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'We’re doing what we can to survive': Beirut, bakeries and the black market

June 27, 2022 at 1:24 pm

Tray of Fatayer

Ten bags of flour are stacked against the wall of a compact bakery in downtown Beirut. “One of these bags used to cost 25 thousand [LLP],” says Anwar. He has worked at this bakery for 22 years and is now standing next to a pile of flour valued at millions of Lebanese pounds.

“We paid about 1.2 million per bag this time, but that will increase,” he explains. “There is no limit any more. Lebanon is upside down.”

Flour shortages have been widespread and increasingly common across Lebanon amid an enduring financial crisis. However, a government decision last month to cut flour subsidies less than a week after the parliamentary election caused already inflated prices to spiral. Following the move, subsidised flour is now only delivered to bakeries producing pitta bread, a staple food for millions of Lebanese people.

“All mills in Lebanon have to stop delivering subsidised flour to the factories mentioned, or make them pay for the difference in price to the Central Bank,” said the government in May. Almost overnight, countless bakeries found themselves with sudden and steep price hikes.

“Three weeks ago one bag of flour cost us 400,000 [LLP], but now the subsidy has been taken away we’re paying over one million,” says Ahmed, a worker at an overcrowded bakery in Hamra. “We started hearing during the election that the price of bread was going to be cheaper. The government promised more subsidies and assured us that things were going to get better. But this turned out to be empty talk. The reality is that we aren’t able to get any of our supplies. The only way is through the black market at very expensive prices.”

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Costs have inflated further amid the ongoing war in Ukraine, which has disrupted wheat supplies severely. Russia and Ukraine ordinarily account for around 80 per cent of Lebanon’s wheat imports. As the crisis continues, though, pressure on domestic production has ramped up, with several mills closing in recent months due to depleted wheat stocks.

As official supply chains collapse, bakeries have been exposed increasingly to black market tactics, notably the practice of stockpiling.

“Black market merchants are greedy suppliers who are monopolising and stocking up on products to sell at high prices,” explains Shehadeh Al-Masry, the President of the Syndicate of Bakery Workers in Beirut and Mount Lebanon.

According to Haasim, the owner of a bakery in Mar Mikhael displaying packed trays of sambouseks and fatayers, “These people are like the mafia. The black market is made up of many people with connections to those with access to the supplies. It’s illegal, but at this point, it is the official market. There’s no real difference.”

Despite having to make significant changes to stay afloat, he has so far managed to keep his family business open. “We can only pay staff a fraction of what we used to and, of course, the price of what we sell has gone up now. One Za’atr Manoush used to be 1,500 [LBP], now it’s 20,000.”

Long ago, adds Haasim, the poor and rich used to eat from here, now only the rich can. “We’re learning to adapt and doing what we can to survive, but this is hard for our customers who can’t afford to come here any longer.”

In a move aimed at stabilising wheat prices amid the ongoing Ukraine crisis, last month the World Bank approved an emergency loan of $150 million to Lebanon. While mill owners in the country expressed support for the plan, they shared concern with the bank over the “potential smuggling of wheat”.

At a government meeting on Friday 17 June, caretaker Economy Minister Amin Salam, addressed the issue and condemned “thefts” of subsidised wheat. “The figures clearly show that there is theft of public funds from the private sector,” he said. “Some bakeries and some merchants personally benefit from the subsidised wheat.”

For bakery union head Al-Masry, it is ordinary Lebanese people who face the harshest impact from black market monopolisation. “Bakeries do not fear buying wheat from the black market because the citizen is the one who pays the price. This is what we have warned about time and time again. A great number of bakeries have already closed and many more are at risk of shutting down.”

What’s more, he adds, “The situation is only going to get worse over the months ahead.”

*Some names have been changed to protect identities.

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