Shoa Bakery and Flour Factory PLC wrote a letter to the Ministry of Trade asking to increase the price of bread by 50 cents but the government has rejected their request. The company said that inflation and increasing cost of labor over the last three years has affected their bottom line.
Currently 100 grams of bread sells for 1.30 birr and 200 grams for 2.60 birr at bakeries which get flour from government subsidies.
Three years ago the government revised bread prices but some bakeries said that the devaluation of birr, which is now around 27.4 to the dollar, and increasing cost of ingredients is making life hard for them.
Thsehaye Zemuy, General Manager of Shoa Bakery told Capital that they didn’t get a response from the Ministry of Trade.
“We gave what we felt were good reasons but they did not say yes or no. Of course the price of wheat we get from the government has not increased but everything else has. Some people who don’t get wheat from the government sell the same amount of bread for three birr whereas we have to sell it for 1.30 birr. This does not take inflation into account,” he said.
Solomon Bekele, an officer from Addis Ababa Trade Bureau said that one cannot increase the price.
“The government has subsidized up to 700 birr per quintal of wheat for the selected bakeries in Addis Ababa. We have not increased the price so we can’t allow them to do so either. We were discussing the question of Shoa Bakery along with the Ministry of Trade and we agreed that it is not our plan to add to the price of bread at this time. When we believe a price increase is necessary, we will conduct a study,” he said.
Shoa Bakery has 16 Branches in Addis Ababa and employs 1,150 people. Addis Ababa has 1,462 bakeries and 39 of them get the subsidized wheat from the government.
The government sells wheat flour at 500 birr per quintal and flour companies sell the flour to the bakeries at 796.25 birr per quintal.