Chamber of commerce warns of subsidies [Archives:2007/1080/Local News]

SANA'A, Aug. 25 ) Deputy director of the capital secretariat chamber of commerce Mohammed Sallah has warned the Yemeni government of the consequences of subsidizing wheat and flour. He stated that the retail prices of wheat and flour at the government's outlets are around 350 Riyals below cost, he also added that the government should first make a careful study of the consequences of such interference in the market.

Sallah also stated that while the notion of reducing the prices of wheat and flour for Yemeni consumers is a honorable one, but doing as such without studying the consequences will have dire effects on the economy and the government's budget. He quoted from previous experiences that showed how the government's eventual removal of such subsidies had disastrous effects.

Leading wheat and flour businessman Yehya Al-Habbari stated that his corporation will not be selling any more wheat or flour until the ministry of trade interferes and regulates and monitors the prices of wheat and flour. He said that he is anticipating that the price list would be fair and would not permit flooding the market, adding that he has a shipment of wheat arriving this weak in order to maintain supply for the local market especially as the holy month of Ramadhan is approaching.

Sources at the government-owned Yemen Economic Corporation said the public are pleased to know of the corporation offer to sell 50-kg wheat bags at 3700 Riyals. A maximum of two bags for each customer is allowed in order to ensure the sold wheat is for household use, not commercial retailing.

However, economic experts stipulate that the usual Ramadhan bonuses which are given by the private sector as well as the extra salary given by the president to government employees for Ramdhan will increase purchasing power. This might increase the tolerance of the public to the increase in prices, in turn stimulating demand for the same supply of foodstuff resulting in an eventual price hike offsetting the Ramadhan bounce.

There are four main trading companies importing and supplying the domestic market with wheat and flour, they are Al-Habbari corporation, Hayel Saeed group, Fahim Trading Corporation and Al-Udaini Trading Corporation, in addition to the latest addition, government-owned Yemen Economic Corporation, importing over 15 brands of wheat.
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