Govt boosts allocations to bakeries to support subsidized bread production

The Supply Ministry told bakeries on Sunday that it had increased its allocations to support their production costs for subsidized bread. 

The decision, of which Mada Masr reviewed a copy, said that bread production costs were revised after last week’s government hike to the cost of fuel nationwide. Some categories of fuel were impacted by over 20 percent.

The price for the public will remain the same.

The Bakery Owners Division at Cairo Chamber of Commerce had proposed that the government boost subsidies for bakeries producing subsidized bread loaves to account for inflation pushing up the expense of production.

Prior to Sunday's decision, the amount the government pays to bakeries to support the production costs for subsidized bread had remained unchanged since 2020, according to Khaled Fikry, the general secretary of the chamber division.

Fikry noted that since 2020, the cost of production inputs for a loaf of bread, including the costs to procure yeast, salt, water, labor, electricity and rent, have significantly increased, and that the sector has struggled to keep up.

The government floated proposals to alter the retail cost of subsidized bread in 2021, but later retreated from the politically controversial step which would impact the roughly two-thirds of the population who are eligible for the subsidized bread.

Meanwhile, bakers are yet to decide whether they will move forward with a different proposal which would see a 10 percent hike to the price of commercially sold loaves.

On Sunday, Supply Minister Ali Meselhy said that “there is no need” to increase the price of commercially-sold loaves after last week’s fuel price increase, as flour costs have declined over the past months. 

While prices spiraled upward at the outset of 2024, an inflow of foreign currency resources in recent weeks has smoothed out chronic disruption to imports, prompting speculation that inflation could also slow.

Khaled Sabry, spokesperson for the Bakery Owners Division, told Mada Masr that Meselhy’s comments are accurate in theory. The hike to the cost of diesel, which is used to operate bakeries, won’t increase the production cost per loaf by more than LE0.002 per loaf, he said. “A sack of 50 kg of flour produces 1,000 loaves, requiring 11 liters of diesel. The increase in diesel price would be LE20 per sack, meaning the increase in the price of a loaf is minimal.”

But he also said that the government does not have a direct role in determining the price of commercially sold loaves, and noted that transportation and living costs should also be considered as factors moving the industry proposal for a price hike. 

“The trucks used to transport the flour will raise their quotes after the diesel increase, and the worker who used to pay LE5 for transportation now pays LE10. Also, food and household expenses have increased. So, the worker will demand a wage increase.”

Members of the division were due to meet to finalize a decision on an increase ranging from LE0.25 to LE0.50 for commercially sold loaves in recent days. But Sabry told Mada Masr the decision was postponed until after Ramadan. 

After disruptions to the global wheat market due to Russia’s 2022 invasion of Ukraine, unsubsidized loaves of bread at licensed commercial bakeries were priced at fixed rates. Licensed commercial bakeries were required to keep prices stable as the Supply Ministry provided them with a regular quota of subsidized flour.

However, the ministry ceased supplying subsidized flour to commercial bakeries in late December of last year, Sabry previously told Mada Masr.