 million DM was printed for the harvest, but forgotten that dinar coupons when new are only seemingly worth so much according to the "yesterday's" black market exchange rates. Wen they reach the market, the price gets changed again. That is the fate of the money which is not defended (and can no longer be defended) by appropriate interest rates.

A big swindle over harvest, which was master-minded in Belgrade, has a painful regional dimension. In Vojvodina, it is perceived as an unprecedented rip-off, so that the highest officials of the Serbian Government in this province have tried to wash their hands of the whole thing and accuse the central state of a wrong purchasing policy. Milutin Stojkovic, Speaker of the Parliament of Vojvodina, has admitted that the situation is really difficult and even worse "as it slipped out of control." "Although we are in power, we are practically powerless," he said. Bosko Perosevic, Prime Minister of Vojvodina, was more specific, "Unfortunately, the power of the Province's Executive Council is very limited. Our hands are practically tied." Savo Stupar and Srdjo Komazec, Deputy Speakers of the Vojvodina Parliament, have sent a letter to the Federal Government. In the letter they warned that the price of wheat which had been determined by the Governments of the Federal Republic of Yugoslavia and Serbia "cannot cover the minimum production costs", and, therefore, "the sale of wheat is being conducted with difficulty and delays." They also reminded the Federal Government that the Parliament of Vojvodina had demanded the price of 0.35 DM per kilo of wheat, even before the harvest began.

The paradox is that the purchase will be best in Vojvodina, since the big producers have no place where to put their crop, which makes the appeals by some opposition parties, that the wheat be not given to the state, seem unrealistic. Besides, the Serbian Government is relying on an Act from its Decree that 4 per cent interest be added for each day the payments to the farmers are late. This decree makes no sense in real life since the cooperatives have already announced to their partners that the time-limit for making payments with no interest money included is between two and eight days. Therefore, it seems reasonable to expect that the payments will be delayed deliberately as the daily inflation rate is over 10 per cent. A decree that the purchase price be corrected every Thursday may result in the firms paying for wheat on Wednesdays, etc...

The citizens of Yugoslavia are helplessly watching this mess over harvest. Everybody will eventually have to pay for the farmers' efforts at converting their profits into the real money (German Marks), for whatever the farmers lose on wheat will have to be compensated elsewhere so that they can at least start a new cycle of production. In the meantime, the Federal and Republic Governments are left with struggling with a question, which to them seems unsolvable - how come that each increase in production gives a boost to the hyperinflation.