Cabinet plans to liberalize bread prices in February
“Price of pack could rise by up to LL700”
The Cabinet is considering liberalizing the prices of white bread. The price of a bread pack has been capped at LL1,500 since more than a decade, but the weight of the standard pack was gradually reduced to 900 grams from 1.5 kilograms in 1997. The Cabinet has managed to keep the price at a fixed rate by subsidizing the prices of wheat flour used for making bread. The flour subsidy will be maintained until February.
Liberalizing the sector could induce a rise in the prices. Arslan Sinno, a representative of the Association of Mill Owners, said prices of a bread pack would rise between LL500 and LL700. “This increase is not significant compared to the much higher increases in prices of other basic commodities, such as gasoline,” he said.
The Cabinet said it will form a committee in January to assess the currently applied subsidy scheme. It said the plan will also consider supporting impoverished families after bread prices are liberalized.
Demand on bread surged over the past few months, due to the inflow of refugees from Syria. Bakeries and mills have also complained that certain amounts of subsidized flour and bread were being smuggled into Syria. “This leaves us with two choices, either to have the government increase the quantities of subsidized wheat flour, or to liberalize the entire bread production sector,” said Sinno.
According to the Ministry of Economy and Trade, the annual local consumption of wheat hovers at around 400,000 tons. Sinno said that traditional white bread represents between 50 and 60 percent of annual wheat consumption. The government subsidizes the price of around 18,000 tons a month.
Date Posted: Dec 28, 2012