Price of wheat flour falls

The new price of wheat flour, announced by the Mozambican government last week, should eliminate the flour subsidy the government has been paying since September 2010 in order to hold down the price of bread.

However, according to a report in Tuesday’s issue of the independent newsheet “Mediafax”, the Mozambican Association of Bakers (AMOPAO) complains that it has not been officially in formed of the cut in the price of flour.

Flour subsidies were introduced after the Maputo riots against price increases on 1-2 September 2010. The subsidy paid to bakers was initially 200 meticais (5.5 US dollars at the exchange rate of the time) per 50 kilo sack of flour.

The price of the flour supplied by the milling companies had risen 850 to 1,050 meticais a sack. The subsidy took the effective price paid by the bakers back to 850 meticais, and allowed them to put bread prices back to pre-riot levels.

Since then the subsidy has been gradually reduced, partly due to fluctuations in international wheat prices, and partly to the sharp appreciation of the metical. In September 2010 there were about 36 meticais to the US dollars, but today the rate has strengthened to 27.2 meticais to the dollar.

Last week, the Ministry of Industry and Trade announced a cut of 80 meticais in the price of a 50 kilo sack of flour. Since 1 November 2011, the price of a sack had been 930 meticais – so it is now back to the figure of 850 meticais. That should logically mean the end of the subsidy.

However, the chairperson of AMOPAO, Victor Manuel, complained that the bakers have received no official information about the new price, and only knew about it through the media.

Manuel also suggested that, with the end of the subsidy, the bakers might increase the price of bread. “The current price was fixed in 2010, and even though flour accounts for between 60 and 80 per cent of the costs of production, there are other costs which have risen”, he said. “So we may eventually reach the conclusion that we have to raise the price”.

That will be unwelcome news for the government, bearing in mind the two days of havoc in the capital that followed the last attempt to increase the price of bread.

Post published in: Africa News

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