Kazakhstan: Era of Cheap Bread Comes to a Close

The era of cheap bread is coming to a close in Kazakhstan as the authorities prepare to scale back subsidies amid efforts to contain government spending.

Agriculture Minister Asylkhan Mamytbekov told parliament on November 9 that the government will lift price controls on the most basic type of bread — a subsidized loaf that is favored by the hardest-up.

As the minister explained in remarks broadcast by the private KTK TV channel bread subsidies not only put a burden on the state coffers but are also socially unjust since they are available to the rich and poor alike. 

The authorities have pledged instead to provide targeted benefits to the needy in order to ensure that they do not go hungry. That will place the onus on those that normally rely on cheap bread to work out whether they qualify for assistance and to then go through the bureaucratic procedure of applying for that help.

No plan has been put in place for the transition and there are no plans to let bread prices rise until a new mechanism is put in place. One proposal under review involves handing out bread coupons.

The price of subsidized bread is set by the local authorities and is different in each region. The most expensive bread is on sale in Astana, at 65 tenge (around $0.20) per loaf, and Almaty, at 62 tenge. The nationwide average is 52 tenge (or $0.17), according to state newspaper Kazakhstanskaya Pravda.

By contrast, the price of non-subsidized bread varies wildly depending on location, outlet and quality, and can range from around 80 tenge per loaf to upward of 300 tenge.

Bread manufacturers have been lobbying the government to liberalize prices since they are forced to make subsidized loaves which yield little profit.

Abdrakhim Tolendiyev, the head of the Stolichniy Khleb (Capital Bread) company in Astana, went to some lengths to make the point this week. He told Kazakhstanskaya Pravda that he had rooting through trashcans in the capital and found that bread was so cheap that people were throwing it away left, right and center.

Moves to cancel bread subsidies come as Astana tackles an economic slowdown and a currency crisis that have forced it to tighten its belt.

According to Mamytbekov’s calculations, canceling blanket bread subsidies will save the government up to $20 million a year.

In September, the government abandoned price controls on gasoline.

So far, the public has swallowed belt-tightening measures without resorting to the type of public protest that briefly erupted on a small scale last year.

Kazakhstan: Era of Cheap Bread Comes to a Close

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