How a shrunken piece of bread explains Bolivia's economic catastrophe
ahead of elections
[August 12, 2025] By
ISABEL DEBRE and PAOLA FLORES
LA PAZ, Bolivia (AP) — Juan de Dios Castillo, covered in flour and
sweat, pulled a crisp roll from the cooling rack and weighed it on an
old metal scale: 60 grams (2 ounces).
That's barely half what it would have been two years ago. Unlike
American or European shoppers scrutinizing suspiciously capacious chip
bags, Bolivians have no doubt that they’re paying the same
government-fixed price for a much smaller, lower-quality loaf.
For years, you could walk into a government-subsidized bakery like
Castillo's anywhere in Bolivia and get a 100-gram (3.5 ounce) roll for
50 centavos (7 U.S. cents), but as a cash crunch cripples flour imports
and inflation squeezes budgets, bakers have almost halved the size of
their staple bread. Early last year, rolls shrank to 80 grams, then 70,
now 60.
“It’s like eating a bit of air, a Communion wafer, it doesn’t fill you
up anymore,” said Rosario Manuelo Chura, 40, dipping some crust into her
morning coffee in Bolivia’s administrative capital of La Paz.
Castillo isn’t particularly pleased about it either. Forced to sell his
bread far below market price, he's barely breaking even. “This situation
is not sustainable,” he said, slamming the oven door open.
Bolivia’s many harbingers of havoc ahead of its presidential election on
Sunday seem to converge in this shrunken piece of subsidized bread that
La Paz residents call “pan de batalla" — “battle bread.”
The hallowed staple speaks to a state stuck in the past after 20 years
under the state-directed economic model of ex-leader Evo Morales, and
now struggling to pull itself out of its worst economic crisis in four
decades.
The right-wing frontrunners, businessman Samuel Doria Medina and former
President Jorge “Tuto” Quiroga, have proposed eliminating the
politically combustible subsidies that underwrite Bolivia's social
safety net.
“I say this openly, I'll remove subsidies because they're the greatest
absurdity," Doria Medina told The Associated Press this month, referring
to the fuel that Bolivia subsidizes to the tune of billions of dollars a
year.
Short on dough, literally
Legend has it that the battle bread earned its nickname from troop
rations in the country's Chaco War against Paraguay in the 1930s.
Today, a battle over bread rages within Bolivia, which is running out of
hard currency to import wheat because the country grows less than 25% of
what it consumes.
Struggling to clear a backlog of imports, the government has slowed or
in some cases suspended subsidized flour deliveries. Loaves have
vanished from shelves and bread lines have started to appear across La
Paz.
The scarcity of U.S. dollars has also hampered diesel fuel imports,
leading to fuel shortages and raising questions about the ability of
import-dependent Bolivia to keep subsidizing its staples.
Not only do farmers use diesel fuel to power machinery for irrigation,
but diesel fuel also contributes to the price of imported foodstuffs.
Prices rise and loaves shrink
Some two years ago Bolivia had a lower annual inflation rate than
Germany. Today it has among the region's highest, with the government
reporting consumer prices rose 25% in July from a year earlier.
But the price of bread hasn't changed in 17 years.
Bolivia imports most of its wheat from Argentina, where prices have
increased — along with the value of the Argentine peso — under
libertarian President Javier Milei.
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A vendor gives "pan de batalla," or battle bread, which is made with
government subsidized flour, to a client at a restaurant in La Paz,
Bolivia, Saturday, Aug. 9, 2025. (AP Photo/Juan Karita)
 Bolivia's grain agency, EMAPA,
distributes the subsidized flour to bakers at a fixed price while
requiring them to sell battle bread for 50 centavos a loaf — about a
fifth of what it would cost to bake the same loaf with ingredients
bought at retail prices.
As the prices of other ingredients climb, many government-subsidized
bakeries warn that they are facing bankruptcy. Scores of bakers last
month staged a 24-hour strike demanding to sell their bread at
market prices.
But a quick scan of history from the 1789 French Revolution to 1989
Venezuelan riots underscores why Morales' Movement Toward Socialism
party, or MAS, hasn't dared tinker with the agreement.
“When the price of battle bread goes up, that’s the day everything
collapses,” said Jacobo Choque, 40, an accountant waiting to buy
bread rich in butter from a non-subsidized bakery. The line of
Bolivians keen to shell out an extra 20 centavos for better-tasting,
thicker rolls stretched almost two city blocks.
Nearby, cash-strapped customers scoured an open-air market, swarming
around one of the few stalls selling battle bread.
“We used to have breakfast with one roll, but now we need two to
feel full,” said Carmen Muñoz, 65, fuming as she queued. “Let’s not
forget that socialism brought us here."
A subsidy system gone bust
When commodity prices surged in 2007, Morales, a coca-farming union
leader elected the year before to his first of what would be three
terms, harnessed revenues from booming natural gas exports to
bankroll subsidies for bread and other essentials.
But as gas production plummeted about a decade later, MAS dipped
into foreign reserves to keep spending. The model became ruinously
costly — last year's food and fuel subsidies made up over 4.2% of
gross domestic product.
With the government unable to pay suppliers on time and trucks
trapped in fuel lines, EMAPA's monthly deliveries of milled wheat
have hit snags, leaving subsidized bakeries suddenly without flour.
Even as bakers eat into their savings to buy other ingredients, the
subsidy agreement bars them from sourcing their own flour.
“Rather than helping, subsidies are hurting us,” Castillo said.
Some bakers say that EMAPA — long accused of favoring MAS party
members — has stopped supplying altogether.
EMAPA denies cronyism, saying it has ramped up investigations into
reports of bakers reselling subsidized flour at inflated prices on
the black market, or trying to pass off rolls baked with low-cost
additives like cassava starch.
“In all my 30 years at this market, this is the most stressful,"
said Raquel de Quino, a 60-year-old bread vendor who now spends her
mornings confronting customers outraged over the shrinkflation and
shortages.
On Saturday, she asked one angry woman to take her rant to the
government — at least for its final week in power.
“I'm just the middleman,” said De Quino, throwing up her hands in
exasperation. “Let's pray to God that under the next government,
there will bread for our children."
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