Mozambique: Govt Seeking Ways to Target Bread Subsidies

The Mozambican government is seeking ways to subsidise the price of bread for those who need it. According to an article in the daily newspaper “O Pais”, the aim is to maintain the current price of bread until March 2017.

There is pressure from bakers to increase bread prices in line with the higher costs of their inputs. At the end of June, the Mozambican Association of Bakers (AMOPAO) proposed a rise in the price of a 200 gram loaf from six to seven meticais, whilst a 250 gram loaf would increase from 7.5 to nine meticais.

However, on 1 July the government placed a temporary suspension on the proposal whilst a review of the supply chain is undertaken. Bread prices rose dramatically in October last year with AMOPAO imposing a 1.5 meticais increase for all types of bread. Thus, a 250 gram loaf went up in price from six to 7.5 meticais. Under the most recent proposal, this size of loaf would cost nine meticais – a fifty per cent increase in less than a year.

Speaking on Friday after a meeting with bakers, the Deputy Minister of Industry and Trade, Ragendra de Sousa, said that the government is negotiating with its partners for more favourable conditions for the purchase of wheat. Amongst the measures are the removal of value added tax and the charge for the non-intrusive inspection (a payment for inspecting goods at port using a scanner) for some wheat imports.

However, this subsidised wheat will not be available to all the market. This is because thirty per cent of imported wheat is not used for bread but for manufacturing pasta, biscuit and cakes. In addition, the price of bread is not of crucial concern to all Mozambicans.

Ragendra de Sousa said that the aim is to target the subsidised bread to a well identified segment of customers. The minister stated that the purpose is to soften the costs for bakeries that make bread for people with less income.

To ensure that the subsidised wheat is not used for other purposes or exported to neighbouring countries, the government will limit the amount that each bakery can buy through a licencing system.

According to “O Pais”, recent attempts to subsidise fuel have ended up benefitting undeserving entities such as multinational companies. In other cases, drivers from neighbouring countries have crossed over the border to buy cheap fuel.

At Friday’s meeting, the representatives of the millers and bakers agreed to respond after analysing the measures with their members.

Source: Agencia de Informacao de Mocambique.