Bakers press for higher subsidy due to rising costs

Talks are in progress between the Bakers' Cooperative and the Ministry of Finance, Economy and Investment over a claim for a higher subsidy following the sharp rise in the cost of fuel and an expected increase in that of flour, cooperative president Karmenu Micallef said.

Production costs have already increased considerably as a result of higher fuel bills and discussions also included the possibility of a subsidy covering a rise in the cost of flour, he said.

Mr Micallef said that last year the cooperative had made it clear to the government that, in order for the price of Maltese bread to remain stable for the consumer, bakers would have to be compensated when the costs of fuel and flour increase.

In view of the increase in fuel costs, bakers are now forking out €1.16 (Lm0.50) more to produce loaves in relation to a sack of 50 kgs of flour.

Flour mills are expected to raise the price of flour in view of the increase in the cost of imported raw material. The extent of the increase is still unclear.

Bakers dread any increase in the price of local bread as they fear it will lead to a drop in demand. Mr Micallef said that during the talks the government promised the cooperative a €0.01 increase in subsidy per loaf of bread, backdated to April 1, to cover the fuel price hikes.

The bakers accepted this offer, he said. However, the cooperative is also expecting a further subsidy from the government to cover the higher cost of flour.

A spokesman for the Finance Ministry said the government is already providing substantial subsidies on bread.

He said the government always honoured its agreements with bakers and the cooperative was now requesting further assistance.

The government is analysing the situation but it is not yet in a position to commit itself on a further increase in subsidy.

A large loaf of bread today costs €0.47 (Lm0.20) and a small loaf costs €0.30 (Lm0.13).

Last August, bakers threatened to stop making the traditional Maltese loaf unless an agreement was reached with the government to increase the subsidy or, alternatively, to raise the price per loaf by Lm0.02 following a hefty rise in the price of flour.

An agreement was then reached under which the government boosted the subsidy by Lm0.01 (€0.023) while the price of a loaf was allowed to go up by the same amount.

Previous to that, the last increase was in December 2004, when a loaf went up in price by Lm0.02 (€0.046).