The annual cost of bread subsidy in Jordan is estimated at 154 million Jordan Dinars, equivalent to 225 million US dollars, according to a statement by the Minister of Industry and Trade at the Parliament’s Finance Committee meeting in December 2015. The subsidy to grain barley fed to animals is estimated at $US 100 million. This huge bread subsidy is due to the government’s purchase of wheat at the international price, of three hundred dinars per ton, before providing it to the mills that sell the flour to local bakeries at a price of thirty five dinars per ton. The current price of one kilogram of bread approximates 23 US cents.
Bread subsidy is thought of as means of social security in Jordan and as a pillar of creating stability in the country since the bread riots in 1996. Several stakeholders benefit from the existing wheat subsidy in Jordan. This includes all those who are involved in the bread food chain, such as, mills, bakeries, and livestock owners.
There are some who call for bread subsidy reform since half the subsidized bread is consumed by non-Jordanians, including refugees, who are not targeted by subsidy. Only thirteen percent of the subsidized bread is consumed by the needy, while twelve percent is consumed by wealthier segments of the society. Interestingly, twenty five percent of the subsidized flour goes to other bakery products or the production of non-subsidized bread that is sold at prices higher than 23 US cents. The low price of the subsidized wheat has encouraged livestock owners to use it for animal feeds since it has a more favorable price than barley. Bread also constitutes a large proportion of food waste due to its low price in the eyes of the wealthy. Throwing bread in the garbage bin is against the Jordanian and Arab belief who used to kiss and put on their forehead any remaining of the bread found on the ground.
Subsidy reduction can be accomplished through the introduction of alternative bread products that do not receive the subsidized flour. The Jordanian bread market has not benefited from Jordan’s wheat landraces that could be valuable in the production of different wheat products. Researchers in Jordan have ignored the aspects of increasing bread quality with lower cost products. They must be encouraged into this field which may be valuable in reducing subsidy across the board.
The Jordanian government has acknowledged the need to reform the bread subsidy. The recently withdrawn suggestion of using smart cards to target needy Jordanians who deserve the subsidy was portrayed negatively by the media and received a negative reaction from Jordanians.
Discussions on the budget items in the parliament this month indicate that bread subsidy is staying with us this in 2016. This should not relax the government but should give it more time and urge it to discuss this topic more thoroughly with the main stakeholders for acceptable proposals. The discussion should include members of parliament, consumer protection associations, political parties, universities, professional associations and bakeries. Reforms should continue to support the needs of the poor. Savings from lifting the subsidy should benefit targeted development projects with transparency. A national dialogue on this matter will benefit Jordan and may be other countries.
