The Supply Ministry plans to increase financial support for bakeries producing subsidized bread starting in the new fiscal year, according to two sources in the bakery sector who spoke to Mada Masr on condition of anonymity.
Bakeries have repeatedly asked for more government support to produce subsidized loaves, with the latest request made during meetings with the ministry this week.
Despite rising costs in rent, wages, electricity, and other expenses, the government has not increased its financial support for bakery production costs in four years, the sources said.
To review this support, the government and bakery representatives held three days of meetings to evaluate production costs.
Supply Minister Ali Meselhy issued a directive on Tuesday, reviewed by Mada Masr, to form a committee to assess the production costs of the three types of subsidized (baladi) bread. This committee includes representatives from the ministry, the General Authority for Supply Commodities, the Holding Company for Food Industries, the General Bakeries Division at the Federation of Egyptian Chambers of Commerce, and the Finance Ministry.
On the same day, bakery representatives submitted a memo detailing their costs to the Supply Ministry, a copy of which was also reviewed by Mada Masr. The memo states that it currently costs LE500 to produce baladi bread from a 100-kilogram sack of flour, 92 percent more than the government’s current support of LE260.35 per sack.
The memo listed 30 cost items, including LE223.05 for production supplies, LE210 for wages, LE47 for monthly and annual overhead costs, and LE10 for equipment depreciation.
According to the sources, the bakery representatives and the ministry agreed on about 70 percent of the points discussed. The remaining contentious issues, pending Minister Meselhy’s final decision on Thursday, include raising the price of yeast and increasing the profit margin per sack from LE6 to LE10.
The bakeries division requested that the ministry pay for the free-market yeast brand Forno, priced at LE35 per packet. However, the Supply Ministry insisted on using yeast from the state-owned Hawamdiya factory, priced at LE22. The bakeries agreed but noted that while the factory price is LE22, retail prices can go up to LE25.
The two parties also negotiated the government’s payment for the diesel supply needed by bakeries. A liter of diesel costs LE10, plus additional costs for transport, losses during dispensing and depositing, and minor thefts by gas station employees, which add another LE1 per liter, according to one source. The Supply Ministry proposed adding LE0.25 per liter, but the parties eventually settled on LE0.50.
Following a 300 percent increase in subsidized bread prices last week, the Supply Ministry decided to stop transferring production costs to bakeries through banks. Instead, bakeries are now expected to deduct their production costs at the old rate from the LE0.20 consumers pay for a loaf of baladi bread, with any remaining balance transferred from the bakeries to the government via bank.
The government has recently revised the bread subsidies system, increasing costs for millions of people who rely on bread as a staple food. This policy change aligns with structural adjustments recommended by the International Monetary Fund.