No increase in Cost of White Packed Bread - Controlled Price of Flour adjusted

Belmopan - 14 April, 2008

Negotiations between the Government of Belize, local flour producers (Belize Mills) and the Baker’s Association have resulted in a decision to adjust the control price of flour while keeping the cost of white packed-bread at the current price.

The need for the adjustment is brought about by the fact that to date the controlled price for flour in Belize has not been reflecting the steady increase in acquisition costs and in the world market price for wheat. Additionally, as a result of the price control, flour produced in Belize is being sold at a significant loss to the producer and at a lower price than neighboring Guatemala and Mexico where prices have steadily increased, taking into account the escalation in the world market price of wheat. As there are no restrictions to prevent the export of flour, Belizean flour is being sold to merchants in Guatemala by traders for a handsome profit given the existing price differential.

The Government of Belize anticipates that the current price trend for wheat is expected to continue with prices tapering off at higher levels than desirable in the near future, the effects of which will inevitably lead to a continued increase in the cost of producing flour in Belize.

Factors contributing to the increase in wheat prices include:

1.      Rapid escalation in world market price for fuel

2.      All time low in global wheat stocks/inventories driven partly by severe drought experienced in Australia

3.      Export restrictions imposed by top major wheat exporters, such as Russia and Argentina

4.      Increase demand for alternative energy sources has spurred a shift in production from wheat to crops such as corn, sugarcane, and rapeseed that can be converted into bio-fuels, namely ethanol.

In spite of the increase in the controlled price of flour, which would normally have resulted in an increase in the price of bread, an agreement has been reached between Government and the Bakers’ Association with the collaboration of Belize Mills to maintain the current control price for the 16 oz. un-sliced and sliced bread at $1.25 and $1.50 respectively. This will be done by a special arrangement with Belize Mills to sell bakers flour to members of the Bakers Association at the old price. This is pending a review of prices by the Association in direct consultation with Government at the time of the next shipment of wheat to Belize.

In addition to preventing an increase in the price of bread, the GOB is committed to:

  1. Increase market surveillance by strengthening institutional capacities particularly in Consumer Protection.  Efforts are ongoing to improve on the functions of the Bureau of Standards through the recruitment of new staff and increased mobility to respond to consumer complaints in a timely manner.
  2. Complement market surveillance by networking with relevant ministries, agencies and statutory bodies to enforce and uphold price control regime. 
  3. Introduce a Consumer Hotline to be housed at the Bureau of Standards.
  4. The GOB will keep the acquisition cost of wheat under review in an effort to assess any future changes in the controlled price as may be appropriate while at the same time protecting the interest of the consumer.

Table 1: Controlled Price of Flour (Approved)

 

Current prices

 

Approved Changes

 

HOUSEHOLD FLOUR(Enriched with vitamins)

 

1-24 sacks

WHOLESALE

Max. price

Per/100 lb. Sack

$58.00

RETAIL

Max. price  

Per lb.

$0.60

WHOLESALE

Max. price 

Per/100 lb. Sack

$82.00 

RETAIL

Max. price

Per lb.  

$0.84

 

“La Gitana” Soft

Wheat Flour

25 sacks or more

 

 

$57.00

 

 

 

$81.00

 

 

Bakery Flour

(Enriched with vitamins)

“Bebe Agua” Hard Wheat    

Flour

 

1 – 24 sacks

25 sacks or more

 

 

 

 

$62.00

$61.00

 

 

 

$.064

 

 

 

$ 86.00

$85.00