Will the rise in bread prices lead to an increase in poverty in Uzbekistan?

As you know, from 1 June the price of a loaf increased from 1600 som to 2800 som.  As a result, the population began to panic, and prices for other bakery products in different regions began to rise artificially.  So, is there a reason for this?  Why did the price of bread suddenly increase by 1200 som? Do we have a reserve for tomorrow?

QALAMPIR.UZ visited a bakery in Tashkent and received answers to several questions from the population.

“The main reason for the rise in the price of bread is the rise in the price of wheat.  Then flour also becomes more expensive in this situation.  Before, companies bought flour from the relevant union, and today we buy it on the stock exchange.  Free trade on the stock exchange is available now and, consequently, prices change.  Flour is sold on the stock market, and we sell the bread.

The change in the price of bread depends on flour which is purchased from the stock market. Today, if we buy flour for 4250 soms, the cost of bread (one loaf) will decrease to 2700 soms.  At the price of flour of 4,400 soms, the price of the molded bread will also rise.  It is free trade.  It is the adaptation to demand and supply.  If the price of flour falls on the stock market, the price of bread will fall by itself», - Akmal Sadikov, head of the enterprise “Bog‘iston non” said. 

We asked Sadikov whether the directors of bakery producing enterprises were being forced to sell the bread at the price of 2,700 soms.

“No, we didn’t get such an order.  Flour is being sold on free trade, bread is being delivered to the store for 2700 som and sold at 2800 som.  So far, no complaint has been observed by sellers. The stock of flour in our factory is enough for 3-4 days.  We are buying flour for 4300 soms”, - said Akmal Sadikov.

One enterprise produces up to 40,000 loaves of bread, which we consume daily.  It is estimated that 250 loaves are produced out of 100 kilograms of flour.  The employee of the company said that the price increase did not affect the quantity and quality.

“The price of flour which is sufficient for a loaf of bread is 1610 som.  In addition, the product is filled with pressed yeast and salt.  The total sum includes employee salaries and corporate taxes. Overall, the total cost of a loaf of bread is 2,700 som.  Then the profitability of the enterprise will be 5-6%.  We actually will not make much profit.

Our enterprise produces 31,000 loaves of bread per day.  The enterprise has 2 ovens with a capacity of 24 tons of bread.  The bread is prepared according to the capacity of daily demand. After the rise in the price of bread, the number of orders decreased a little, and now we are working permanently.  Today, work is being carried out on a contractual basis with 57 organizations.  The increase in the price did not affect the quality, as before, and now the weight of the loaf is 600g.  The weight in the hot state is 610-615 gr”, - Gulchehra Khoshimova, technologist of the enterprise “Bogestan Bread” stated.

According to the report of Shakhobiddin Artikov, a senior official of the Ministry of Economic Development and Poverty Reduction of Uzbekistan, Kazakhstan is a major supplier of wheat to Uzbekistan.  The neighboring country produced 11,800,000 tons of wheat last year and is expected to produce about 13 million tons this year.

QALAMPIR.UZ asked the representative of the Ministry: “Won’t a sharp increase in bread prices lead to an increase in the number of the poor at a time when Uzbekistan is fighting against poverty?”

“No. To date, 70-80 percent of bread and flour have been sold at market prices.

The price of the flour, which is being produced, has been kept stable at the expense of parts from the state reserves, from the state resource wheat.  This was not in accordance with the principles of an open and healthy market.  Therefore, from June 1, the process of formation of free prices began.

If we link the rise in prices to poverty, first, the aids in the amount of 300,000 and 400,000 soms were allocated to pensioners and low-income families.  In addition, since the beginning of June, every needy layer of the society, those enrolled in the “Iron notebook”, a “Women’s book” are receiving benefits.The government also distributes 20 kilograms of flour to low-income families, 20-30 thousand people in each district.  Free products are also given away so as not to experience the expensive prices.

Of course, the question arises as to whether this is one-time assistance.  This is constantly investigated by the relevant ministries and departments depending on the situation.  There is no reason for a sharp rise in prices.  The state is always ready for this.  We can afford it, both financially and on the other hand.  There is no reason to panic.  We have enough flour and wheat resources.  Uzbekistan’s production amounted to 6 million 30 thousand tons last year.  This year it is expected to exceed 7,500,000 tons”, - a special official of the Ministry of Economic Development and Poverty Reduction of Uzbekistan Shakhobiddin Artikov.