From January next year, the government of Kazakhstan intends to abolish subsidies for bread, which would inevitably cause the rise in prices for this product vital for all categories of the population. Up to this point, over the past six years, manufacturers of bread had received from the state support in the form of grants designated by him. In addition, they bought grain at prices below market. And now, in less than two months, all kinds of help will be completely canceled.
As it was told reporters at the Ministry of Agriculture, the practice had a number of shortcomings. In particular, there was no competition among the producers of bread, the subsidies were received mostly by large enterprises, which didn't try to introduce new technologies and upgrade their equipment. And everybody enjoyed by low prices, including the wealthy citizens, although initially social subsidies focused on vulnerable sectors of society.
Experts stressed that the price of bread includes not only the cost of flour. It includes a whole range of expenses, which in any case influence the final price of the essential product.
As the executive secretary of the Ministry of Agriculture of Kazakhstan Arman Evniev said, "no more than 30 percent in the total cost structure of the price of bread is wheat or flour. It is also electricity, fuel, transportation costs, etc. We tried to adjust prices at the expense of grain producers, or, as in the last six years, with the help of subsidies. "The introduction of market regulation of the price for bread will give a new impetus to the industry. Competition has always been the engine of progress, and in the current economic reality, it is simply a necessity."
"If the price of social bread rise, then the benefits to those whose incomes are below the poverty line will rise also" - so said the president of the Union of Grain Processors and Bakers of Kazakhstan Eugene Gan.
INC News, 12/11/2015 - via AK ZHAIK
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