The importers of wheat for distribution as flour to bakers, Federated Mills Inc., are to raise the cost of their product to make up for the higher cost of the imported raw material.
Company chairman Charles Demicoli said yesterday he was not in a position yet to say how much the flour will sell for. What is certain is that the company has no other alternative, and the increase is imminent.
This follows the green light given by the Commission for Fair Trading which last week revoked a government order through the Office of Fair Trading stopping Federated Mills from raising the price of flour last December.
The bakers' cooperative is well aware of the impending increase and is engaged in talks with the government over this issue.
Federated Mills are free to increase the price of flour - as they have always been when the need arose - in view of the higher cost of imported wheat, Mr Demicoli said when contacted.
The practice in the past was to amend the price before importing the wheat. Instead of increasing the price at the rate of, say, €3.50 (Lm1.50) per sack at one go, the increase would then be of about €1.05 (Lm0.45) over a longer period of time.
The government used to accept this practice after looking into the costings but when the company sought to follow the same procedure last year, the government argued that since the wheat had not yet been imported, it would not allow the price increase.
"We knew we were justified to raise the price of flour and it turned out we were right," Mr Demicoli said.
On Monday, the Commission for Fair Trading revoked an Office for Fair Trading order banning Federated Mills from raising the price of flour to bakers last December, deeming the rise unjustified and noting that "the increase would have come at a time when the country was about to go through a somewhat sensitive moment in its democratic process".
Federated Mills took its case to the Commission for Fair Trade arguing, among other things, that the price of wheat on the international market had been going up, something that was completely beyond its power to control.
Talks are in progress between the bakers' cooperative and the Ministry of Finance over the bakers' claim for a higher subsidy following the sharp rise in the cost of fuel and the expected increase in that of flour, cooperative president Karmenu Micallef said when contacted.
The cooperative is insisting bakers will have to be compensated for the higher cost of fuel and flour.
The government has already promised the cooperative a €0.01 increase in subsidy per loaf, backdated to April 1, to cover the fuel price hikes, Mr Micallef said.
However, the cooperative is expecting an additional subsidy to cover the higher cost of flour.