The government has failed to stop
the rise in bread prices. Ahead of the self-government elections, the officials
said they would have to make some
decisions in this regard and intervene if necessary. Bread price in
supermarkets has hiked by an average of
15-20 tetri, prices may continue to rise
in parallel with the increase in flour price.
First Deputy Minister of Agriculture Giorgi Khanishvili said a few days ago that the government is monitoring the situation and considering various measures. However, the government approach is not yet specified.
Bread producers say in a conversation with Commersant that they consider any options for resolving the situation except subsidies which create non-competitive environment for business leading some of them to bankruptcy.
Tbilisi City Assembly MP and the Executive Director of MCB bakery products company Alexander Ratiashvili shares this opinion. Ratiashvili believes the subsidy is a harmful practice, which the government can’t constantly refer to.
"Subsidizing is not a market economy, businesses and people can’t expect a constant support from the state. A very harmful practice has been introduced, I do not support subsidies in any field, including bread production,- Ratiashvili notes.
Dali Kupatadze, Director of Temka Puri JSC, also stresses a vicious influence of the subsidy.
"We can’t really stop bread price hikes, prices are rising for all the products as well as all raw materials. Despite the current situation, we categorically reject any subsidies that put companies in an unequal position, ” the company Director says.
Given the current situation, Malkhaz Dolidze, Director of the Association of Bread Producers, considers flour subsidies to be the most optimal way possible.
Note: The government extended subsidies until June 30, and the size of the subsidy was increased to GEL 20. According to the program, a fixed price was set for mills – for a 50-kilogram bag of first grade flour – GEL 53. That is, those mills that sold a bag of first grade flour to bakeries for GEL 53 were subsidized by the government.
The current price of one bag of 1st grade flour is GEL 72-73, while the cost of the premium flour reaches GEL 80.