News / National
Mnangagwa takes on bread cartels
05 May 2019 at 04:51hrs | Views
THE Government has moved to break the monopoly in the bread industry through resuscitation of indigenous bakeries that used to operate in various communities, a Cabinet Minister said.
In his independence speech, President Mnangagwa said the Government was committed to address price distortions in all sectors of the economy.
He said one of the ways of doing so was opening of small-scale bakeries. Such bakeries will service their localities resulting in low costs of transport, among others, to ensure that the price of bread is affordable.
In an interview, Industry and Commerce Minister, Nqobizitha Mangaliso Ndlovu said the Government was interrogating factors that led to the closure of some small-scale bakeries.
He said the resuscitation of small-scale bakeries could break the monopoly which has seen a few players dominating the bread industry leading to the exploitation of consumers.
"We had bakeries that were preferred in our local communities. When they closed I don't believe there was an effort or study to understand why they had to close because their closure did not translate to shortage of bread. People did not put effort, those were our indigenous businesses closing and why was it so? That was the beginning of the genesis of cartels and monopolies, where a big guy controls the supply of flour to you a competitor and they determine the price they sell to you and the quantities. And if you are to become a big competitor, you would face shortages," said Ndlovu.
He said the monopolies were dictating the bread price and this was seen when they arbitrarily increased its price to $3,50 from $2 per loaf .
Ndlovu said it was not true that the main bread sellers were the only ones producing quality bread, as it has been evident that other bakeries could produce a competitive loaf of bread which is selling at a lower price especially in supermarkets.
"Even us as Government, we had to wake up at this point where we realised that two big guys can decide to make such a big move on the bread industry. No doubt such big institutions create employment, but they have grown organically over time in ways that constrain competition. And that is what we are worried about. It's not easy to say let's deal with them unless to say let's increase competition.
"We are being made to believe that we need the Baker's Inn, Lobels and Proton kind of standard of bread, but I know when you go to TM Pick and Pay, Choppies supermarkets, their bread is selling more than others. Why is that so? You'll find out most of those bakeries are using mostly local inputs, but these big guys will tell you about their quality, but when people are given forex to import raw inputs anything can happen."
He said to break the monopoly the Government will give Grain Marketing Board the mandate of importing and selling wheat in the country.
Ndlovu said the Ministry of Women Affairs, Community, Small and Medium Enterprises Development has been tasked to identify bakeries that would be resuscitated.
He said the re-opening of the community bakeries would create employment and was one of the low hanging fruits in devolution of power implementation.
"Our programme now is to identify those bakeries, look at their needs, what they require to come back to life and we see as Government how to support them mostly through the Ministry of SMEs, but we have resolved that let us bring them back. If you have a bakery in Binga why would your bread come from Harare?" asked Ndlovu.
Super Fresh Bakery proprietor Mr Sinothi Nsingo who owns a small bakery in Bulawayo said Government's move to open small bakeries was welcome. He said the monopoly in the bakery industry has frustrated most small bakeries out of business.
"It's difficult to access flour due to the muscle of these bigger bakeries. They decide the quantities of flour one gets as well as the prices which has pushed so many small bakeries out of business. We can provide quality bread and our clients can attest to it.
"At the moment we are selling bread at $2,50 because we have cut transportation costs as our bread is sold locally. We also appeal that in the spirit of devolution Government injects funds to local bakery owners whose shops shut. Community bakeries should be community bakeries in letter and spirit. We don't expect foreign persons to be running bakeries yet Government would have funded the process."
In his independence speech, President Mnangagwa said the Government was committed to address price distortions in all sectors of the economy.
He said one of the ways of doing so was opening of small-scale bakeries. Such bakeries will service their localities resulting in low costs of transport, among others, to ensure that the price of bread is affordable.
In an interview, Industry and Commerce Minister, Nqobizitha Mangaliso Ndlovu said the Government was interrogating factors that led to the closure of some small-scale bakeries.
He said the resuscitation of small-scale bakeries could break the monopoly which has seen a few players dominating the bread industry leading to the exploitation of consumers.
"We had bakeries that were preferred in our local communities. When they closed I don't believe there was an effort or study to understand why they had to close because their closure did not translate to shortage of bread. People did not put effort, those were our indigenous businesses closing and why was it so? That was the beginning of the genesis of cartels and monopolies, where a big guy controls the supply of flour to you a competitor and they determine the price they sell to you and the quantities. And if you are to become a big competitor, you would face shortages," said Ndlovu.
He said the monopolies were dictating the bread price and this was seen when they arbitrarily increased its price to $3,50 from $2 per loaf .
Ndlovu said it was not true that the main bread sellers were the only ones producing quality bread, as it has been evident that other bakeries could produce a competitive loaf of bread which is selling at a lower price especially in supermarkets.
"Even us as Government, we had to wake up at this point where we realised that two big guys can decide to make such a big move on the bread industry. No doubt such big institutions create employment, but they have grown organically over time in ways that constrain competition. And that is what we are worried about. It's not easy to say let's deal with them unless to say let's increase competition.
"We are being made to believe that we need the Baker's Inn, Lobels and Proton kind of standard of bread, but I know when you go to TM Pick and Pay, Choppies supermarkets, their bread is selling more than others. Why is that so? You'll find out most of those bakeries are using mostly local inputs, but these big guys will tell you about their quality, but when people are given forex to import raw inputs anything can happen."
He said to break the monopoly the Government will give Grain Marketing Board the mandate of importing and selling wheat in the country.
Ndlovu said the Ministry of Women Affairs, Community, Small and Medium Enterprises Development has been tasked to identify bakeries that would be resuscitated.
He said the re-opening of the community bakeries would create employment and was one of the low hanging fruits in devolution of power implementation.
"Our programme now is to identify those bakeries, look at their needs, what they require to come back to life and we see as Government how to support them mostly through the Ministry of SMEs, but we have resolved that let us bring them back. If you have a bakery in Binga why would your bread come from Harare?" asked Ndlovu.
Super Fresh Bakery proprietor Mr Sinothi Nsingo who owns a small bakery in Bulawayo said Government's move to open small bakeries was welcome. He said the monopoly in the bakery industry has frustrated most small bakeries out of business.
"It's difficult to access flour due to the muscle of these bigger bakeries. They decide the quantities of flour one gets as well as the prices which has pushed so many small bakeries out of business. We can provide quality bread and our clients can attest to it.
"At the moment we are selling bread at $2,50 because we have cut transportation costs as our bread is sold locally. We also appeal that in the spirit of devolution Government injects funds to local bakery owners whose shops shut. Community bakeries should be community bakeries in letter and spirit. We don't expect foreign persons to be running bakeries yet Government would have funded the process."
Source - sundaynews
