HomeBusiness Digest90% bakeries close down

90% bakeries close down

Paul Nyakazeya

ABOUT 90% of the country’s bakeries have closed shop since the beginning of the year after they failed to get consistent fuel and wheat supplies fro

m government, the National Bakers Association (NBA) has said.

Speaking to businessdigest yesterday, NBA chairman Vincent Mangoma said 90% of the bakeries have shutdown and they were likely to remain closed until government announces a new price that would make the baking business viable.

“About 90% of the bakery industry has closed down according to the calculations done by the bakers association,” Mangoma said.

“The majority of the bakeries are not getting flour. Most of the small to medium bakeries have not been receiving enough fuel from Noczim as was the case with big bakeries,” said Mangoma.

Mangoma said most bakeries were buying wheat at $1 billion per tonne instead of the gazetted $100 million. The bakeries are also buying fuel on the parallel market.

“The cost of producing one loaf of bread is between $400 000 and $500 000 and if bakeries are not obtaining inputs from the official market they will not survive as the end product is controlled,” Mangoma said.

Government this week increased the retail price of bread from $100 000 to $200 000. The wholesale price has been pegged at $185 000.

Bakers this week said their inputs were rising weekly and the Ministry of Industry and International Trade was pretending as if nothing was happening.

Mangoma last month wrote to the National Incomes and Pricing Commission proposing that the viable standard price of a loaf of bread should be $400 000.

He submitted that the ultimate remedy to the bread shortage was to peg the price of bread in Zimbabwe at regional levels tracking the price of the United States dollar.

The baking industry did not, however, specify the rate at which the greenback should be pegged, but considering the static nature of the official rate and its fluctuating rate on the parallel market, they were said to be looking at the latter.

The NBA submitted that the general price of bread was US$1 per loaf and urged the government to take a leaf from the regional pricing model for the commodity.

The National Incomes and Pricing Commission which they were scheduled to meet yesterday is on record as saying it does not recognise the parallel market, and has ordered companies to submit import invoices to the commission from which it would convert the foreign currency component to the local currency using the official rate.

Major bakeries have scaled down operations drastically citing viability problems, and calling for an expeditious determination of the price review application.

Bread is available on the parallel market where a loaf is going for $650 000.

The baking industry is also reeling from high labour and packaging costs.

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