Bakeries say govt support not enough to produce subsidized bread

Bakery owners producing subsidized bread said that they are currently unable to make loaves to official weight and quality standards, expressing dissatisfaction to Mada Masr over the "unfair" production costs they say are set by the government.

After consumer inflation rose to record levels last year, the government enacted an unprecedented hike to the price of subsidized bread and later boosted its spending to support some bakeries' costs. 

But bakery sector sources said that their expenditure has increased throughout the supply chain and that the government needs to do more if they are to pay workers fairly and make loaves at regulation weight and nutritional value.

Bakeries have repeatedly requested that the government provide them with more financial support to produce subsidized loaves, suggesting an across-the-board increase of around 65 percent.

But when the government enacted in July its first comprehensive increase to allocations in four years, it boosted the value of its support for bakeries by only 25 percent.

Another minor increase to the allocations followed, part of routine adjustments to the support provided by the ministry to bakeries to cover fuel expenses in line with quarterly national fuel price adjustments.

The government’s recent price adjustments fail to address the full spectrum of rising costs faced by bakeries, including flour and raw material transportation, equipment maintenance, and travel for workers, according to seven sources in the bakery sector who spoke to Mada Masr on condition of anonymity to express criticism of the ministry.

"A few days ago, the government raised metro and transportation fares, and they know that workers who rely on public transport to get to work now face higher expenses and increased household needs,” a bakery owner in Monufiya said. “Yet, the government's set production cost ignores all of these hikes.”

Bakery owners and sources from the General Bakeries Division in the Federation of Egyptian Chambers of Commerce also said that bakeries did have to start paying higher diesel prices starting on July 25, when fuel costs were raised nationwide, but that the Supply Ministry only increased its support for bakeries using diesel from the beginning of August, leaving them out of pocket.

Six bakery owners from various governorates said that they are unable to produce loaves of the quantity and quality required to meet the ministry’s specifications within the stipulated costs.

One of them said that, over the years, he has submitted multiple requests and complaints to both the Supply Ministry and the Cabinet. “I told them, ‘I don’t know how to do the calculations. Come teach me; maybe I just don’t get it,” he said. “Alternatively, fetch some bakeries that can produce the required weight and number of loaves at this cost so I can learn from them. But I don’t know how to meet your requirements without compromising my principles.’"

One of the bakery owner’s complaints was reviewed by former Supply Minister Mohamed Ali al-Sheikh, who set up a committee to respond, according to the bakery owner and documentation reviewed by Mada Masr. The committee confirmed that it was impossible to meet the quality specifications and the required number of loaves with the stipulated costs and accordingly made allowances for the permission of a 10-gram weight divergence from the 90-gram regulation standard.

However, former Supply Minister Ali Meselhy later revoked this tolerance and increased the production yield from 660 to 725 loaves per 50 kg sack of flour, as well as raising the flour extraction rate from wheat from 82 percent to 87.5 percent.

A bakery owner from Beheira governorate previously told Mada Masr that he made LE10,000 in profits per month in 2020, but that he is now in a position where he is struggling to pay the bakery’s rent and is covering the cost with income from another job.

In order to keep operating the subsidized bakeries, many owners are now reducing the weight of the loaves they produce or selling subsidized flour informally to cover their costs.

"Most bakeries are now forced to cheat just to keep operating. If you weigh any loaf, you’ll find that it’s only 50 grams,” the Beheira baker said. “Then, the Supply Ministry files a fraud complaint and puts me in jail. They know the cost is higher than what they’re paying now. So, who covers this difference? The citizen bears it with a loaf that doesn't stave off their hunger, while I risk facing legal consequences."

The other option is to short-change workers, according to a source from the General Bakeries Division. They said that the government recently pressured bakery owners to cut production costs by compromising the quality of materials and lowering labor wages.

The Cairo Bakeries Division held a meeting on Thursday, according to the source, inviting its members, labor brokers from Greater Cairo and chief police inspectors for each area. The bakeries division source said that, during the meeting, the one broker in attendance was asked to reduce labor costs. Some attendees described the situation as one in which the government was "failing to raise production costs, so we go and exploit workers," the source said.