The Mozambican government is negotiating with the Argentinean authorities for a guaranteed supply of wheat at fixed prices from the South American country’s milling companies, said Mozambique’s Industry and Trade Minister, Armando Inroga.

Cited by Mozambican news agency AIM, the minister noted that the aim was to ensure wheat price stability in Mozambique and to reduce the costs of the government’s subsidies to bakeries.

Despite its potential for wheat production Mozambique is still highly dependent on imports. The price of wheat on international markets has recently been very volatile.

“With this agreement we will be able to buy wheat at fixed prices, which means that purchases in June, August and September, for example, will be at a previously set fixed price, even if prices on the international market change,” Inroga said.

The minister said that negotiations were expected to be concluded by June and that before then the two sides would meet either in Maputo or Buenos Aires.

Wheat is currently bought by Mozambique’s milling companies, which then distribute flour to bakeries and other units.

In 2010 the Mozambican government established a subsidy for mills to minimise the impact of wheat price volatility. In 2012 the State Budget included a provision of 615.3 million meticals for wheat flour subsidies. (macauhub)