Zimbabwe News and Internet Radio

Bread price Increase by 70%

By Tendai Kamhungira

The price of bread has gone up by almost 70 percent — the highest increase since the introduction of the multi-currency regime in 2009.

Baker’s Inn workers package bread at their Bulawayo plant in Belmont.

It’s the fourth increase within a space of 12 months, and the first this year.

In terms of the latest price adjustment, a standard loaf of bread which was going for $1,40 now costs between $2,10 and $2,35.

At the time of going to print yesterday, it was still not clear if government had sanctioned bakers to adjust their prices.

National Bakers Association of Zimbabwe president Ngoni Mazango yesterday confirmed the price increase, arguing this was a result of the foreign currency challenges which have made it difficult for many of the bakers to remain afloat.

“I think you are aware of the cost pressures which have caused the industry to be unviable for a long time.

“You remember in November last year, when we affected the price of between $1,30 and $1,35, government had promised to intervene by providing 80 percent of the forex required for raw materials.

“In the month of November we got 30 percent…while in January we only got nine percent of foreign currency,” Mazango told the Daily News, adding that the bakers remain exposed and have a challenge of getting the product on the shelf.

“Trying to bridge the gap is a big tall order. Some bakers are closing shop. The costs involved for repairs and maintenance as well as running costs are making it difficult for most bakers to remain afloat.”

In November last year, government shot down attempts by bakers to hike the price of bread from $1,10 to $2,20.

After lengthy negotiations, government allowed them to go up to between $1,10 and $1,40.

To keep prices in check, Treasury also allowed millers to bring wheat into the country duty-free.

Bakers canvassed by the Daily News argue, however, that the rebate does not factor in other cost pressures which impact on the overall pricing of bread.

For example, the price of fuel which is used to heat ovens went up by more than 150 percent last month.

In a statement issued yesterday, the Grain Millers Association of Zimbabwe (GMAZ) said the increase in the price of bread has nothing to do with the prices of flour.

“GMAZ has noted the recent increase in bread prices. These bread price increases are, however, not in any way associated with flour cost drivers as the product (flour) supply price has remained constant,” said GMAZ’s media and public relations manager Garikai Chaunza.

“Flour supplies to bakers have, however, remained suppressed due to the non-availability of foreign currency to bring in imported wheat which is still held in Beira,” Chaunza said.

Millers have been failing to get adequate foreign currency allocations from the Reserve Bank of Zimbabwe (RBZ) to augment domestic wheat supplies with imports.

While the RBZ had promised to allocate 80 percent of their foreign currency requirements from the previous allocation of 35 percent, this has not been possible due to the worsening foreign currency situation.

With wheat in short supply, millers cannot produce adequate flour to meet demand from bakeries hence the persistent shortages of bread, which have given rise to a black market for the product.

Before the latest price increase, bread was fetching as much as $2,50 on the parallel market.

According to officials, the country needs at least $13 million every month for wheat imports, to enable it to produce bread flour and self-raising flour.

Zimbabwe consumes 1,8 million loaves of bread per day and needs 400 000 metric tonnes of wheat per year. The country is currently producing less than half of its annual requirement.

Local annual production capacity stands at 200 000 metric tonnes, leaving a shortfall of 200 000 metric tonnes. DailyNews