Cheating bakeries rip-off customers

Many bakeries in Addis who get their wheat flour subsidized from the government are illegally selling it in order to increase their profit margins, instead of using the flour to bake bread.
Sources at the Addis Ababa Trade Bureau told Capital that bakeries that buy flour from wheat companies for 796 birr per 100 kilograms are re-selling it for up to 1,800 birr.
The bakeries then turn around and reduce the weight of bread. For example, a 100 gram piece of bread, normally sold for 1.30 birr, is lowered by 40 grams, thus becoming a 60 gram loaf. Similarly, 200 and 300 gram pieces are also reduced by 80 grams, during the baking process. Currently, 1,650 bakeries get a flour subsidized by the government from the 44 wheat flour factories that work along the outskirts of Addis Ababa.
Solomon Bekele, Basic Commodity Distribution Head at the Bureau told Capital they are working hard to stop the black market.
“These bakeries receive the subsidized flour to bake bread not to sell. Yet, more people are doing this. They are getting money through the flour subsidy which makes it harder for people to get bread at a fair price” Solomon said.
“It is shameful to see subsidized flour being sold on the black market. We are trying our best to stop it through inspection and we have prosecuted offenders” he added.
Capital asked Solomon if the government might stop subsidizing wheat.
“Absolutely not, we still are importing wheat. The local market is not enough to meet the country’s demand. When the country produces enough wheat we will think about cutting the subsidy.’’
Solomon also commented on the recent withdrawal of Shoa Bakery from the flour subsidy chain.
“It is up to them to choose what they want, getting subsidized wheat is not an obligation it is an option. We are not increasing the wheat we supply to the bakeries and we can’t allow anyone to add any price to the bread when the wheat comes from us.’’
Solomon said the government is conducting a study of the bread market.
Recently Shoa Bakery and Flour Factory PLC increased the price of bread because they said labor and other costs had risen. After the adjustment, 100 grams of bread jumped from 1.30 birr to 2.50 birr. A 200 gram of bread rose from 2.60 birr to five birr and 300 grams of bread went from 3.80 birr to 7 birr. Shoa Bakery has 16 branches and employs 1,150 people.
Recently Capital reported that Addis Ababa Trade Bureau had been fielding complaints from the bakeries. So they conducted a study with the goal of showing the Ministry of Trade Industry that they could slightly increase the price of bread.
The study took into account inflation, the recent devaluation of the birr, the price of input materials and the increasing cost of labor and transportation. They planed to increase the price between 20 and 80 cents.
If the proposal is accepted by the Ministry, 100 grams of bread currently sold for 1.30 birr will be sold for 1.50 birr while 200 grams which was sold for 2.50 birr and 300 grams for 3.80 birr will be sold for 3 and 4 birr, respectively.