Lebanese bakers barred from buying subsidised flour for anything but Arabic bread

Bakery workers package fresh bread coming off a production line at an automated bakery in the southern Beirut suburb of Dahiyeh. AP

Lebanon’s minister of industry on Friday issued an order barring factories from producing certain goods using state-subsidised flour.

The decision, first reported by Lebanon’s National News Agency, will only allow bakeries that produce the pocketed flatbread known as “pita” or “Arabic bread” — a staple food item in the majority of Lebanese households — to purchase subsidised flour.

It is an apparent bid by the government to keep the staple bread’s prices as low as possible while the nation weathers a severe economic crisis and chronic shortages.

As Lebanon’s economy has collapsed, the value of its national currency has plummeted, inflation has soared and nearly 80 per cent of its population is now impoverished.

Acute shortages of medicine, oil, electricity and flour have further exacerbated a bleak situation.

“They want to conserve as much flour as possible to save the bread,” said Ali Ibrahim, head of the Syndicate of Bread Owners. “To make sure it will stay.”

Maintaining subsidies for flour used to make flatbread while flour for other products such as pastries and baguettes is sold at the market rate indicates the looming possibility worsening bread shortages as summer approaches.

“All mills in Lebanon have to stop delivering subsidised flour to the factories mentioned, or make them pay for the difference in price to the central bank,” the decision, published by the state news agency, read.

The central bank has continued to subsidise wheat imports at 1,507.5 Lebanese lira, despite the currency losing more than 90 per cent of its value.

But maintaining the subsidy has not kept bread prices down, as Lebanon’s inflation continues to soar and bakeries must pay for the cost of other ingredients and equipment in dollars or at the black market rate.

When the Lebanese currency began to unravel from the dollar in 2019, the prices of most goods and services rose out of necessity, with importers paying in dollars.

Although flatbread is cheaper than most goods, its cost has periodically risen over the past three years. Updated prices published by the Ministry of Economy this week show that a family-sized bundle package of flatbread now costs 16,000 lira (about $.50).

Before the economic crisis, the same amount of bread cost 1,500 lira.

On Thursday, Lebanon’s state news agency reported that flour shortages in the southern city of Nabatiyeh had caused long queues in front of bakeries, while on the black market flatbread was being sold for as high as 30,000 lira ($1.00).

The global wheat supply shortage caused by Russia’s invasion of Ukraine has also affected bread prices, as the majority of Lebanon’s wheat imports come from the Black Sea region.

Earlier this month, the World Bank approved a $150 million soft loan for wheat imports in an attempt to stabilise bread bundles at subsidised prices.

Lebanon's Minister of Economy and Trade Amin Salam told The National this month that the loan came at a time when the country “cannot take any instability in wheat” inflow.

Mr Ibrahim, the head of the bread owners' syndicate, agreed that stabilising Lebanon’s bread prices was a national priority.

“We are trying to protect the price of Arabic bread for the sake of the people.”