In early May, Feletti announced that the Stabilizing Fund was ready to go. In practice, what he does is subsidize the industrial flour that is sold by the milling sector and bought by the noodle industry, bakers, pizzerias, and pasta houses. But at that time, the business association that brings together the country’s main millers (FAIM) kicked the board and reported that “most of the companies grouped in this federation ratify their refusal to this trust.”
Three mills, inside
This Tuesday afternoon, Feletti reported that “The trust is now ready to start operating”, in a meeting held with the manufacturing sector. Despite Faim’s refusal, there were 3 milling companies that registered with the trust. This means that the Ministry of Domestic Trade Starting this week, he will send them money to subsidize the bag of flour they sell to the industry.
Currently, with the price of wheat at historical records, and after India closed its exports, the stock market of Industrial flour of 25 kilos is sold for over $2,000, and with the subsidy the industry will be able to get it for $1,200. The Government hopes that this drop in cost will translate into a “stabilization” of the prices of some foods. In the last week alone, bread, cereal and pasta products rose 3.5%, and the average variation for the last month was 6.9%, according to the consulting firm LCG.
In the Government they consider that the public position of the milling business chamber of refusing the trust sought to remain in line with the rejection of agricultural producers. But beyond press releases and public statements, Three milling companies signed up, including Molino Cañuelas, which has more than 25% of the market. For next week, another 20 could be addedaccording to the private sector.
From the sector they considered that it is a market with “perfect competition”, due to the fact that just among the top 10 millers they concentrate 50% of the market. One of the businessmen in the sector commented to this newspaper that he believes that he will do the rest: “In principle there will be a huge mess of prices. But if it works well, others will end up joining because the difference in prices with the subsidy is great. Likewise, those who are inside the trust cannot supply the entire market either.” They estimate that some small mills might not join due to the time it would take for the government to deposit the subsidy.
Price expectations
The expectations of how much this tool could influence the final price that consumers access varies according to the sectors. Juan Airoles, head of the Union of Industrial Noodles, was “optimistic” about the start-up. “The membership of the mills is going to expand progressively,” he said. If it works, they could expect a drop in the price of noodles of around 10%.
The bakery industry was pessimistic. “We have been holding meetings since November and we are concerned about the implementation. What happened in India is going to hit prices hard,” said Gastón Mora from the Avellaneda bakers center. If he does not access the subsidy, he anticipated that the price of bread could rise at least 30% next week. “Currently you can get a kilo between $220 and $270, and it could go to a floor of $320-$370.”
In the economic team they observe that there are mills that will never join because they do not have “all the papers in order”, nor do they want the State to have the “traceability” of each bag they sell, which will bear the seal of “product subsidized by the Government national”. The subsidy will be for flour type 000, 0000, tapera and semolín. The state funds arise from the two points that withholdings were increased for exports of soybean meal and oil.
Source: Ambito
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