HomeBusiness DigestViability woes ground 20%

Viability woes ground 20%

Paul Nyakazeya

CLOSE to 20% of the country’s bakeries closed down during the first half of the year due to viability problems caused by escalating input costs,

gathered this week.

According to information gathered most bakeries failed to cope due to price controls on the retail price of bread.

“For the past three years bread has remained a controlled commodity, yet about 80% of the inputs used to make it are not controlled, except flour,” an industry player said.

National Bakers Association of Zimbabwe (NBAZ) vice-president Vincent Magoma refused to confirm the details but said the organisation had informed government about the number of bakeries that closed shop due to viability problems.

He referred all questions regarding the percentage of bakeries to his chairman Burombo Mudumo who could not be reached for comment.

Magoma said bread was not readily available in small towns due to the shortage of flour.

Businessdigest however has it on good authority that Victoria Bakeries, one of the biggest bread-makers in the country, had written to the NBAZ advising them that they were closing shop due to viability problems.

In January a loaf of bread cost $60 000 (old currency) before rising to $90 000 in March. The price rose to $150, $200 and $300 in June, July and September respectively.

However, bakers said they were always three months behind cost movements. The latest increase saw a number of senior officials being arrested for “unlawfully” increasing the price of bread.

In a letter to the Ministry of Industry and International Trade, the Bakers Association of Zimbabwe (BAZ), through its chairman, Mudumo, proposed a monthly price review for bread to keep abreast with inflation, currently at 1 023,3% for September. The association said a monthly review of bread prices would enable bakeries to “just break even” and remain in business. The BAZ argued that bread was the only product whose price had not been adjusted for the past three months, until the last review last week, which is not commensurate with production costs.

“We met ministry officials explaining our predicament and the estimated number of people who lost their jobs last year. They (ministry) said they will treat our dilemma with the urgency it deserves,” a senior executive with a confectionary company said.

The operations of bakeries are likely to come under renewed pressure from a reported reduction in the supply of wheat by the Grain Marketing Board.

The country’s three largest millers — National Foods, Blue Ribbon and Victoria Foods — are said to be operating below capacity due to erratic wheat supplies from the Grain Marketing Board which enjoys a legislated monopoly in the buying and selling of wheat in the country.

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