Subsidy change could decrease Jordan's wheat consumption

by Susan Reidy
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AMMAN, JORDAN -- Jordan’s wheat consumption, which saw unprecedented growth in recent years due to refugees, may decrease in 2018-19 with changes in the nation’s bread subsidy program. 

For now, the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) is leaving the wheat consumption forecast largely unchanged at 1.1 million tonnes but warned of a possible decrease in a Feb. 27 report.

“It is still yet too early to accurately tell how far total consumption may drop, but we could eventually see a drop of 20-25 percent as less bread is wasted,” the report said.

Jordan’s population has increased from 6.2 million in 2012 to 10.2 million in the most recent estimate due to a heavy influx of Syrian refugees.

As of Feb. 1, Jordan replaced its bread subsidy program with targeted assistance, setting new bread prices in the process.

The Ministry of Industry, Trade and Supply will continue to set price caps for bread but it will no longer directly subsidize the product to bakeries, FAS said. Bread prices increased from 67% to 100% under the new program.

More than 35% of Jordan’s population is non-Jordanian, but they account for 40% of the subsidized bread consumption, FAS said.

Replacing the subsidy program with targeted assistance is expected to save the government $106 million. An estimated 25% of subsidized bread goes to waste and is often used as animal feed.

“These reforms of the subsidy should help put an end to subsidized wheat flour leakages that distort the commercial market,” FAS said.

Jordan is an insignificant wheat producer, with total production estimated at 20,000 tonnes for 2018-19. Its imports for the year are expected to reach 1.1 million tonnes, mostly unchanged from 2017-18. Romania is Jordan’s main wheat supplier.