Biti says NO to bread price hike

HARARE - Finance minister Tendai Biti has warned bakers against effecting a unilateral bread price increase saying the move is unjustified and will not be allowed by central government.

Bakers have threatened to increase the price of bread to $1,20 per loaf from the current $1 citing a 20 percent increase of duty on flour imports.

The National Bakers Association of Zimbabwe (NBAZ) demanded an immediate downward review of import duty on flour.

But speaking to journalists at his offices yesterday, Biti said it is unfortunate that while inflation has been tumbling since the beginning of the year, some unscrupulous bakers are now threatening to increase prices, posing a threat to inflation targets.

For the month ending July, inflation stood at 3,94 percent.

“The statement by the Bakers Association of Zimbabwe was very misleading,” Biti said.

“There is no duty on the importation of wheat. And wheat is imported by millers who then sell to bakeries. The association is trying to push us into liberalising the importation of flour but if we do that we are now damaging the local milling industry which is the manufacturing sector.”

He added: “There is no duty at all on wheat but a small duty on flour to protect the local milling industry. It is irresponsible to insinuate an increase in the price of bread when the price of wheat and the duty of wheat is non-existent and has not been increased.”

Biti said bakers are trying to bully the government into scraping duty on a processed product, flour.

“What they are trying to argue is that give us the licence of importing flour and not wheat,” the minister said.

“But that will be unfortunate because we will be damaging the local industry. There is nothing that justifies an increase on the price of bread and we will not allow that situation. The fact of the matter is, there is no duty (on wheat).”

TheFinance minister also dismissed claims by bakers that the 40 cents hike in fuel price was having a domino effect on the price of bread.

“The issue of fuel is not a basis for increasing the price of bread. You are all aware of the use of electricity in bakeries to process bread,” Biti said.

“On the issue of deliveries, the international price of hydro-carbons has been coming down.”

Biti said government will “not allow an appetite amongst small sections of business of trying to push inflation”.

Meanwhile, the Grain Millers Association of Zimbabwe (GMAZ) warned against the hike in bread price, saying the price surge of wheat on the world market and the imposition of 20 percent duty on flour imports does not warrant any increase of bread in Zimbabwe.

GMAZ chairperson Tafadzwa Musarara said from the flour perspective, there was no need for bread price increases.

“It is unfortunate that bakers have increased bread prices blaming it on wheat,” Musarara said.

“It is not in our power to increase or not to increase the bread prices because we are not bread marketers. But from where we stand, bread price increases are not justified. In terms of the main input flour which constitutes 35 to 40 percent of the raw material that makes bread, we have done our part,” he said.

Musarara said in a bid to avoid the increase of bread price, GMAZ resolved to absorb eight percent and passed on only five percent increase to the price of flour.

Thus the price of flour only increased from $34 to $36 per 50kg bag.

“This means that out of 102 loaves of bread produced from a 50kg bag of flour, the price increase is only $0,019 per loaf. We believe that between the bakers and the retailers $0,019 per loaf can be absorbed.

“Our fear is that our colleagues in the baking industry might want to come up with price increases to fight the 20 percent duty imposition by the Finance minister. We also want to be mindful that the concerns in one sector must be aligned to concerns of all key stakeholders within the grain ecosystem. The grain ecosystem includes farmers, grain-millers, livestock feeders, bakers and consumers,” said Musarara.

In his Mid-term Fiscal Policy review, Finance minister Tendai Biti increased flour import duty from 5 percent to 20 percent saying the move is meant to protect the local milling industry and at the same time encouraging the local beneficiation of wheat.

“The continued importation of flour inhibits growth of the local milling, agro-processing, packaging and transport industries, as well as revival of the national herd, since the by-products of wheat milling are currently inadequate to meet requirements for stock feed,” the minister said.

Musarara said GMAZ had earlier committed to the baking industry through NBAZ that the price of bakers’ flour will stay at $34 per 50kg all variables being constant.

“The GAMZ has kept its commitment on the stabilisation of prices of maize meal, rice and other staple foods. This can be vouched by the monthly bulletins published by the Central Statistical Office,” he said.
 (additional reporting by John Kachembere)

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