Why bread is so expensive in Panama?

Roberto Lombana, president of the Panama’s Wheat Millers Association, said there have not been any fluctuations in wheat prices and therefore the price of the loaf of bread should not go up.

He added that currently flour is being subsidized by the government, with the intention of keeping prices low.

Last week the price of a loaf of bread was $1.03 and inexplicably, the cost went up 25 cents without any explanation.

Lombana said that Panamanians are eating less bread than before. A study made by the Millers Association revealed that in June this year the consumption of flour in the country was 100,000 quintal (50 kg. is a quintal) per month, while in December of 2007 it was 120,000 quintals.

The miller attributed the decreases to the high price of flour at the time. Panamanians looked for other alternatives for breakfast such as plantain and yucca.

The president of Panama’s Bakery Association, Giacomo Tamburelli agreed with Lombana that bread prices should not go up.

However, a spokesman of Musmani bakery, said that they are planning to increase bread prices between 25 and 30 percent, mainly because of increases in raw materials and freight, since they import bread from Costa Rica and do not make the products themselves.

Other popular bakeries such as the chains Momi and La Flor Panameña do not have plans to put the prices up in the near future. They have heard rumors about the prices, but nothing has been confirmed.

In the supermarkets a loaf of bread could cost between 85 cents and $1.48 and there are no signs that they will go down soon.

Six months ago the price of bread and similar items went up between 20 and 40 percent due to the wheat crisis in the international market.

Since then the prices have stabilized, but the Panamanian market is still volatile, because the bakeries determine how much they are going to charge for their products.

The irony of the situation is that although fuel prices are substantially lower than they were four months ago, the prices of the products of the basic food basket continue to be high.

Supermarkets, producers and manufacturers have not bothered to pass those saving to the long suffering consumers.

Currently the world is in the middle of a financial crisis which threatens to affect even small countries such as Panama and that imminent recession could be the next excuse for speculators to put bread prices up.

Without a proper mechanism that could control the basic food basket items, they will continue to go up.

Meanwhile, bakeries and millers are not sure if the prices will continue to rise, but nobody is talking about a reduction either.

One thing is sure, a strong possibility exists than in a year’s time bread will be a luxury item that only the rich can afford.