maximum import duty rate of 20 percent as well as the usual 18 percent VAT. In addition, like sugar, the usual taxes on flour are supplemented by a TCI duty when the price of imported flour is below a threshold price of 201,400 CFAF per ton, but at a fixed rate of 10 percent rather than the variable levy for sugar. Thus, the import taxes on flour cumulate to about 55 percent when the price is below the reference price and 45 percent if the price is above the reference price (see Appendix 1 for more details). Given that wheat is the main ingredient in flour, accounting for about 80 percent of costs of production, the effective rate of protection on flour is very high. These duties are apparently high enough to have almost completely eliminated legal imports of flour. Some smuggling of flour from The Gambia occurs (Golub and Mbaye 2009) but less than for sugar.

Tables 3 and 4 show that the actually applied tax rates on wheat and flour over 20002013, using customs data, are largely consistent with the above-described statutory provisions, but flour displays considerable year-to-year variations in applied rates that apparently reflect discretionary adjustments by customs in both tax rates and valuations as in sugar and vegetable oil. The customs valuations for flour are not very meaningful after 2002, however, given that flour imports dropped sharply starting in 2003 to very low levels, so these calculations are based on very small import volumes.

Until recently, the retail price of flour has not been officially regulated, although it was set in consultations with the government. On the other hand, the government sets the price ceiling for baguette with a government-set weight of 210 grams.<sup>16</sup> As the bakeries and their trade representative have repeatedly pointed out, controlling the price of bread is highly problematic in a situation where flour prices are free to move. For this reason, in late 2012 the new Senegalese government moved to fix the price of flour. Given that wheat accounts for about 80 percent of the cost of flour, however, and that the Senegalese government has no control over the world price of wheat, any fixed price of flour is likely to be contentious and subject to revision, as has indeed been the case in Senegal. Consequently the government has wavered on setting the new flour price ceiling, first lowering it to 18,890 from 20,600 CFAF for a 50 kg bag, and then raising it back to 20,000 CFAF after pushback from the flour producers. At the time of writing, flour producers demanded a reduction in the VAT similar to that accorded to sugar, claiming that they are making losses at the controlled price of 20,000 CFAF. The underlying problem is that price ceilings on flour and bread are not viable when wheat prices fluctuate in the world market.

Bakeries are also subject to government regulations regarding distribution, with sales restricted to kiosks devoted solely to selling bread, ostensibly for sanitary reasons. The argument is that general stores will not handle bread safely, for example cutting bread with the same knife as cutting soap, cheese or other items. This is unwarranted—there are far more efficient ways to control the rather limited health risks this regulation is purported to prevent. In any case the regulation is not widely adhered to.

As in sugar and vegetable oil, intense political pressures are shaping policies but there are differences in the organizational dynamics. Imports are less controversial, with no

> 16 The price was set at CFAF175 in 2013 but reduced to CFAF150 in 2014.

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