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Saudi Arabia- Grains agency allays fears of flour shortage  Join our daily free Newsletter

MENAFN - Arab News - 31/01/2013

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The GOGSFM says that not only is there no shortage of flour, but that it, in fact, has a stock of 2.5 million sacks as an emergency reserve.
(MENAFN - Arab News) The General Organization for Grain Silos and Flour Mills (GOGSFM) has again denied reports of a shortage of grain, flour or any other essential food item in the Kingdom.

"There is no crisis or shortage of grain or any other essential commodity in the domestic market as the GOGSFM has been supplying all consumer requirements in sufficient quantities, in addition to stocking 2.5 million sacks as an emergency reserve," Director General of GOGSFM Walid Al-Khereiji said.

While the GOGSFM is supplying essential commodities in sufficient quantities, some distributors are creating black markets, he said.

Al-Khereiji was reacting to a statement by the committee for bakers at the Jeddah Chamber of Commerce and Industry which said that a black market for flour was growing in Jeddah and would adversely affect investments in the sector.
The GOGSFM also recently held a press conference denying any shortage in flour supplies in the western region, following reports repeatedly published in Saudi newspapers about a supposed shortage.

Al-Khereiji alleged that the shortage was a fake one created by distributors who receive supply that can cover more than the region's need of the product as well as by some contractors who are diverting the supplies to illegally operating bakeries instead of supplying the commodities to licensed bakers.

The official called on the distributors and beneficiaries who did not update their data to complete the updating process on the GOGSFM's website to guarantee delivery of their full allotments.

He also urged all registered bakeries or selling points to contact the GOGSFM in case they did not receive in full their permitted share of flour from the distributors. The complaints would be received by telephone or online. Any distributor who fails to supply in full will be dealt with sternly, so that the commodity subsidized by the government reaches all sections of the people at affordable prices, he said.

The GOGSFM has approved contractors who are distributing flour to bakeries in all parts of the Kingdom. A contractor should supply data about him periodically to a committee set up by the Ministry of Commerce and Industry.

The committee determines the quantity of flour each distributing contractor is authorized to supply to the market. The committee also studies the population density and urban expansion to estimate the need of each town.

However, flour to the black market is supplied by the distribution contractors or bakers who receive more allocations than they actually need. Illegally operating bakers, who have been denied licenses by the municipality or Civil Defense, survive on the flour they buy from the black market, a source told a local newspaper.

Despite this, consumers think the GOGSFM's failure to control and monitor the distribution has led to the fake shortage.

They blame the current system that does not allow the GOGSFM to prevent distributors from creating such a problem every year.

A source from the GOGSFM, on the other hand, told Arab News that part of the problem was created by the media.

In a related development, informed sources have uncovered the exploitation of some bakeries and specialized factories that dry bread and sell it as livestock fodder, taking advantage of the high profits they can earn with the subsidized flour.

A local newspaper obtained information that indicated that a 45-kg sack of wheat flour is distributed to bakeries at SR 25, which produces between seven and nine bags of dried bread. One bag sells at SR 15 for livestock owners as feed.

It also has become clear that a pasta producing company in the Kingdom is greatly benefiting from subsidized flour. The sources pointed out that the factory buys 45-kg sacks of flour for SR 25, and sells pasta for about SR 700. In addition, it exports its products.

In December last year, the newspaper published a report that pointed out that a food company was producing instant noodles, a popular kind of pasta, for which it relies on flour.

It used to import these noodles to Saudi Arabia from Indonesia, but due to the considerable government subsidies for flour, as well as other subsidies for factories, the company decided to open a plant in Saudi Arabia. It now exports its products to Indonesia.

Saudi Arabia is expected to ban the export of subsidized goods, according to official sources who revealed there is a study under way to assess the value of the subsidy in each exported product that contains flour. A decision is expected in the coming months in this regard by the Saudi Higher Economic Council.

Flour receives more than 70 percent government support.



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