DYNAMICS OF FASTER RISE IN WORLD PRICES CAUSES RISE IN PRICES FOR FOOD PRODUCTS IN ARMENIA

ARKA
March 27, 2008

YEREVAN, March 27. /ARKA/. The rise in prices for food products in
Armenia can be attributed to the dynamics of faster rise in the world
prices, particularly in the prices for grain, butter and sugar.

At a meeting of the interagency task group for price monitoring, RA
Deputy Minister of Trade and Economic Development Vahram Gushchyan
reported that a 41% rise in the prices for vegetable oil was recorded
in February 2008 as compared with the year 2006, with an approximate
180% rise in the world price for this product recorded.

A 128% rise in the international price for butter was recorded,
with a 28% rise recorded in Armenia.

A 120% rise in the world prices for grain crops was recorded, with
a 90% rise recorded in Armenia.

As regards sugar prices, they have shown a downtrend both on the
world and Armenian markets since 2006, whereas a rise in the prices
has been recorded on both the markets over the last two months.

"Among the main factors that caused a price rise are global climatic
changes and unfavourable weather, which cause yield reduction, and
a rise in the international oil prices," Gushchyan said.

As regards demand, the man factors are increased consumption due to
the population’s increased incomes as well as a sharp increase in
the bioenergy output.

He pointed out a sharp increase in the production of biofuel in
the world.

Cereals are used in biofuel production, which influences the world
demand.

In the context of the available scenarios of biofuel use and
development until 2020, international experts forecast a 26% rise
in the price for cereals, 12% rise in the price for sugar and an 18%
rise in the price for vegetable oil, Gushchyan said.

He pointed out that, with larger-scope scenarios considered, the
prices in question may rise by 72%, 27% and 44% respectively.

A rise in prices for a number of food products was recorded in Armenia
in February 2008 as compared with February 2007: a 26.1% rise in the
prices for grain crops, 46.9% rise in the prices for vegetable oil,
12.1% rise in the price for rice, 32.5% rise in the price for flour,
and 5.6% rise in the price for cheeses.

The prices for butter and sugar fell by 4.9% and 16.3% respectively.