Argentine government analyzes subsidizing bread production

The idea is to stop bread production until we have clear rules in the internal market and ask Minister Matías Kulfas to receive us to seek a joint solution to this crisis once and for all”.

Gastón Mora, director of the Avellaneda Bakers Center

The Argentine government is rethinking against the clock its strategy to contain the price of bread. There were meetings with the bakery sector at the Ministry of Social Development and progress was made on a measure aimed at vulnerable sectors.

They analyze subsidizing the production of bread and, thanks to the differentiated cost, selling it at a lower price than the current one in poor neighborhoods. In addition, they would announce an Easter thread below $200 (1.83 dollars).

Currently, a kilo of bread is sold on average for $300 (2.75 dollars). Since the beginning of February, the kilo of food has increased by 50%, given that before the conflict between Russia and Ukraine exploded, a 25% increase had been allowed, and since the invasion of the country led by Vladimir Putin broke out, it advanced another 25 percent.

The rises also reached the supermarket shelves, where the baked goods had adjustments of between 10 and 15%. Russia and Ukraine account for 30% of world wheat exports, 19% of corn exports, and 80% of sunflower oil exports, a complementary product to soybean oil.

The Indec will release the Consumer Price Index (CPI) for February on Tuesday, with the prospect that it will remain at levels similar to January, which was 3.9% or even higher. Food increases again grew more than the general level of inflation, with an advance of around 5%, with pressure from fresh foods such as meat and vegetables.

Due to the uncertainty generated by the increase in commodities, many grain owners prefer not to sell it. For this reason they warn that there is beginning to be a lack of supplies of baked products and oil in the gondolas.

While the Government thinks about alternatives to decouple international prices from costs in the domestic market, the measure that advanced in yesterday’s meeting to give an immediate response is to subsidize bread production and direct it to vulnerable neighborhoods.

In this way, the elaboration would be financed so that it has a differentiated cost and can be sold cheaper. On the other hand, an Easter thread was agreed for under $200.

This program would be added to the wheat trust that began operating this week and ensures the supply of cereal for two Care Prices products: 000 flour and dry noodles.

Due to the uncertainty generated by the increase in commodities, many grain owners prefer not to sell it. This is why there is a shortage of baked goods.

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