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Yemen: Greedy traders increase prices of wheat

Greedy traders have driven the price of wheat and flour up by 30 percent in the last month, said President Ali Abdullah Saleh. To fight these price increases, he has directed the government to import wheat instead of the traders. During launching of Fourth General Conference of Agricultural Cooperative Federation, Saleh said that "the government must import wheat to dominate the market. "We liberalized trade, but will come back if they don't respect trade liberalization. Then government is to be the importer and the seller for the wheat and flour," he said.

The government must import wheat and distribute it to the people in affordable prices. It is true, he said, that there has been international price increases, but unfortunately, the private sector increased the suffering of citizens, and this greed unacceptable. The traders' stores are full of those basic goods, said Saleh. "In the '80s, we prevented the importing of fruit and vegetables. So many opposed this step, but we planted it and now we export fruit and vegetables, so we must farm wheat, he said. He called on all of the governorates to farm wheat. "The government will offer all support to farmers of wheat and buy it from them with high prices more than we paid to Australia, Canada or America," he said.

"The government is under stress because of price increases," said Yahya al-Mutawakal, the Minister of Industry and Trade." So, the president called to farm wheat to reduce price increases." Prices of wheat and flour rose 30 percent last month due to the international crises of prices, said Mutawakal. The price of a 50-pound bag of wheat increased from$250 on January to $342 in August, due to world reduction of the production of wheat and flour. This decrease was caused by bad climate, as some countries--such as India shifted from being exporters to becoming importers for these basic foods.

In addition, the increase in the cost of transporting food has risen, due to the increase in oil prices. Global price increases have not exceeded 30 percent, but the domestic price increases exceed 40 percent, said Mohammed Salah, a member of the Director Board of Sana'a Chamber of Commerce.
There is not a higher demand for foodstuffs, but there is a monopoly; this is what is causing the increases. Some traders rely on price increases to get high profits, said Salah. Professor Taha al-Fosiel, an economics expert, said that price increases would create many economic problems, like local inflation exceeding the rate of global inflation, which is 5 to 6 percent.

Many vendors raise prices of basic foodstuffs for their own profit. The government should depend on the free market for importing foodstuffs, instead of depending on special traders, said al-Fosiel. And the Yemen Economic Corporation must take lead role in these crises of food to break down the monopoly. "I get 25,000 as a salary and I have five children, so what can I do with it? I thought to leave the city to my village," said Mohammed Khaled, 45, a driver. "I escaped from a hanger in my village to Sana'a to look for work. When I arrived, I surprised because I work just two days per week. So I sleep on the street with many like me, due to gathering money for my poor family," said Mohammed al-Hofashi.

"Yemenis always suffer due to greedy traders. I wish to hear about prices decrease, because the prices increase or decrease based on demand and supply. In this case, Yemen is unusual case because everything will go up," said Abdul-Jabbar Mohammed. On August 9, the cabinet held an exceptional meeting to discuss price increases. The cabinet directed the Yemen Economic Corporation to make available basic goods for covering the country needs for a period of no less than six months, and sell them to consumers with lower prices. It also directed the Finance Ministry to allocate YR3 billion to support the corporation to achieve this goal.

The cabinet pressed the Yemen Economic Corporation to create a balance in available basic goods and double imports in the forthcoming period, and to distribute them across the country. It also approved holding a meeting with prime merchants next Saturday to study necessary treatments to fix prices. The cabinet authorized Ministry of Industry and Trade to make weekly announcements on international prices of basic goods imported to the country, in order to explain to consumers the international price changes. On August 11, the cabinet and senior importers of wheat and flour formed a joint committee to tackle the problem of price increases of wheat and flour in the markets. The cabinet and traders agreed to offer enough of these two basic food materials at reasonable prices across the country.

Traders have confirmed that there are unused stored quantities of wheat and flour. The importers said that the current storage of these materials would cover the needs of the country for about four to five months. They denied any shortage of these materials in all markets. The traders agreed to open stores to directly sell wheat and flour to consumers, to ensure offering them without any unjustified increase. They asked authorities of the seaports to give priorities to the unloading of these materials. The importers agreed to supply the Ministry of Industry and Trade with a database associated with the contracts and shipment of these materials to enable the ministry to monitor markets properly.

"The corporation has enough quantity of wheat which will sell at official prices, according to cabinet, said Ali al-Kohlani, general Director of Yemen Economic Corporation . "The corporation has plans for implementing the decision of the cabinet to interfere in the market to stabilize prices, by means of the branches across the country, and trucks to distribute wheat among cities and countryside."

By Faisal Darem

© Yemen Observer 2007