Bakers slash bread prices

via Bakers slash bread prices | The Herald March 19, 2015 by Happiness Zengeni and Tinashe Makichi

IN line with submissions from the Government and the Reserve Bank of Zimbabwe for the country to readjust its prices, bakers will, with effect from tomorrow, reduce the wholesale bread price from 90 cents to 85 cents.

This follows similar cuts in the prices of beer, soft drinks and mobile phone tariffs.

More recently, The Herald’s sister paper Kwayedza reduced the price of its tabloid to 50 cents from $1.

Government has been consistently urging businesses to cut commodity and service prices to enhance domestic economic competitiveness and curb pressure for increased wages.

RBZ Governor Dr John Mangudya recently said the country’s pricing model was uncompetitive and needs reviewing.

As such, the introduction of bond coins sought to curb abuse of the stronger US dollar in favour of the consumer and restore normalcy in pricing by providing change.

The Grain Millers of Zimbabwe, Bakers Association of Zimbabwe and retailers met last week and resolved that the rounding up of retail of prices of bread to $1 is no longer fair and necessary in light of the introduction of bond coins.

The three parties agreed that in light of the reduction of prices by bakers, retailers may apply mark ups of up to 10 percent on bread prices which will mean that prices of bread in supermarkets will range from 93 cents to 98 cents depending with the brand of bread.

Bakers Association of Zimbabwe president Mr Givemore Mesoemvura yesterday told the media that the price of bread is expected to go down in line with the RBZ directive on companies to stop rounding up prices at the expense of consumers.

“In order to obtain full appreciation and adopt the usage of the recently launched RBZ bond coins in the retail and distribution of bread we met as parties involved in the bread value chain and came up with the resolution that bread price on the bakers side should go down to about 85 cents and that price should then reflect on the shelves of retailers by way of different retail prices.

“We also agreed that millers shall relook at revising downwards the prices of wheat bread flour to bakers who in turn shall pass the price drop to the retailers for the benefit of consumers,” said Mr Mesoemvura.

Grain Millers Association of Zimbabwe president Mr Tafadzwa Musarara said the reduction of flour prices to the bakers should reflect in the whole value chain so that it benefits consumers who have been on the receiving end since dolarisation.

Mr Musarara said the reason why bread was selling at $1 was due to issues of change so the introduction of bond coins will add convenience to the market.

“Change is very critical and we hope that we are going to save an average of four cents per loaf. With one million loaves sold every day this will account for $40 000 and by the end of the year the country and the sector would have saved about $10 million.

“If the bond coins were rolled out in 2009 this economy could have saved about $50 million in change,” said Mr Musarara.

“The prices must reflect on the shelves and if a bakery reduces its price by one cent it should reflect on the shelves. At present the discounts that bakeries have been making have not been filtering to the consumers therefore we think this is a good start.”

The bakery industry is a critical part of the Zimbabwean economy, accounting for 2.5 percent of nominal gross domestic product. It directly employs 3 500 people.

In 2014, bread output grew by over 20 percent mainly driven by capacity revamping and expansion of local bakeries. Bakeries which ramped up capacity include Bakers Inn, which added two bread lines and Lobels.

Local millers supply over 80 percent of the flour requirements.

Buy Zimbabwe will next week host the second Baking Industry Stakeholders Conference at the Rainbow Towers Hotel. The Minister of Industry and Commerce Mike Bimha is expected to give the keynote address.