Mozambique’s government suspended the bread subsidy at the end of March, sending a concern throughout the country of a repeat of the violent food riots in 2010.
This followed the government’s announcement that circumstances that led to the introduction of compensation to bakers were no longer in place.
The rise of the bread subsidy
The Mozambican government decided to introduce a subsidy on bread and fuel following violent demonstrations against the cost of living in 2010.
Jeque reported the government spent 330 million meticais ($5.44m) on bread subsidies between July 2014 and February this year.
It was noted, though, that the price of bread in bakeries was almost identical whether they were subsidised or not.
As of yesterday, the price of bread for two people for one day in Maputo was 20 meticais (33 cents), which is 423% lower than the price of bread in Panama City, 431% lower than in Wellington, New Zealand, and 17% lower than in Jaipur, Indonesia.
According to Nelson Jeque, spokesman for the Ministry of Industry and Commerce, the metical had recovered against the US dollar and the price of wheat on the international market had fallen.
Positive move for Mozambique’s bakery market
Espiga de Ouro has invested heavily to build the country’s biggest industrial facility, in a move it claims may further stabilize the country’s price of bread.
The ‘Ear of Gold’ plant is expected to supply the country with 1.8 million loaves of bread per day and create 1,200 jobs throughout the entire production and distribution system.
It is due to start operating in late August.
Hussein Ali, Spiga de Ouro’s CEO, said that, in a first phase, the factory will operate 22 hours a day to achieve production levels close to 750,000 bread rolls and 135,000 loaves of bread.
Restoring availability of domestic production
He added the factory will consume about four thousand bags of 50 kg of wheat flour.
Max Tonela, Mozambique’s Minister of Industry and Commerce, said the government, through the Mozambican Grain Institute (ICM), would ensure the new facility would be supplied by wheat grown in the Tsangano district of Tete province that is currently being sold in neighbouring Malawi.
“The indication we have from the owners is that the level of production will be increased as the market evolves, which is making a good investment,” said Tonela.
Espiga de Ouro’s bread will initially be supplied to the cities of Maputo and Matola, and later expanded to the districts of Gaza and Inhambane.