The Mozambican government has promised to subsidise milling companies in order to avoid any increases in the price of bread before the end of January 2017, according to the Ministry of Industry and Trade.

This follows prolonged negotiations between the government and the Mozambican Association of Bakers (AMOPAO) which in June had called for a 20 per cent increase in the price of bread, which would have pushed the price of a 250-gramme loaf up from the present 7.5 meticais (around 10 US cents, at current exchange rates) to nine meticais.

The bakers based their case on the rise in the price of imported wheat flour, when expressed in meticais. The government has opted for much the same solution as that adopted after the riots against price increases of September 2010; it will keep bread relatively cheap by subsidizing wheat flour.

The government has fixed a reference price of 1,240 meticais for a 50-kilogramme sack of wheat flour. The government will pay the milling companies and other authorized wholesalers 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 system will depend on honest invoicing. The bakeries will send the invoices for the flour purchased from the milling companies to the AMOPAO leadership, which will pass them on to the government’s National Directorate of Internal Trade.

As for flour purchased by the bakeries over the last three months, the government will pay the subsidy to the companies, which will then pass it on to the bank accounts of each bakery affiliated to AMOPAO.

The amounts of flour sold to the bakeries will be subject to verification by government inspectors.