Bread war continues

Bakeries across the country cut back the production of low-priced breads in response to the rise in global flour prices.

bread biz 88 224 (photo credit: Ariel Jerozolimski)
bread biz 88 224
(photo credit: Ariel Jerozolimski)
Bakeries across the country on Monday cut back the production of low-priced breads in response to the rise in global flour prices and the government's refusal to raise the cost of bread accordingly. "Industry, Trade and Labor Minister Eli Yishai is focused on getting his social welfare package approved, which is fair enough, but in the meantime, he is not prepared to raise the price of regulated breads or put price-controlled breads out of supervision, which is leading the bakeries to the verge of bankruptcy," Yohanan Aharonson of Davidovich Bakery & Sons Ltd., who is acting as the bakers' representative in talks with the government, told The Jerusalem Post. "We had been asked to wait until after the Succot holiday but nothing has been moving while world wheat prices have been skyrocketing, levying higher production costs on making price-controlled breads, which we can no longer absorb." The three large bakeries - Angel Bakery, Davidovich Bakery & Sons and Berman's - on Monday cut back on the production of regulated breads and threatened to halt the manufacturing of hallah bread for Friday, if no immediate solution is found. Aharonson said that in response to the worldwide wheat crisis and resulting hike in flour prices, which is putting pressure on production costs of the country's bakery owners, the price of regulated breads needed to be raised by at least 10.6 percent, until they are lifted from under the supervision of the government. Estimates are that once bread prices are no longer under government supervision, they could be expected to increase by between 10% and 20%. The Industry, Trade and Labor Ministry has been working on a proposal to stop supervising price-controlled breads, which includes plain white bread, plain brown bread (lehem ahid) and regular hallah - all of them sold whole or sliced. The proposal will be implemented together with a compensation mechanism under which low income families would receive a one-time bonus in their benefits from the National Insurance Institute to cope with the rise in bread prices. But until the compensation proposal, which is part of the Arrangements Law is approved by the Finance Ministry and the government's 2008 budget (at the earliest by the end of the year) price-controlled breads will remain under supervision. "Our production costs are rising day by day and we can not wait until the social welfare program is being approved," Aharonson said. Late on Monday, the Industry, Trade and Labor Ministry confirmed in an official response that it was working on providing a solution to the bread crisis, which included a financial compensation package for low income families provided through the National Insurance Institute and lifting the price-controlled breads from government supervision. "However, the proposal is dependent on the cooperation of a number of ministries such as the Social Affairs Ministry and the National Insurance Institute and we are still waiting for a response from the Finance Ministry," the ministry said in a statement.