Failure of bread subsidy smart plan; Has the government made a mistake in its calculations?

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Failure of bread subsidy smart plan It was an event that economists predicted from the beginning and were against this plan. Where is the mistake? Read it over and over again.

It has been a while since flour was provided to bakers at the government price and there was no price increase. But flour is the raw material and only 20% of the cost of bread production is related to flour. The remaining 80% of costs cannot be compensated by only paying 8-15% of sales. Therefore, the failure of the bread subsidy intelligentization plan should be accepted. A plan that had more opponents than supporters from the beginning.

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Mandatory pricing and the failure of bread subsidy smartening plan

In this regard, Dunyai Ekhtaz newspaper wrote: “According to economists, keeping the price of bread constant is equal to mandated pricing, and the bane of mandated pricing will also affect the producer and in the long run, it will destroy both the producer, the consumer and the economy. “It is an issue that was not paid attention to and its effects are gradually becoming visible, and traditional bakers are talking about the failure of the plan in the first phase.”

Failure of bread subsidy smart plan

At the time of implementing this plan, the government also knew that there were problems on the way Bread subsidy smart plan There is. One of the most important problems in the implementation of this project was the lack of infrastructure.

If the difference in the price of flour was paid by the politician according to the number of breads sold by the baker, we would need special card readers. But at the time of implementation of this plan, only a small percentage of bakeries were equipped with card readers. As a result, the implementation of this plan turned into 2 phases. The first phase of the plan had no result except for the price of bread. Mandatory pricing has also shown its terrible consequences in the life of Iran’s economy for years.

Bread subsidy smart plan and the problems of bakers

Bijan Nowrozi Moghadam, the head of the traditional bakers union of Tehran, said about the results of the intelligentization of the bread subsidy and its effects on this trade:

“When it was decided to implement the bread subsidy smart plan, it was said that bread would find its real price and on the other hand, so that the bread that reaches the people does not increase in price, the price difference should be paid to the baker. That is, we were supposed to buy flour freely and the government would pay us the difference in the price of bread and flour, but this plan was not implemented.”

Nowrozi Moghadam added: “From the second month until today, the price of water, electricity, gas, worker’s wages, etc. has increased; But regardless of the increase in production costs, the government compensated us by paying 10-15% of the total sales. That is, if, for example, we sell two million tomans of bread a day, the government will pay 10 percent of the total sales, which is two hundred thousand tomans, to the baker for type two bread (sangak) and 15 percent of this amount for type one bread (lowash and barbari).

He further stated: “It is true that today’s flour is for government bakers and its price has not increased; But all production costs are not flour; Flour is only 20% of our costs and the remaining 80% of costs are side costs, and these costs cannot be compensated by paying only 8-15% of sales; This issue is not economical for the baker and the price of bread does not match the baker’s expenses. Even if the government decides right now to increase the price of bread and make it real, we have lost because we sold bread at uneconomical prices for 8 months of the year.”

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