The sale of industrial bread has declined by 60-70%, following the government’s decision to discontinue flour subsidies, says Mohammad Javad Karami, the head of Leavened and Semi-Leavened Breads Producers and Sellers Union.
“Industrial bread producers approve of flour price liberalization of both traditionally-baked and industrial breads; subsidy system reforms should have been carried out for both traditional and industrial breads simultaneously. The goal of this policy was to fight rent-seeking practices but the way it has been implemented defeats that purpose,” he was quoted as saying by ILNA.
“Iran’s development plans stipulate that industrial breads should account for 40% of total bread supply, but people will turn away from the consumption of healthy bread following flour price liberalization in its current form,” he said.
“In order to create healthy competition between traditional and industrial-bread bakers, subsidies must be granted equally; the implementation of this plan has led to the closure of a number of small bakeries and the unemployment of a significant number of workers.”
The liberalization of flour prices came as part of the government’s recent move to remove subsidies for importing essential goods, including wheat, barley, corn and soymeal, for many years now. Instead, the government has opted to deposit cash subsidies straight into the accounts of first to ninth income deciles.
The unexpected announcement of a fivefold increase in the price of flour used by food factories has led to their procrastination in purchasing raw materials. Their production is expected to be suspended for 15 days, as no factory has bought flour at the new price, the Persian daily Jahan-e Sanat reported last month.
“Factories buy their flour from the Government Trading Corporation of Iran. It supplies three kinds of flour. The first type is given to traditional bakeries; the price of this type of flour has remained unchanged … The second type of flour goes to industrial bakeries; the price of this type of flour has also remained unchanged … The third type of flour is supplied to pasta, cake, cookie, starch and noodle producers; the price of this kind of flour has increased fivefold,” the head of the Association of Flour Producers, Mohammad Reza Mortezavi, said, adding that prices of pasta will double.
“The global prices of grains have increased, therefore the government’s decision to increase its purchase price seems logical. The price of wheat also affects the prices of fodder and other livestock feed, including alfalfa and barley.”
