Government wavers over high cost of bread subsidy

The subsidy demanded by bakers would cost the government an extra Lm11,000 per week, Competitiveness Minister Censu Galea told The Times yesterday after the government said it needed more time to study the situation.

Bakers made the demand last week - or as an alternative requested that the price of Maltese bread increases by 2c a loaf - after the price of a sack of flour soared by Lm1.60. Collectively, the bakers consume around 7,000 sacks per week. Mr Galea said the government acknowledged that under an agreement with the bakers it was bound to issue a subsidy when the production costs for bread increased. But in this case the amount involved was extraordinary, which meant the Ministry of Finance had to assess the situation.

The Ministry of Competitiveness informed the Bakers' Cooperative yesterday that it needed more time to work on a solution.

The price of a 50-kilogramme sack of flour last week rose sooner than expected from Lm7.08 to Lm8.68.

Mr Galea acknowledged that the existing agreement spelt out that bread production would be subsidised when there were extraordinary increases that affected bakers' costs.

However, he said even under that scenario they would not receive anything until next year.

The cooperative's vice-president, Raymond Briffa, said yesterday that it had no alternative but to wait for the government's reply, although it is feared that some members would take it upon themselves to raise bread prices. Mr Briffa said bakers needed cash in hand to pay bills because those providing them with services insisted on immediate payment. A baker who uses 100 sacks of flour per week would incur an additional cost of Lm160, he said.

He also said the cooperative was in possession of a letter from the government which states that bakers would wait for the subsidy to be paid at a later date when the increase was as high as 20c. But the situation now was different, Mr Briffa said.