Flour price hike targets restaurants, not homes

TDT | Manama     

The Daily Tribune – www.newsofbahrain.com

Report by P Unnikrishnan

In an exclusive interview with The Daily Tribune, Mr. Basim Mohamed Al Saie, Chairman of Bahrain Flour Mills Company, addressed the recent controversy surrounding the increase in flour prices.

As parliamentarians prepare for a special session to discuss the matter, Mr. Al Saie provided insights into the reasons behind the price adjustments and clarified issues of misinformation.

Misrepresentation and Sensationalism

Mr. Al Saie refuted allegations circulating on social media and some news outlets that the prices of all flour types have increased.

“These allegations are untrue and unfortunately misrepresented. They have been made without a clear understanding of the matter,” he stated.

Mr. Al Saie emphasized the importance of accurate reporting, urging those who publish news and stories, especially on social media to present all facts comprehensively rather than creating sensationalism.

No Increase for Controlled Markets

Mr. Al Saie highlighted that there has been no price increase for subsidized controlled markets, which include traditional bakeries and food outlets.

The recent price adjustment only affects subsidized uncontrolled markets such as restaurants, hotels, and other commercial food establishments.

“These establishments are selling their products at a premium rate, so this price change will have a minimal impact on their costs,” he explained.

“For instance, the cost of flour in croissants, cakes, and other premium baked goods is less than 5% of the total cost, so the price change will not be significant for this segment of the market.”

Operational Challenges and Modernization Efforts

Located near the port in Mina Salman, Bahrain Flour Mills faces logistical challenges due to the port’s shallow waters, which restrict large vessels from docking.

Established over 50 years ago, the mill has undergone a few modernization over the years to meet demands. “For the current and latest expansion decisions to modernize and expand were made in 2019, but the arrival and installation of new equipment were delayed due to the COVID-19 pandemic,” Mr. Al Saie explained. Despite these challenges, the company ensured a seamless transition without disrupting the market supply.

The capacity expansion was completed in March this year, and this additional capacity will allow the company to meet the market need and growth of the market and demand for flour.

Financial Sustainability and Local Employee Welfare

The modernization efforts, costing around six million dinars, have financial implications, including depreciation costs that affect the company’s bottom line. Mr. Al Saie stressed the importance of economic sustainability: “The company cannot operate at a loss and put itself in a distressed situation. We have commitments to the government, stakeholders, and the entire country.”

He also noted that 83% of the company’s workforce are Bahrainis, and the company invests in upskilling and training to groom the next generation of leaders, ensuring good salaries and career development opportunities. Succession planning is a major target and responsibility for us in the board.

Subsidies and Market Dynamics

The government subsidizes a significant portion of the flour prices, which remains unaffected for traditional bakeries. However, for uncontrolled markets which are still subsidized, the price increase aligns with regional standards.

“Our prices are still lower than other regional markets,” Mr. Al Saie noted. “We use Kuwait as a benchmark since it has the lowest subsidized price in the region, and the wheat used in Bahrain and Kuwait is identical, making it a fair comparison.”

Preventing Abuse and Ensuring Transparency

Mr. Al Saie addressed issues of misuse where subsidized flour is repackaged and sold at higher prices, or some people who are profiteering by selling subsidized flour products in the black market.

He mentioned that the Ministry of Industry and Commerce has been informed of such abuses.

To prevent this, Bahrain Flour Mills has implemented a new system requiring users to log in and purchase flour online, ensuring better tracking and reducing misuse.

“This system is vital for us to know our customers and monitor trends in use and consumption,” he added.

Future Investments and New Mill Plans

The company plans to build a new mill, requiring an estimated investment of 50 million dinars.

The new facility will enhance capacity, allowing for better storage and product diversification. The technology will enable the production of various flour types and support local industries, including poultry farms.

Quality and Expertise

Mr. Al Saie dispelled misconceptions about the quality of their wheat: “We purchase some of the finest wheat with the highest protein content from Australia.”

He emphasized the importance of improving baking processes to maximize product quality especially among traditional bakeries and highlighted ongoing efforts to work with customers, especially traditional bakeries, to enhance their baking techniques.

He assured that the price increase would not significantly impact consumers, as controlled market prices would remain unchanged.

He reiterated the company’s commitment to quality, financial sustainability, and the well-being of its employees and customers, while continuing to serve the Kingdom’s food security needs.