Prices zoom out of control

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HARARE – The price of cooking oil has shot up by more than 20 percent, adding to the cost-push inflationary pressures triggered by the recent wave of price adjustments.

A survey by the Daily News showed that the standard price of a two-litre cooking oil bottle has gone up from about $2,75 last month to between $3,50 and $4, which is an increase of over 20 percent.

Denford Mutashu, president of the Confederation of Zimbabwe Retailers, confirmed the price increase, saying it was a result of failure by oil processors to meet demand.

“Some oil processors are now demanding hard cash, which a retailer or wholesaler may not have — forcing them to buy from (the) parallel market as one cannot afford not to have stocks such as basics as they drive customer traffic,” he said, referring to rates on the black market, which are now hovering above 100 percent to the United States dollar.

“We remain optimistic as importation of soya beans, just like wheat and fuel, remains top on the priority list at the Reserve Bank of Zimbabwe. It is strategic though that we begin to support soya bean farming in the country as a long-term solution to the current cooking oil challenges,” added Mutashu.

The chief executive officer of United Refineries Limited (URL) — a major producer of cooking oil — also confirmed this development.

Busisa Moyo, the top dog at URL, said oil producers were struggling to supply them with soya due to constraints in the supply chain, compounded by the acute foreign currency shortages.

URL has since launched a soya bean out growers’ alliance scheme to deal with the current shortages of soya. Through the alliance, URL is giving farmers with at least 10 hectares of land guaranteed uptake of their produce as well as assisting them to access finance from banks.

URL requires 72 000 metric tonnes (MT) of soya at its plant, while the whole industry needs 400 000 MT annually — based on installed capacity.

“Soya requires training and irrigation. There is also a low awareness that the Grain Marketing Board is buying at $780 which is to incentivise farmers,” said Moyo. “On refining and soap, we hover at between 40 to 60 percent depending on currency allocations. On crushing we are below 10 percent due to low soya production. This puts pressure on currency”.

The increase in the price of cooking oil comes as the cost of bread has also gone up by 10 percent due to an increase in the price of wheat — a key raw material in the manufacture of bread.

Figures obtained from the Grain Millers Association of Zimbabwe recently indicate that the price of wheat has in the past 90 days increased by about 10 percent from $375 per metric tonne to $415.

As such, the cost of production in the manufacture of bread has also gone up, resulting in bakers passing on the increase to the consumer.

This week, the price of fuel also increased marginally as the local market reacts to global developments.

A survey by the Daily News showed that service stations in Harare have adjusted their prices by at least two cents per litre, which is quite something in a United States dollar economy.

Petrol, which was retailing at $1, 38 is now going for between $1, 39 to $1, 40 per litre, while diesel is fetching $1, 31 from $1, 29.

Energy and Power Development minister Joram Gumbo told the Daily News that the local pricing of fuel was determined by international trends.

“As you know, fuel prices internationally have gone up,” he said.

“The price of fuel, however, is inspected by the Zimbabwe Energy Regulatory Authority (Zera). They have certain charts that they use to deal with the fluctuations of fuel prices in terms of the exchange rate. So, the fuel price in service stations is always within the stipulated rate, they can’t sell using prices outside those set by Zera,” he added.