Bread crisis in Lebanon could lead to loss of hundreds of jobs

Rise in bread production costs fuelled by an 85 per cent drop in value of national currency

Shoppers que at a bakery in Lebanon's capital,Beirut, on April 13, 2021 (The National, Mahmoud Rida)

A disagreement between bakery owners and Lebanon’s ministry of economy over the price of bread puts hundreds of distributors at risk of losing their jobs.

The rise in production costs was caused by an 85 per cent drop in the value of Lebanon’s national currency as the worst economic and financial crisis to grip the country since the civil war unfolded in 2019.

Bakeries began to sell bread only on site at the price set by the government, but this now effectively excludes distribution costs.

The move forced most distributors – who used to transport bread to third-party vendors, such as supermarkets and groceries, in exchange for a cut of the profit – to suspend their deliveries.

Tony Seif, head of the association of bakeries, told The National it was expected that most deliveries would resume soon, but with an extra charge that distributors would pass on to retailers.

The additional charges will be reflected in the price of bread packs sold to consumers by third-party vendors. They will cost 2,750 to 3,000 Lebanese pounds, as opposed to 2,500 pounds for packs sold at bakeries.

Distributors worry that such a disparity will cause sales by third-party vendors to drop.

The dispute led to queues at bakeries, where residents gather every morning. They are often joined by grocers who supply consumers in areas without bakeries.

“Every time we need a loaf of bread, we need to run to the bakery. But what about people who don’t live near a bakery? Should they pay a taxi to be able to purchase bread?” asked Beirut resident Milad Semaan.

Mr Semaan’s concerns were echoed by Rene, a resident of Achrafieh district, who used to buy her bread daily from a nearby supermarket.

"There's no bread in supermarkets. We had to come all the way here to the bakery," she told The National as she prepared to pay the cashier.

A bakery owner, Abou Ali Chouman, said the increase in production costs left bakeries with no choice but to seek a reduction in expenses.

"The halt in distribution to grocery stores is resulting in queues at bakeries and increasing the risk of Covid-19 infections," he told The National.

Queues outside bakeries, petrol stations, pharmacies and supermarkets are become common in Lebanon as businesses struggle to secure the dollars necessary to replenish their stock of imported goods.

The Central Bank subsidises vital imports of fuel, wheat and medicine at the official rate of 1,507 Lebanese pounds to the dollar, which is now trading at a market value of more than 12,000 pounds. But with only $16 billion left in foreign currencies, the Central Bank is rationing subsidies, which cost it $500 million each month.

The government is struggling to agree on a comprehensive plan to contain the worsening crisis, which has plunged more than half of Lebanon’s population into poverty.

This month, caretaker finance minister Ghazi Wazni said the country could “no longer continue with the same pace of subsidies”.

Caretaker prime minister Hassan Diab said they would last until June.

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