Bread price increase imminent

May 6, 2020

LIVINGSTONE MARUFU


The price of bread is set to go up in the next coming weeks after the Grain
Marketing Board (GMB) hiked wheat producers’ price to above ZWL$11 000 from around ZWL$8000 last year.

The development comes at a time when the local companies are grappling
with high cost of production, hyper inflationary environment, foreign
currency challenges and power outages.


National Bakers Association of Zimbabwe (NBAZ) president Denis
Wala told Business Times that due to rising costs of raw materials in the whole value chain, the price of bread may go up.


“As you can see the Grain Marketing Board has hiked the wheat producer’s
price, this means the millers will get wheat at a high price and consequently
they have increased flour prices hence all the costs will affect us and this will definitely increase bread prices.


“As we speak, we are in negotiations with millers and the government as
to what price we may put in place.


Every time we increase the bread price, people think we are inconsiderate to the consumers but we are the last in the value chain,” Wala said.


He said at peak the country produced over one million loaves a day but the
numbers have since dropped to 800 000 loaves a day last year due to high cost of production.


This year, the numbers have further dropped to 400 000 loaves a day.
Bakers say, the agreed price which is likely to be announced soon is going to
be around US$0.90 of the parallel rate market which is at around US$1:45.
If that is going to be approved, a loaf of bread is likely going to cost at around ZWL$40.50 per loaf.


Analysts believe the imminent price increase of bread will push up price of
other basic commodities as bread has an effect to other commodities.
Zimbabwe requires between 350 000 tonnes and 400 000 tonnes of wheat
yearly for consumption.


Last year, the country managed to produce less than 100 000 tonnes of
wheat, leaving the monetary authorities to import over 250 000 tonnes of wheat.


However, it is often argued that even if local farmers produce the national
requirement, the quality of wheat is not good enough for a standard loaf. This, players say, means locally produced wheat will be blended with imported one.


Local wheat is also mainly for selfraising and biscuit making due to warmer
climatic conditions.


Meanwhile, Confederation of Zimbabwe Retailers Denford Mutashu
said government needs to action the resolutions of last week’s moratorium
meetings to find the long lasting solutions.


“As long as there is short supply on the manufacturers’ side the reverting back of prices to March 25 will be a toll order.


Currently we have the NBAZ letter which is hinting on hiking bread price in
the next few weeks and if that happens the returning to March 25 prices will be a mammoth task as most consumers will follow the bread price increase,” Mutashusaid.


Reserve Bank of Zimbabwe said it is providing foreign currency to some
manufacturers despite a shortage in basic commodities supply.

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