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The Mozambican government has not yet decided whether it will continue subsidizing wheat flour in order to keep the price of bread low.
Speaking on Thursday to the independent television station, STV, the Deputy Minister of Industry and Trade, Ragendra de Sousa, said the government is still studying the matter, and will shortly announce its decision.
Bakers last put up the price of bread in October 2015, when the price of a standard loaf, weighing 250 grams, rose from six to 7.5 meticais (from 8.6 to 12.4 US cents, at current exchange rates). To avoid a further rise in the bread price in 2016, the government reintroduced the subsidy on wheat flour.
The government fixed a reference price of 1,240 meticais for a 50 kilo sack of wheat flour. The milling companies and other authorized wholesalers would be paid the difference between this reference price and the price they really paid for imported flour, in meticais, using the exchange rate of the day the flour arrived.
The bakers claim it is not enough. On 20 December, the Mozambican Association of Bakers (AMOPAO) threatened to increase their prices, because the subsidy only covers flour and not the other inputs needed to make bread (such as yeast, vitamins, water, electricity, fuel and labour).
“We are having great difficulties in paying our workers’ wages”, said the AMOPAO chairperson, Victor Miguel. “Furthermore some milling companies refuse to sell us flour on credit, and this is incompatible with our industry”.
AMOPAO has been calling for an increase in the price of a standard loaf to nine meticais (which would be a hike of 20 per cent). But in September, the government insisted that the flour subsidy would continue at least until the end of January 2017, and there would be no need to increase bread prices until then.
“If there is no bread, there is cassava, there is sweet potato”
“The intention of the government has not changed”, Ragendra de Sousa said in his Thursday interview. “The government wants to benefit, in an effective manner, the poorest strata of society”.
But he also argued that, if people are unable to buy bread, they could opt for alternative foods. “If there is no bread, there is cassava, there is sweet potato”, he said. “We are going to study all this and bring a satisfactory answer”.
But, if the deputy minister imagines that cassava or sweet potatoes are cheaper than bread, he is much mistaken. A kilo of bread (four standard loaves) should cost 30 meticais, which is much the same price, or more expensive, than the equivalent amount of cassava or sweet potatoes.
In the informal markets, cassava and sweet potatoes are not normally sold by the kilo, but in little heaps. A source familiar with the informal market told AIM that a heap of cassava currently sold for 30 meticais will usually weigh around a kilo. Sweet potatoes are more expensive. One housewife told AIM that, when she wanted to buy sweet potatoes at a supermarket, two potatoes weighing between them less than half a kilo, cost 105 meticais. Sold by vendors in the streets, a small pile of sweet potatoes, weighing less than a kilo costs 50 meticais.
Furthermore, the great advantage of bread is that it can be eaten immediately – but cassava and sweet potatoes must be cooked. Hence, price calculations must also include the cost of fuel.
At current prices, cassava could only become competitive with bread, if there was a substantial increase in the bread price. Even then many urban consumers will prefer bread, simply because of the convenience factor.
These calculations are all for Maputo. In the countryside, bread is often unavailable, and many rural households can eat the cassava and sweet potatoes which they or their neighbours grow.
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