| Mongolia's Bread Producers Refuse Discount Flour |
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| Written by B.Bulgamaa | |
| Thursday, June 19, 2008. | |
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The monopoly bread producing companies are pushing the government last week to increase the fixed price of bread. The Prime Minister S.Bayar led a resolution on May 1 to fix bread prices at lower prices, with a 600 gram loaf of “Atar†priced at Tg550. The government calculated that bread prices would reduce by Tg80 if the State supplied imported flour to the monopoly bread companies at a discounted price. Under the proposal, 9,000 tons of flour was imported, but the bread companies have refused to buy the discounted priced flour because they considered the contract with government too burdensome. According to “Atar Orgoo†and “Talkh Chikher†calculations, the bread producers can only reduce the bread price after three months of production. The government contract stipulated that the bread producers must buy the flour in cash, but the companies want a loan and to pay money after producing the bread. The companies also claim they do not have the capability to store 1,000 tons of flour. The Government took a loan from the Ministry of Finance with interest in order to import the 9000 tons of flour. Therefore, the Government started to supply the flour to small bread producers but failed reduce the market bread price. If Government and monopoly companies reach an agreement for the price of bread, the monopoly companies are promising they will reduce the bread price in increments, but not to Tg550 per loaf.        The government spends Tg710 per kilogram to buy the best quality flour, which sells for about Tg1200 per kilogram in the market. The first class flour is selling for Tg950 per kilogram in the market but government buys it Tg650 per kilogram. |
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