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Zimbabwe: Bakers Seek Bread Price Review
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Financial Gazette (Harare)
16 May 2008
Posted to the web 16 May 2008
Harare
THE National Bakers Association (NBA) this week initiated fresh talks for a review of the price of bread by the National Incomes and Pricing Commission (NIPC), as prices soared across the board after the depreciation of the Zimbabwe dollar on the official market.
The new wave of price hikes increased pressure on the bread making industry, which has been grappling with losses due to price controls.
Sources indicated that the NBA, whose new executive is led by Harambe Holdings operations director Bramwell Bushu, was pressing for a review of the bread price from $66 million per loaf to $290 million.
They are citing the increase in the cost of wheat imports for the suggested price review. Import duty shot up significantly after the Zimbabwe dollar slid from $30 000 to the US dollar to around $200 million last week, following the floatation of the domestic currency under reforms meant to boost exports and revive faltering industries.
Although the Zimbabwe Revenue Authority used a lower exchange rate of $285 000 to the US dollar prior to the new exchange rate policy, it quickly abandoned its rate and followed the market rate as it sought to boost revenue inflows.
Should the NIPC fail to approve the suggested price, bakers are understood to be asking for the provision of wheat from the Grain Marketing Board at subsidised prices, but still would want the bread price reviewed to $105 million per loaf under this arrangement.
Still, the bakers are hoping for a two-tier pricing system that would allow bread made from imported flour to be priced higher than that made using local flour.
"Bread that is baked using the imported wheat will cost $290 million per loaf and bread that we bake using locally produced wheat will cost $105 million per loaf," a well-placed NBA source said.
"What it means therefore is that all the bread on the market will be sold at $290 million per loaf because the bulk of the bakers are importing wheat for baking," the source said.
Although the official price of bread is $66 million per loaf, the black market is, however, selling bread at up to $200 million..
Figures produced by the NBA last week indicate that out of the required 450 000 tonnes of wheat per year the baking industry required to produce at full throttle, they had only received 150 000 tonnes in 2007, leaving a deficit of 300 000 tonnes.
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Capacity utilisation in most bakeries has dropped to 10 percent or below, according to an NBA report.
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