by Grace Chekai
The National Bakers Association of Zimbabwe (NBAZ) has justified the recent upward review in the price of bread saying the economic environment which they are operating has left them with no option but to increase the price of bread.
A source within the NBAZ revealed to this publication that the recent hike was triggered by several factors, among them an increase in the price of flour which was announced by millers on 20 May 2020. The new flour price is ZWL$ 28 513.70 up from an average of ZWL$ 25 480.50 per tonne.
The source added that the increase in the price of sugar from ZWL$ 28 000 per tonne to ZWL$57 000 per tonne, and the movement in exchange rates also contributed to the upward review in the price increase of bread.
“Grain Marketing Board (GMB), being the major local wheat supplier to the milling industry, contributes significantly to what happens within the wheat to bread value chain. It should be recalled that in April 2020, the GMB increased the producer price of wheat from ZWL$8 613 to ZWL$11 786, 44. In accordance with the subsidy policy in place, the new producer price automatically became the selling price to millers,” said the source.
Same source said millers who were importing their own wheat were pegging a tonne of flour at US$580 on average. He said these millers used the prevailing parallel market rate to calculate prices in local currency. The source noted that these developments plus an increase in overheads also contributed to the increase in the price of bread.
He said that, based on the movement in prices in the bread value chain, the wholesale price of bread should be between ZWL $33. 00 to ZWL$ 33. 50 and retail price should be between ZWL$ 37 and ZWL$ 37.50.
The source also noted that the decision by Government to suspend duty on flour imports for the period 22 November 2019 to 21 May 2020 which has since been extended to 22 November 2020, through Statutory Instrument (S.I) 247/2019 had resulted in the stabilisation of the supply of flour.
He added that the decision addressed the issue of flour shortage.
On 20 May 2020, according to source, NABZ wrote to the Ministry of Finance and Economic Development recommending the suspension period of duty on flour imports to be extended further by 18 months subject to periodic reviews.
He said NABZ argued that the country did not produce enough wheat to meet local consumption. On 26 May 2020, the Ministry of Finance and Economic Development gazetted the extension of duty suspension for a period of another six months ending 22 November 2020.
Bakers had earlier on given a notice of intention to increase the price of bread to a maximum price of ZWL$ 34 but were discouraged to do so in the spirit of price moratorium and the Bakers also considered the depressed demand of bread which forced them to suspend their price adjustment. However, they are now lamenting that they can no longer absorb the cost pressures, hence they had to increase the bread price.
Nevertheless, Government is making efforts to cushion consumers from these escalating prices of basic food items. President Emmerson Mnangagwa met with the Minister of Finance and Economic Development Mthuli Ncube on Wednesday and deliberated upon the prices of basics which are supposed to be affordable and within the reach of many.
