HARARE – The percentage at which bakers will reduce the price of bread in line with the agreement between the National Bakers Association of Zimbabwe and the Reserve Bank is dependent on how other cost drivers will remain constant.
NBAZ president, Denis Wallah, said this in an interview with Business Weekly on Wednesday. The Reserve Bank of Zimbabwe (RBZ) this week advised the public that it held a consultative meeting with the NBAZ last Friday and deliberated on the cost build-up in the bread value chain.
“Taking into account the submissions by the bakers’ association and the need to stabilise the price of bread, the bank agreed with the bakers’ association that its members would access their full requirements of foreign exchange through the weekly foreign exchange auctions for importation of inputs and procurement of fuel for the distribution of bread across the country.
“In view of the positive engagement with the bakers’ association, it is expected that members of the bakers’ association will review the price of bread downwards,” RBZ said in a statement.
“Going forward, the price of bread will be adjusted on account of economic fundamentals that include global price trends of inputs and the movement of the foreign currency exchange rate.”
At this week’s auction, the Zimbabwe dollar traded at 346,78 against the United States dollar.
At the beginning of this month, the retail price of bread increased to an average of $650, a standard loaf from about $370 in April and NBAZ attributed the upward price review to cost drivers such as fuel and bread flour.
In a telephone interview on Wednesday, Wallah said; “Definitely discussions have been ongoing with RBZ and in the statement the monetary authority highlighted the terms and conditions that came out of our engagement. We’re going to see some movement in the price of bread going down.
“In terms of the quantum at which the price will go down, we cannot say the price will go down by such a figure because we are fighting a moving target in the sense that there are other cost drivers that we are not guaranteed will remain constant. But certainly starting tomorrow (yesterday) consumers should see the reduction.”
The price of fuel and wheat, which is used to produce bread flour has largely been driven by the Russia-Ukraine war.
This is against the background that the two warring Eastern Europe countries account for about 70 percent of the global fuel supplies.
While Wallah would not be drawn into disclosing the bakers’ congregated forex requirements per month, he said the association’s members require forex to import raw materials such as baking fat and enzymes.
These are largely being imported from neighbouring South Africa.
“In terms of what our forex requirements are over a given period of time, for example a month, that is dependent on what we need to import. Our members require forex to import mostly baking fat and enzymes and these are imported from South Africa,” said Wallah. Meanwhile, Zimbabwe’s attendant inflation has in recent months been rising sharply on the back of the Russia-Ukraine war which has resulted in wheat prices trading near record highs.
The country’s annual rate of inflation last month was at 131,7 percent from the April rate of 96,4 percent.
Globally, because most of the grain, cereals, and fuel come the two warring nations, the prices are skyrocketing on the back of supply shortage fears.
In terms of wheat, Russia and Ukraine supply more than a third of global wheat exports.
At the moment, Zimbabwe, which requires about 350 000 tonnes of wheat annually imports the cereal due to low yield the country experienced in the last cropping season.
This winter season, the Government now targets 80 000 hectares under winter wheat having revised the target from an initial of 75 000.
As of last Thursday, the farmers across the country had planted 69 000ha. – Business Weekly