Bakers cry foul over 19% hike in wheat prices

PLAYERS in the baking industry are crying foul over the increase of prices of flour by 19% in the last quarter of the year, saying the move was likely to have devastating effects on the sector.

BY MTHANDAZO NYONI

National Bakers’ Association of Zimbabwe president, Givemore Mesoemvura told NewsDay in an interview that the industry was operating under immense pressure due to a number of issues, chief among them the increase in the price of flour and cash shortages.

“The operating environment is worse off, especially for the small to medium operators. The cash shortages have had a very negative impact on our businesses,” he said.

“Competition has intensified as can be seen through promotions and advertising, which have taken root in the industry. The last quarter, we have seen prices of flour increasing from $27 to $32 for 50kg bag.”

The industry accused millers of hiking prices of flour following the introduction of Statutory Instrument (SI) 64 of 2016, which restricted imports in July by removing some products from the open general import licence, as they have local equivalents.

Flour is the main ingredient in the production of bread and any price increase might force bakers to increase the price of bread to leverage costs.

Mesoemvura said they were not expecting extraordinary demand for their products in the coming year, unless “if there is improved supply of money”.

In his 2017 National Budget statement last week, Finance minister Patrick Chinamasa removed the importation of wheat from the open general import licence to boost local production on the back of a declining milling
industry.

Chinamasa argued that the number of wheat producers had shrunk to 37 in 2016 from 368 in 2007 due to competition from wheat flour imported from the region under bilateral trade arrangements.

Mesoemvura said current production was around 900 000 loaves per day against the installed capacity of 1,8 million loaves.

He said the industry would be able meet bread demand during the festive season.

The bakery industry employs about 3 500 people and has shown downstream value chain effects that accrue to farmers, yeast and fat producers, millers and the government through fiscal revenues.

The country currently has more than 257 operational bakeries, with Lobels and Bakers’ Inn the biggest.