bread biz july 10 88 298.
(photo credit: Ariel Jerozolimski)
The Knesset Economic Affairs Committee on Monday ordered bakeries to temporarily begin producing price-controlled bread and called upon the government to form a special committee to investigate and settle the matter of government-controlled bread prices.
"The situation that we find ourselves in today is that anyone who is looking to purchase less expensive bread is being forced to buy bread that is at least 10 percent more," said MK Gilan Erdan (Likud), head of the Economic Affairs Committee. "The economy is suffering because the Industry, Trade and Labor minister [Eli Yishai] is insisting on bakeries selling products at lower prices. Bakeries have thousands of employees that they need to pay - if prices are not raised, the bakeries will suffer terribly," Erdan added.
Erdan went on to say that he sees only one possible solution to the problem, which began last Wednesday, when the country's major bakeries, including Angel Bakery, Davidovich Bakery & Sons, Berman's and the Alumot Bakery in Holon, decided to halt the production of price-controlled breads as mills raised flour prices by some 35-40% in response to the sharp rise world-wide flour prices over the last month.
Bakery owners have been demanding that the government raise by some 12.5% the amount that can be charged for price-controlled breads, which comprise 17% of all breads sold in Israel.
"The only solution is for bakeries to be allowed to raise their prices on price-controlled bread," said Erdan, who added that a 12% price hike is required to allow the bakeries to avoid suffering big losses. "We will then immediately work to find a solution for the weaker population who will have a problem buying the more expensive bread."
The order came after Yishai indicated he was ready to examine the possibility of retroactively returning revenue lost over the last few days during which the price-controlled bread was not produced.
The committee expects a solution will be found within three days.
"In over 50 years, we have never had a situation like this where we have ceased producing price-controlled bread," said bakery representatives present at the committee meeting. "The rise of flour prices will not allow us to produce bread at the same government-controlled prices."