| 05 Nov 2007 |
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Jordan: Gov't partially lifts flour subsidies, prices up
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AMMAN - Prices of bread, pastries and sweets have increased by 20-60 per cent due to a new mechanism of subsidising wheat applied by the Ministry of Industry and Trade as of October 31.
The hike, which did not affect the prices of Arabic bread, or pita, covered all other kinds, such as the type used for hamburger.
The ministry retained subsidies on small Arabic bread.
Officials said the new mechanism was meant to regulate wheat sales to mills, bakeries and distribution centres.
After a partial lifting of subsidies on fodder earlier this year, the prices of subsidised wheat became relatively cheaper, which tempted mills to make fodder using this essential commodity, according to ministry officials.
Cattle owners started mixing animal fodder with subsidised wheat after animal feed prices rose from JD90 to JD150 per tonne.
The ministry countered the violation by limiting the supplies of subsidised flour to bakeries, while wheat used for other purposes was kept available at market prices (around JD360 per tonne), said Minister of Industry and Trade Salem Khazaaleh.
Carefully studying the bakeries' actual needs for Arabic bread, the ministry set a quota for each outlet. According to the new mechanism, bakery keepers will now buy all their needs for flour from mills at market prices and then they are refunded in cash, on the basis of their quotas.
According to the ministry's new regulations, distributors are not allowed to store flour in their warehouses or sell it to other parties. In addition, they are required to provide the ministry with daily lists of bakeries and the quantities of flour delivered to them.
The new mechanism will save the country "at least" JD54 million a year, which is the value of the additional 15,000 tonnes a month the country has been importing following the use of wheat in fodder, Khazaaleh told The Jordan Times yesterday.
The official said the final figure of the savings will be worked out one month after applying the system.
President of the Bakery Owners Association Abdul Ilah Halawani said the association took the decision to increase prices after it was faced with the ministry's "surprise" method of regulating the distribution of wheat to mills.
The decision was issued on the eve of October 31, he said. The association tried to contact the minister the next day but he was in China, he added.
"We were promised that prices will not exceed JD300 per tonne of wheat. The JD360 figure came as a shock," he added.
Halawani warned that the large difference in prices between subsidised and nonsubsidised flour provides an opportunity for greedy dealers to manipulate the quantities delivered to bakeries.
But Khazaaleh dismissed these fears, saying financial compensation will only cover quantities specified in bakeries' ration cards.
Regarding citizens who bake their own bread at home, said Khazaaleh, they will be provided with subsidised flour from the ministry's centres. The ration will be calculated according to the size of the family, as shown in the family book.
Halawani said unless the ministry closely monitors the implementation of the new mechanism, the results would be disappointing.
By Hani Hazaimeh
© Jordan Times 2007
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