In early 2015, rapidly falling oil revenues and rising levels of public debt, brought about a situation where the Government was compelled to look at creative solutions for significantly reducing public spending.
However, the announcement in May 2015 that meat subsidies would be halted with just a few months’ notice caught everybody by surprise, including MPs, many of whom reacted angrily to the new measures, firstly because they were not consulted in advance and secondly because of concerns that the measures would adversely affect citizens.
After two-month long delays in implementing these measures – largely as a result of pressure from MPs who wanted further time for consultation – the measures were finally introduced at the beginning of October. It is envisaged that this is a first step towards a comprehensive reform of subsidies, including
Starting from mid-September, citizens were encouraged to sign up for a compensation scheme, which would see them receiving a fixed amount each month, based on the number of family members. The majority of Bahraini families seem to have already registered for the payments. Non-Bahraini residents are ineligible.
After the first few days following implementation of these measures, we take a look at some of the issues which have been raised by these measures.
Meat off the menu?
According to reports, many restaurants had simply stopped selling some of the cheaper meat products like shawarmas, or were selling them for more than twice the previous prices.
Al-Ayam newspaper reported finding a range of different approaches from restaurants. Some had adopted a business-as-usual policy and were maintaining their current menus until matters became clearer; some had simply taken a broad range of meat products off the menu and some had altered the prices on their menus, including a jump in around 150% for some red meat products.
Measures against overpricing
There were complaints that some restaurants and shops were selling overpriced meat, particularly as much of the meat they were selling was frozen produce. On 7 October, it was announced that the Commerce Ministry had taken measures against three outlets across Bahrain after warnings to put their prices in order were not heeded.
This followed a 5 October directive by the Prime Minister that prices must be monitored and action taken. The Ministry has called on consumers to notify them of any pricing abnormalities.
Some meat industry workers “on strike”
Several butchers, restaurant owners and others have unofficially stopped work for a few days, out of fear that they will be unable to sell any meat that they purchase. Some of them are taking a wait-and-see approach in an uncertain market climate where it is unclear whether they can make a profit or what prices they should be selling at.
According to Al-Watan newspaper, most meat stalls in Manama central market were closed, with only a few traders catering for the small number of visitors. Sources at the market told the media that they were only seeing 10% of the normal levels of trade in chicken, with lorry loads of produce returning unsold.
In some cases, the cessation of business activity was clearly intended to take the form of an organized strike. As of 7 October, meat sellers at Muharraq central market were reportedly seven days into a strike. However, given the circumstances, it is impossible to tell which butchers are temporarily closed for practical reasons and what proportion are intending their actions to carry a political message.
No more fresh meat?
The national Bahrain Livestock Meat Company on 7 October was reportedly only selling frozen meat, as a result of the lack of butchers buying their fresh produce on the previous days. In normal circumstances butchers should file their requests for meat three days in advance. However, given the uncertainty, many butchers were clearly unwilling to commit themselves to advance orders.
Hoarding
In the days after implementation of the reforms, there were reports about meat traders hoarding subsidized meat and then selling it after the date of which it was fit for consumption. Food safety officials confirmed that they had received such reports, but noted that many of the tests they had conducted had failed to find unsound meat products. However, their investigations were hampered by many butchers’ shops being closed over this period and therefore unavailable for testing.
Meat standards
During the early months of 2015, there was a temporary halt on much imported meat as a result of the discovery of large quantities of meat which was considered to be unfit for consumption. A parliamentary investigation of this issue is still underway, which also looks at the wider issues facing the meat import trade. Meat subsidy reforms will clearly impact on this issue, with greater public awareness of food safety and food security. These dynamics may well lead to changes in the guidelines for importation and regulations facing companies involved in the meat trade.
Parliamentary activity
The parliamentary committee for investigating the subsidies issue failed to persuade the Government to further delay implementation of these measures and failed to convince the Government to seriously consider their smart card proposal. Most MPs have been critical of the Government’s approach to subsidies, but currently lack a clear strategy for seizing the initiative.
When Parliament reopens on 11 October MPs will hold an open debate on the issue, but several MPs are already skeptical that such a debate could lead to anything tangible. MP Majid al-Asfour cynically noted that “deputies will just issue condemnations in the most foul language for the sake of video clips to display their positions for the social media.” MPs also have differing views as to whether seeking to interrogate certain ministers could lead to a positive result for protecting citizens for the adverse consequences of subsidy reforms.
Consumers staying away
In the days leading up to implementation of the new measures, consumers were buying meat in large quantities in expectation of price increases. As a result, it was not surprising that few people were buying meat in the first few days of the new regime. What is unclear is the extent to which overall meat sales will continue to be low, either because people simply cannot afford the increased prices, or because of a proportion of people who are staying away in principle out of protest.
There is currently a lot of uncertainty as to what fair prices should be under the new system, so many will be reluctant to be purchasing meat until they get a clearer idea what reasonable price levels should be. With a lot of meat going unsold and people in the meat trade themselves enduring a lot of uncertainty, it may take some time for prices to settle down.
There is a wide sense of public disaffection with the measures. Many people complain that the compensation levels are small and will simply disappear into people’s monthly budgets. Many express confusion about how the measures will affect them, particularly if subsidy reform widens to other products like electricity, petrol and water.
Prior to summer 2015, there had not been much public debate about the subsidy issue, so there was a lack of awareness about how heavily subsidized products were and how this issue impacted on the public budget and the economy. As a result, for many Bahrainis these measures are a step into the dark.