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Bread Price Expected To Go Down As Mangudya Engages Bakers

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The Reserve Bank of Zimbabwe (RBZ) Governor Dr John Panonetsa Mangudya has met with the National Bakers Association of Zimbabwe (NBAZ) in an engagement expected to see the price of bread come down as the association accesses foreign currency from the weekly Forex Auction.

 

Prior to this meeting the baker’s felt justified to increase the price of bread as the faced challenges in accessing foreign currency required to buy necessary ingredients in producing bread.These challenges are now expected to be a thing of the past following Mangudya’s promise during the engagement to supply the baker’s with the foreign currency from the weekly forex auction.

In a press statement dated today 20 June 2022 and signed by Governor Mangudya released moments ago, Dr Mangudya said, “The Reserve Bank of Zimbabwe (The Bank) wishes to advice the public that it held a consultative meeting with the National Bakers Association of Zimbabwe (the Baker’s Association) on 17 June 2022 and deliberated on the cost build up in the bread value chain.”


This comes in handy for the ordinary person in the streets considering the price of bread recently soured and the Governor’s engagement has stopped bakers from raising the price of regular bread after assuring them that the foreign currency auction will give them the foreign currency it requires each week.

Governor Mangudya in the statement went on to say, “Taking into account the submissions by the Baker’s Association and the need to stabilize the price of bread, the Bank agreed with the Baker’s 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.”

The authorities believe that the current price already reflects the cost of production.The bread makers want the price to be pegged downwards in light of the market forces at play as determined by the weekly official exchange rate of the Zimbabwe Dollar versus the United States Dollar $.

The Governor of the Reserve Bank of Zimbabwe , added that,

“In view of the positive engagement with the Baker’s Association, it is expected that members of the Baker’s Association will review the price of bread downwards. Going foward 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.”

From the statement critics may argue that it is clear the Governor may have taken into account that even before the auction system was launched on June 23, 2020, the bakers set the price of bread at $ 1 based on illegal exchange rates back then and therefore by accessing from the forex auction this time around there will be no need for bread to be that similar price but far way less.

Such a response after an engagement is most welcome to the bakers’ position.Grain Millers Association of Zimbabwe (GMAZ) will see the writing on the wall that this engagement will only expect a decrease in bread prices and any increase would not be considered.


The National Bakers Association of Zimbabwe, includes Bakers Inn, Lobels Bread and Proton, as well as millers such as National Foods, Blue Ribbon Foods and Edurate Milling.


Through this engagement, bakers and millers have been reassured that they will be prioritized for foreign currency allocation during the weekly foreign exchange auction.


Bakers therefore have no reason to justify raising the price of bread, as the souring price of bread was based on a speculative black market rate which is no longer determining price when NBAZ accesses foreign currency from the official forex auction.


We expect bread prices to fall as bakers are now accessing forex at auction at a much lower price of Zim Dollars versus the US Dollar.


This means the NBAZ has been insured at least an ample amount a week from the forex auction. Millers and bakers need a total of 12 million US dollars per month to produce flour and bread, respectively.


The two sectors had problems raising foreign currency to import wheat and other ingredients for bread production.Millers would argue that bread flour price was no longer viable and baker’s would carry the expense to their production and final price of bread. But now this engagement with NBAZ means the price of bread will be reviewed downwards because, on account of Economic fundamentals that include global price trends, of inputs and the movement of the foreign currency exchange rate according to Governor Mangudya’s take.

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