THE National Bakers Association of Zimbabwe (NBAZ) has expressed concern over the removal of wheat from the open general import licence with effect from today, amid indications that local millers have already started hiking the price of flour taking advantage of the new measures.
In his 2017 National Budget statement presented in December, Finance Minister Patrick Chinamasa added wheat flour on the Statutory Instrument (SI) 64 of 2016 list so as to boost local production.
Millers had complained that the continued importation of flour by bakers, and other operational challenges, had seen the number of producers shrinking to 37 in 2016 from 368 in 2007.
But NBAZ president Mr Givemore Mesoemvura told The Sunday Mail Business last week that the baking industry, which is already reeling under operational challenges, would be adversely affected by Government’s protectionist intervention.
“In my opinion, 2017 would be the same as 2016 if not worse for the baking industry. Let’s look at, for example, flour imports; that will have negative effects on our operations.
“You look at it and say, ‘we are going back to 2008’ where the very same industries that are being protected by the 2017 Budget, got protection through the Reserve Bank (of Zimbabwe) through that policy of Foliwars (foreign currency licensed shops and warehouses) where we had to hunt for US dollars for them but selling our products in the Zim dollar,” said Mr Mesoemvura.
He said bakers lost a “lot of value” during that period and players fear that the new measures would “haunt our industry seriously”.
The baking industry, according to Mr Mesoemvura, lost 100 members last year alone and there are fears that the inclusion of wheat flour under SI64 would hurt bakers since locally produced wheat falls way below the national annual requirements of 420 000 metric tonnes.
Bakers argue that all Southern Africa Development Community (Sadc) member states are not producing sufficient wheat for themselves, and are relying on imports to cover the shortfall. Currently, Zambia and South Africa are importing wheat, just like Zimbabwe, because they are unable to produce adequate wheat for themselves.
“There is no one with sufficient wheat, we all import. And looking at the processes that wheat undergoes to become flour, none of the countries can meet any of those thresholds because we are looking at about 60 percent for you to be certified as the origin of Sadc.
“With wheat, it’s just milling and bagging, and already the other adverse effect is that from the day the (2017 National) Budget was announced, our local millers have upped their prices for flour from US$27 to around US$32 (per 50kg bag), taking advantage of this window that they have been given.
“So, it’s going to be a very tough year for our industry,” said Mr Mesoemvura.
The NBAZ argues that flour cannot be removed from the open licence since it is not a finished product for them, but a raw material that requires value addition.
SI64 seeks to restrict the importation of finished products into the country so as to reindustrialise the country.
Fears are that restricting the importation of flour would make the baking industry suffer in the value chain because there is no sufficient wheat being grown in Zimbabwe. About 60 000 tonnes of wheat are expected from the winter crop, which is way below the 420 000 metric tonnes required by the country annually to avoid bread shortages.
NBAZ had requested to import 25 percent of their total wheat requirements to ensure lower bread prices and good quality of products.
“But now with the upward movement of flour, which is about 90 percent of our raw materials, I don’t know for how long this can be contained.
“I mean, surely, if the prices of your raw materials rise, how do you continue producing at the same price?” said Mr Mesoemvura.
Quizzed if bread prices could be forced upwards by the rise in flour, Mr Mesoemvura said: “That is very obvious, as long as the price of our major ingredient has gone up, we have to pass it on somewhere if we are to survive”.
Grain Millers Association of Zimbabwe (GMAZ) national chairman Mr Tafadzwa Musarara could not be reached for comment last week.
Mr Musarara said he was attending a meeting and promised to return the call but didn’t. Attempts to call him later were fruitless as his mobile phone numbers were unreachable.
GMAZ has praised the decision by Government to restrict flour imports.
However, Confederation of Zimbabwe Industries (CZI) vice president Mr Sifelani Jabangwe said protectionist measures were critical in supporting the local industry. He said if local industries were capacitated, eventually there would be competition which will result in lower prices.
“What we have always advocated for is competition among local industries. You might have seen the competition in the local baking industry recently, which saw prices of bread coming down.
“We believe that with Blue Ribbon plants coming up soon, the market will achieve low prices.
“The competition has also spread to the dairy sector; there used to be one player, now there are many players and there is competition,” said Mr Jabangwe. – Sunday Mail