Recently we saw an internal communication from Lobels in which they informed all their stakeholders that they would be raising the wholesale price of bread to around $310 ZWL. The recommended retail price for bread (RRP) was set at around the $340 ZWL mark but expect to be paying about $350 ZWL for the Lobels loaf soon in most shops. This comes barely a week after most shops started charging around $320 per loaf of bread and the Grain Millers Association of Zimbabwe raised the prices of various grains.
The various hikes have been blamed on the war in Ukraine but other factors besides this are also in play besides. First Zimbabwe gets a lot of its wheat imports, as much as 50% by some estimation, from Ukraine and Russia. This means that thanks to the warring countries it has become harder to get wheat into the country. The country has had to look for alternatives but every country out there is also looking for alternatives. This means that demand for wheat has gone up in the face of fixed supply raising the prices which bakers, unfortunately, have to pass on to customers.
Then there are also indirect effects of the war. Chief among these is the issue of fuel prices. The government under the Zimbabwe Energy Regulatory Authority (ZERA) announced steep fuel prices in March in response to the same war. The government refused to scrap fuel duty which constitutes a big percentage of the ultimate fuel cost. We warned that there would be severe shocks due to these sudden and steep fuel price hikes. Now the chickens are coming to roost as the fuel whiplash is now wreaking havoc in the retail and manufacturing sectors of the economy.
This will get worse
When it comes to strategic planning the Zimbabwean government tends to be all talk and incompetent. Take a look at how the COVID-19 fiasco unfolded. The government lied that their health sector was ready and well prepared to deal with whatever the pandemic brought. This is despite the fact that the health sector is in shambles with chronic shortages of basic medicines such as paracetamol and even surgical gloves. Corrupt officials including the former Minsiter of Health continue to be free despite mountains of evidence that they engaged in corruption thanks to the government’s catch and release scheme.
This Ukrainian-Russian war whiplash was easy to predict. Urgent and far-reaching measures were needed to lessen the pricing shocks that it would bring but the government was again all talk and incompetence. The Minister of Energy and his counterpart the ever immodest Professor Mthuli Ncube brushed it all off and now here we are. In the midst of a storm. Their lie that they were doing all they could expose you will see them scupper to do what they ought to have done but it’s now too late and Zimbabwe’s economy will pay a heavy price. Unbelievably in the midst of all of this, the RBZ continue to print billions of ZWL for no sensible reason.
Zimbabwe gets a lot of inputs from the warring parties. This means that the usually shambolic winter wheat season will be more shambolic this season. Like always it will fail to meet local demand despite necessitating load-shedding. As is the hallmark of our government they will blame everyone and everything except themselves. Taking no responsibility whatsoever is part of their storied tradition.