Govt blocks illegal bread price hike
Nyemudzai Kakore and Davison Kaiyo
GOVERNMENT yesterday ordered bakeries to revert to the old price of $1,10 for a loaf of bread after they sought to unilaterally increased it to $2,20 with effect from today. Industry and Commerce Minister Mangaliso Ndlovu yesterday confirmed the attempt by bakeries to increase the price of bread.
The bakers, the minister said, had not followed due process after he was only notified of the increase after they had already sent out memos on the increases to retailers.
“The bakeries called me during the day today (yesterday) to advise me of the development. I told them to hold on until we meet on Monday, that is my position. I want to believe they will adhere to the position l communicated to them,” he said.
“I do not know how they are going to proceed.”
Social media was awash with a memo from Lobels regional sales manager Mr Zenzo Malunga to OK Zimbabwe operations manager-bakeries advising him of the increase in the wholesale price of a loaf to $2 and of the retail price to $2,20.
Mr Malunga said the price increase had been necessitated by rising inputs costs.
“Please be advised that the price of Lobels bread is going up with effect from 27th October 2018. This has been necessitated by the constant rise in inputs costs. May you please effect the necessary adjustments within your stores. Your usual cooperation will be greatly appreciated,” read the memo.
National Bakers Association of Zimbabwe president Mr Ngoni Mazango refused to comment on the issue.
He, however, told our sister paper The Sunday Mail recently that a hike in bread prices was imminent.
“As an industry, we have a challenge of foreign currency like other industries as well. We are not getting enough (foreign currency) allocations from the Reserve Bank,” he said.
“As a result, the cost of raw materials has gone up. People are asking in either US dollars or some are multiplying using current exchange rates, which have shot up. That poses serious viability challenges to the industry. The price of flour might have moved slightly from about $31,50 to around $36,50 per 50kg bag, but bread is not made by flour alone. We do not manufacture bread fat here in Zimbabwe. There are also enzymes, spare parts for our plants and even for service vehicles, which are also imported or bought with foreign currency.
“We require between US$4 million and US$7 million each month and we are getting 20 to 30 percent of that. We are still consulting (on the price of bread), the problem is we have to cost our bread in US dollars and it is costing us in the range of US$1 to US$1, 10 (to produce a loaf).
“If we don’t get the forex and you apply the current prevailing parallel market rates, a loaf should be around $4 to $5. But we are saying if the Government can allocate the same money to us the price should come down.”
President Mnangagwa on Thursday said Government will not allow business to unjustifiably increase prices, neither will it tolerate saboteurs manipulating the market to create artificial shortages of goods.
Addressing the Zanu-PF Central Committee at the party headquarters in Harare, the President said he was alive to the machinations of detractors.
The increase in bread price comes after most basic commodities have started appearing in the supermarkets after Government on Monday amended indefinitely Statutory Instrument (SI) 122 of 2017 to allow companies and individuals with offshore and free funds to import specified basic commodities that are in short supply due to the speculative behaviour of local retailers and panic-buying by consumers.