Flour importers demand price liberalisation

The controversy over the price of bread, which bakers want to raise, took a new twist yesterday when flour importers Federated Millers plc said the government should no longer intervene in setting the price of flour, which has recently gone up.

"The price is set according to the supply and demand for wheat on the international market. Although, legally, the price of flour is still subject to a price order, the government should have liberalised the market as soon as Malta joined the EU on May 1. The price order is obsolete," a spokesman for the millers argued.

The sharp rise in the cost of flour coupled with the higher price of paraffin has plunged bakers into turmoil. They are claiming the cost of producing a Maltese loaf has gone up by at least 2c.

Although the price of the Maltese loaf is controlled by the government, the bakers are not prepared to keep working under the strain of such additional costs and are threatening to raise the price of the loaf unilaterally.

To make matters worse, the cost of freight is going up.

This is the second time in the space of four months that the millers have put prices up. In August, the price of a sack of flour had gone up by 56c. As a result, bakers were able to negotiate a 1c increase in the price of the large Maltese traditional loaf to 17c.

Although the millers do not as yet have any direct competition and, so far, enjoy a monopoly situation, the spokesman noted that about six other firms had imported samples of flour in a bid to make inroads into the market.

"But apart from the fact that the price of the flour imported by these firms was higher than that sold by Federated Millers, the bakers did not find it good enough," the spokesman added.

Seventy per cent of the flour imported by Federated Millers consists of hard wheat from America and the remaining 30 per cent is soft wheat bought from the EU.

The spokesman said there was an EU derogation that waived levies on high quality hard wheat which is the type imported by Federated Millers.

Federated Millers told The Times it had written to the government last September pointing out that the price of flour would have to go up in November. It sent another letter the following month.

"The government did not do anything except tell us that we would be breaking the price order by raising the price of flour," the spokesman said.

Federated Millers is made up of seven millers who, prior to May 1, used to buy wheat from the government-owned company, Medigrain, which was dissolved prior to Malta's accession to the European Union.

In order to make up for fluctuations in the price of wheat, the government used to subsidise millers through the Price Stabilisation Fund.