HomeBusiness DigestZim has one month's wheat supply left

Zim has one month’s wheat supply left

Eric Chiriga

ZIMBABWE is left with one month’s supply of wheat, the National Bakers’ Association (NBA) has said.

David Govere, an executive member

of the NBA, said at the rate of consumption, Grain Marketing Board (GMB) wheat stocks will last up to the first week of September.

Govere is also an executive member of the Zimbabwe National Chamber of Commerce.

The new harvest of wheat is expected at the end of October, meaning two months of extreme bread shortages.

“The Reserve Bank of Zimbabwe has failed to avail currency for the wheat in bond (CMA wheat) for the last six months, worsening the flour and bread shortages further,” Govere said.

Besides the short supply of grain, Govere said fuel shortages were adversely affecting the baking industry.

“The industry is further threatened by the shortage of diesel needed to fire the baking ovens as well as for the distribution trucks.”

He said the National Oil Company of Zimbabwe was only able to supply a third of industry requirements, leaving bakeries with no option but to buy from the black market.

Govere said the industry was also threatened by the government’s opposition to viable prices.

He said they had been in negotiations with the government for the past four months but nothing had materialised.

The baking industry and the government’s costing models established that at a 20% return, bakers would have to wholesale the bread at $11 000 and retail at about $12 000.

Government has been subsidising wheat purchases by buying wheat at $2 million per tonne and selling it to the milling industry at $900 000 per tonne and the flour is then sold to bakers at about $3,6 million per tonne.

However, the positive contribution of the subsidy to the cost of bread has dropped from 60% to 22% because the ingredients, for instance yeast, packaging, additives, fuel and spare parts, have risen at an alarming rate.

“Two weeks ago both government and the baking industry agreed that if a standard loaf was to be produced using GMB supplied wheat, the bare cost would be $7 500,” Govere said.

In order to cushion the consumer, both parties then agreed to wholesale the bread at $8 000 per loaf and retail it for $8 500.

“Both parties established that it was impossible to produce a standard loaf at $4 200.”

Govere said because of delays in getting profitable prices several baking companies, for example Continental, Koullas and N&B, had either collapsed or sold their assets.

“All industry players submitted that they had tried all tricks to help the business to keep afloat but they had now reached a level where nothing except a reasonable price increase coupled with good flour and fuel supplies can save the baking industry in Zimbabwe,” Govere said.

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