This is how small producers and traditional foods are kicked out of the system. I went yesterday to buy Saj bread from one of the 2 women who bake it in my little village in South Lebanon (Saj or Markouk bread is Lebanon's traditional bread, cooked not in an oven but on an inverted wok). I was told that they don't bake anymore, because it is not worth it. I asked why, they said that the price of the 50 kilos sac of wheat flour costs now LL50,000 ($33) up from 27,000LL ($16). I was surprised because these women had regular clients who came from other villages and who bought the 5 loaves for 1000LL when they could buy 9 large loaves of Arabic bread for 1,500LL. The 2 women made a significant part of their household income from these sales, and they took turn in baking.
The price of flour has risen in the world with the increase in the price of wheat, and I have blogged about this earlier (search under "wheat"). The world price increase is about 30% which translates in 100% on the Lebanese retail market. The Lebanese government is subsidizing flour because they do not want a bread revolt at this very critical time. They need to look popular, so they are paying the difference between the old price and the market price to the mill owners cartel. But they are only subsidizing the quantity of flour needed to cover the Arabic bread (pitta) needs of the country. Of course the government, the mills owners and the bakeries did not agree on the quantities, and what is being subsidized probably exceeds the local needs so the bakeries can make a clean buck too.
The bakeries cartel now receives subsidized flour and cannot increase the price of the bread, but they decrease the size of the loaf and the weight of the bread bag (see this post among others).
As to the local small scale producers, like the women in my village, they have to buy the flour from local traders. They do not benefit from the subsidies, because they are not a cartel, and they find themselves kicked out of the system, having to pay what is many folds the current market price.
This does not mean that Saj bread is disappearing: you can find it in all the large bakeries. They hire the women who made it at home and use second rate ingredients and have them make 100o's of loaves a day without a contract or social security or any of the benefits of being employed. And of course, they pay them a pittance.
As long as there is a demand for it, food culture is safe. Pity I can't say the same about the rural poor.