Bread Is Disappearing to many,while TPLF building 120 million office – Addis Fortune

March 4th, 2008 Print Print Email Email

Reaching to Afford a Staple

For Yassin Ahmed, a father of five, last Thursday was no different from other days of the week, until he went to Misrak Bakery, on Africa Avenue (Bole Road). Yasin was in for an unpleasant surprise at 6:00pm after leaving Darmar Shoe factory, where he works for a monthly salary of 530 Br.
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Reaching to Afford a Staple

For Yassin Ahmed, a father of five, last Thursday was no different from other days of the week, until he went to Misrak Bakery, on Africa Avenue (Bole Road). Yasin was in for an unpleasant surprise at 6:00pm after leaving Darmar Shoe factory, where he works for a monthly salary of 530 Br.

What left the 60-year-old flabbergasted was the increase on prices of bread. Confident that he would buy 10 pieces for his children’s breakfast the following morning, he gave the cashier 2.50 Br as usual. However, the salesman handed him seven pieces of 50gm bread and stretched his hands to give him his five cents change.

“But I gave you 2.50 Br,” he told the man demanding three more pieces and ignoring the change in his hand.

The man stretched her other hand to the far left corner pointing out a notice glued to the wall bearing the seal of the Bakery. According to the announcement, the price of a small piece of bread has risen from 0.25 Br to 0.35 Br while the medium size has gone up to 0.70 Br, almost doubling from its pervious price of 0.40 Br. Large bread is tagged at two Birr showing a 33pc increase.

Yasin had no option but to take the reduced amount to his family of seven struggling with memories of the good old days where a single piece was sold for not more than 0.10 Br. Walking to his home carrying the unusually small amount of bread, he was nervously wondering what he would say to his kids the following morning when they ask for seconds.

“Imagine what it feels like, when you are not able to feed your children at least two pieces of bread each,” bemoans Yasin, who is the sole bread winner of the family. The mother of his children helps him with housework as well as looking after the children.

It is not only Misrak that has slapped a new price on bread. Residents of Addis Abeba, who are still expressing their concern over the recently increased prices of gasoline, are moaning over the latest moves of bakeries to increase prices of bread even before Thursday.

The price increase is attributed to a major shortage of wheat among flour factories that supply flour to consumers as well as bakeries. Much to the disappointment of the bakeries, the gravity of the shortage is pushing some flour factories to the brink of closure while Kokeb Flour and Spaghetti Factory has already ceased production.

Moreover, Kokeb, which is under the Privatisation and Public Enterprises Supervisory Agency (PPESA), is considering an increasein the price of spaghetti that it is producing, according to Bayu Reta, general manager of the Factory.

The Factory currently sells a quintal of spaghetti for 755 Br and has planned to increase it to 800 Br as of this week.

Kokeb demanded 20,000qts of wheat in 2007/08 to consistently supply flour with its current capacity. Nonetheless, having exhausted the 5,000qts of wheat it procured in November 2007, the Factory has closed its flour production plant and is now only left suppling pasta.

“Although we had expected at the outset that we would improve our flour supplies eventually stabilising prices in the market, the unexpected wheat shortage has foiled that plan,” Bayu told Fortune.

Even for those households who procure the unground wheat to process it themselves, the price has now become unbearable coupled with a confounding rise in other consumer goods.

A quintal of wheat flour now goes for close to 600 Br in major markets in Addis Abeba. The wheat is tagged at close to 429 Br, sharply increasing from the 320-327 Br range four months ago.

Wheat is supplied to the market by state farms, cooperative unions and independent farmers. In 2007/08, the Privatisation Agency expects to reap close to 400,000tns of wheat from state farms under its supervision of which the largest are Bale Agricultural Development Enterprise and Arsi Agricultural Development Enterprise.

Bale for instance rests on 14,212hct of land. In the first half of this budget year, the Enterprise produced 241,000qts of wheat, and is now preparing to auction 60,000qts to the market.

“We expect a reasonable income from the auction because our costs have significantly increased,” Adugna Woldeyohannes, acting general manager of Bale Enterprise, told Fortune.

The staggering price increase of fertiliser and gasoline is claimed to have the major role in pushing up prices of commodities on the market.

The price of fertiliser has skyrocketed to 800 Br per quintal this budget year showing close to a 100pc rise compared to last year. Prices of benzene, diesel and kerosene also were also increased by the government two months ago.

According to Seid Ibrahim, a farmer residing in Bale, cultivating a hectare of land would previously have cost 300 to 330 Br. However, following the price increase on petroleum products, the cost per hectare has elevated to close to 750 Br.

This has sent a shockwave through the Ethiopian Millers Association, which has more than 60 flour-producing members.

Almaz Wokweya, vice president of the Association who also owns a flour factory bearing her name, demands 60,000qts of wheat for her factory. But, she says, not more than 800qts have been secured.

“The factory is on the brink of shutting down,” she told Fortune.

The Association has requested the Ministry of Trade and Industry (MoTI), to assist the Association taking measures to stabilise the market in a letter dated February 26, 2008.

The letter appeals for the release and sale of wheat stocked in warehouses by the government agricultural farms, agricultural cooperative unions, as well as reserves stocked by the government to flour factories.

“Reserves are held to shield a crisis, and we are in a crisis now,” says a member of the Association who preferred to remain anonymous.

There is little room for the government to manoeuvre through.

The Grain Reserve Office, under the Disaster Prevention and Preparedness Agency (DPPA), currently has 148,000tns of wheat, maize and sorghum in its stock. Although it had 400,000tns of grain last year, half of the wheat has been distributed by the Grain Trading Enterprise following the government’s decision to stabilise prices.

“The Enterprise is expected to restock the grain, but we do not know when it is going to happen,” Sirak Hailu, head of the office, told Fortune. “Of the total grain distributed by the Enterprise, 153,700tns remains to be replenished.”

According to Sirak, the Association’s request is impossible to address.

“Our Office is established to provide grain in times of drought,” he said. “Otherwise we do not sell grain.”

The Millers Association seems to face a cumbersome task of convincing officials judging by the reaction of Sirak. It previously has convinced the government to change its techniques of taxation.
The government had stated that flour companies should pay taxes based on an evaluation that would be made on their power consumption. However they have both agreed to change this criterion.

It is agreed and understood that companies that properly hold their accounts records based on tax provisions as of November 2007 to pay tax based on their record and those who do not maintain their account pay based on their power consumption. As a result, the previous decision is no more effective.

A senior management member of the Association believes that they would also sway the government to consider their latest requests.

But for now those in the industry will have to hope for prices to stabilise and supplies to return. World trends are not promising though.

Prices from the largest exporter of wheat, Kazakhstan, have rocketed by more than 25pc in the past week alone and four-fold in the past year. Under pressure from rising demand in the emerging powerhouses of China and India, weather-damaged harvests from Australia, Canada and the United States (US) have not helped the problem, causing US stocks to fall to the lowest level in 50 years.

With the international market in tatters it is a wonder what city dwellers like Yasin will do for their families.
“It is difficult to face my family when I cannot even bring home bread,” Yasin said.

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