Conrad Mwanawashe Business Reporter
BAKERS have hinted on an increase in the price of bread and other flour products following a rise in the prices of bread flour of between 10-25 percent as a result of nostro liquidity challenges.
The nostro liquidity challenges have caused banks to sell euros, British pounds and South African rands to pay United States dollar invoices resulting in exchange losses and high service fees totalling 12 percent.
This has forced the National Bakers Association of Zimbabwe and the Grain Millers Association of Zimbabwe to request an urgent meeting with the Reserve Bank of Zimbabwe to find a solution to the challenges.
“The National Bakers Association of Zimbabwe in liaison with the Grain Millers Association of Zimbabwe is hereby requesting a meeting with you at the earliest possible time to discuss issues that came out of a joint meeting held on Tuesday April 19 2017,” the associations said in a letter to the RBZ governor Dr John Mangudya seen by The Herald Business last Friday.
“The other foreign-sourced bread ingredients are in the same predicament. However, flour remains the biggest raw material in bread and confectionery production. Bakers are squeezed and a bread price increase is now inevitable,” NBAZ and GMAZ said in the letter.
In order to continue to sustain the current bread prices and create their stabilisation in the short to medium term, NBAZ and GMAZ proposed that the central bank avails $43,25 million to settle all outstanding wheat invoices. The local funding is available to pay for the nostro currency. The associations said this will stop finance costs to accrue.
Furthermore, the NBAZ and GMAZ proposed that the Reserve Bank provides $16 million every month for wheat and bread ingredients importation, including logistical costs from now up to October 2017.
Finance and Economic Development Minister Patrick Chinamasa in the 2017 Budget proposed that wheat flour be removed from the Open General Import Licence.