Poverty, Not Bread, Is the Problem

Macedonia is shaken by various affairs these days, but none of them have caused such an outburst of popular anger as the recent rise in the price of the basic provisions, flour and bread

AIM, Skopje, January 21, 2001

At the very beginning of 2001, the Macedonian government adopted new prices of the basic provisions, flour and bread. They were kept on ice for full five years, a means of maintaining social stability in the country. Now, at the start of the new millennium - in keeping with the principles of the free market and their own reformist course - the authorities have decided to do away with controlled prices. They have allowed for a full liberalization of prices, at the same time promising the millers and the bakers that, through systemic measures, the government would pave the way for a more stable market-environment for them to work in, putting a stop to the further rise in the said prices. The official promise, taken for granted by some of the producers, appeased the appetites to a certain extent. Instead of the initially requested 60 per cent, the producers contented themselves with a merely four times smaller raise of the price. With the taxes ensuing from additional gain, the overall rise amounts to approximately 20 per cent.

Thus, starting with January 15, a kilogram of type 500 flour- the most commonly used sort of flour in Macedonia - now costs 23 instead of former 19,5 denars... A 600 grams loaf made from this type of flour is now being sold at a price of 28 denars (0,87 DM) as opposed to the previous 19,5 denars. As a reminder, one DM is presently valued at 32 denars. Other types of flour for human use and stock-feed, as well as other types of bread, rolls, cakes and bakery products have also gone up in price. This was the agreement the Chamber of Commerce made with the producers. But, the agreement is variously applied in practice. A motley of prices and loaf-weights is in existence, because each miller and baker is making calculations of his own, according to the stock at his disposal. Those who have provided themselves with considerable supplies of cheep, humanitarian-aid flour bought from people on welfare and the refugees are now selling bread at lower prices. The phenomenon is more noticeable in provincial cities than in Skopje. The poor are thanking heavens above for it, the competition screaming unfair practices since their flour is made of more expensive, domestic and imported wheat.

The new price of bread has caused grave agitation among 90 per cent of the population who perceive it as an attack on their, for the most part, already meager domestic budget. Prices of so many things have gone up here in the past - the price of petrol, electricity, water, central-heating, telephone - it seemed people had become numbed by it all. But, the recent rise in the price of bread has caused an outburst of anger for which no one can predict where or when it might end.

Few are willing to listen to the explanations of the producers. For their part, they claim there is no other way out for them but for an upward correction of prices if they are to survive. For, as they insist, in the past five years they have been exposed to the various disturbances of the market and a drastic enhancement of all of their production inputs. They were the ones saddled with all the rises in the price of: electricity (amounting to 60 per cent), petrol (92,86 per cent in comparison with 1995), the 16 per cent rise in the cost of living caused by the 1997 inflation, transportation and depreciation costs (up for a quarter), differences in the denar-dollar exchange rate (up for 72 per cent by the end of 2000, in comparison to 1995, when the price of bread was last raised).

Domestic production satisfies 60 per cent of the required wheat supplies, the remaining 40 per cent have to be imported. Officially, not a gram of imported wheat has entered the country since last year's harvest, domestic supplies are rapidly diminishing and precisely this, maintain the managers of the largest bread producer in the country, the Skopje-based Zito-luksol, is one of the causes for the January leap in the cost of bread. They claim that the newly approved price falls short from ensuring them a profitable management of the business, since only the market price of minimum one DM per loaf of semi-white bread could cover the actual costs of its production. Their further actions, they say, will depend on measures the government chooses to undertake in the future. In other words, new rises in the price of bread are not to be entirely ruled out. It yet remains to be seen if the ever louder sound of popular anger is to be toned down by the joint efforts of the labor's and consumer's unions who maintain that the government has ill-timed the moment for the correction of prices of crucial provisions.

For months now, poverty is on the rise in Macedonia. The up-to -date sociological and statistical research show that around 380 000 citizens, 23 per cent of the overall population in Macedonia, have trouble making ends meet. For the most part, this endangered portion of the population is made up of the unemployed (47,5 per cent), the undereducated (38,7 per cent) and the peasant population. None of them are able to procure for themselves even the basic necessities of life. With the record unemployment figures in the country added to the final sum, it turns out that an army of 360 000 people living on an average of 50 DM per month is, in fact, living off government aid. This holds true for 220 000 pensioners and 150 000 young people left with no other choice but to find work on the black market, as well as for the 18,8 per cent of the working population irregularly paid out. With this said, the overall picture of poverty in Macedonia becomes more precise and comprehensive.

Poverty, not bread is the problem, say the analysts. Sociologists carrying out a survey at the end of 2001 came up with a particularly disturbing finding. More than half of the polled considers they are downright paupers. These people are convinced that the quality of their lives has deteriorated in comparison with the circumstances from ten years back because of the negative economic and political trends in the country and not due to any lack of exertion on their part or absence of achievements. They believe transitional changes and badly implemented structural reforms are the main culprits for their plight.

According to the 1999 statistics, 44,2 per cent of the income of an average Macedonian family were spent on food, 7,7 on clothing, 3,8 on furniture, 5,7 on educational, cultural and other needs. At the end of the decade, in 1999, food-expenses reached 44,3 per cent, while all other expenditures were cut by half. Statistical figures for 2000 have not yet been published.

Nevertheless, one thing is absolutely certain: an average family of four will now have to set aside 1200 denars per month just for two daily loaves of bread, a fifth of an average Macedonian salary which, if one is imaginative enough, amounts to 300 DM - warns the Labor Union Alliance of Macedonia. It will be hardest on people on welfare since they already practically have no means of livelihood. According to official figures, at the end of last year there were 75 000 such families, unofficially, the figure is somewhere in the vicinity of 100 000.

The Labor Union and the Consumer's Union of Macedonia have lodged a protest with the government requesting that it intervene immediately. It is either to "shift prices to reverse" or to give out flour from state reserves to the producers so as to make cheap bread available to the citizens for a few more months. If not, the unions are planing to stage strikes of the hungry and call for civic disobedience.

Judging this to be an ultimatum, the government has, in the words of its spokesman Antonije Miloski, rejected the request adamantly. The promised stimulating systemic measures, devised to help the milling and the baker's industries survive, are to be adopted shortly, announced the Minister of Agriculture, Marjan Djorcev. To begin with, the income tax will be lowered from 23 to 15 per cent and it is only a matter of days when 50 tons of cheap flour will be put at the disposal of the producers. Wherefrom this flour is to come, whether from state reserves or imports, the Minister did not specify. The said quantity is said to be sufficient for another two and a half months.

Analysts warn that, due to the unfavorable hydro-meteorological circumstances, the state of grain crops - similarly to previous years, sown on a surface of 120 000 hectares - are in an extremely bad shape. Gazing at the skies, experts fear that this year's harvest will be the worst in twenty years. Having this in mind, they are trying to make the government realize that it would be well advised for it to undertake not merely timely short-term measures, but long-term ones as well, if it means to enhance the domestic production of bread-wheat - the crucial prerequisite for stabilizing prices on the market of basic life necessities, flour and bread. In this respect, the singing of the Agreement on Free Trade with Ukraine this week is viewed as a step in the right direction. The barter arrangement enables the exchange of domestic vine and tobacco for Ukrainian grain.

In the meantime, optimists believe, some sort of social stability will be maintained. What if they are proved to be wrong?

AIM Skopje

BRANKA NANEVSKA