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LOAF OF BREAD COSTS E18 IN RURAL SHOPS

28/05/2023 17:13:00 Welcome Dlamini

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MBABANE – Folks in rural areas have to pay a heavy price if they want to eat bread.

Bakers in the country are concerned at losing customers in rural areas because of retailers who have been found to be selling bread way above the gazetted prices. The Times SUNDAY has been informed that in general, the rural shops are selling above the gazetted price, something that is not legal. Sources within the bread and confectionary industry said they found themselves helpless in the situation because they did not have power over the retailers. “It is government, through the Ministry of Commerce, Industry and Trade, that should take action, we can only report. We are concerned that our customers are being robbed. Our message to these retailers is that they should stick to the gazetted price,” lamented one of the sources. It has been gathered that some of these rural stores sell a loaf of bread weighing 700 grammes for as much as E18 for both white and brown bread. The gazetted retail price for a 700 grammes loaf of brown bread is E13.68, which means the rural shops have effected a mark-up of E4.32. The wholesale price for a loaf of brown bread (700 grammes) is E13.26, which means that an overall profit of E4.74 is made by the rural shops on each loaf of brown bread.

According to the gazetted prices, retailers should be making a profit of 42 cents on each loaf of brown bread weighing 700 grammes. For the loaf of white bread weighting 700 grammes, the gazetted retail price is E15.29, but the rural shops are selling it at E2.71 more. When purchasing the white loaf of bread, the retailers pay a wholesale price of E14.87, which means that overall they are making a profit of E3.13 instead of 38 cents. Neal von Wissel, the Bakery Manager at Premier Eswatini Milling, confirmed this problem and said once they engaged these rural shops, some of them, but not all of them, reverted to the gazetted price. He said they had not encountered this problem with shops in urban settings but only in the far flung rural areas. This tendency by the rural shops, he said, was having a significant impact on the bakers’ bottom line. “It affects our business because bread is expensive at the moment due to expensive wheat and expensive flour as a result of the Ukraine war. So we don’t want bread to be expensive, even more expensive because people can’t afford it. Like any other commodity, once it becomes expensive people stop buying it. We wouldn’t like people to sell above the regulated price because that’s also against the law,” von Wissel said.

He said once they catch out these shops, they try to make the regulator aware from time-to-time even though they do not report specific retailers. “The regulator has to do their own surveys and inspections, and visit the stores to tell them that they are not allowed to do what they’re doing. We don’t have the power to instruct people at what price to sell; we can only tell them what the regulation says,” the manager said. Von Wissel stated that as bakers they do not add any cost to the retailers for delivering the bread to their shops but stick only to the gazetted wholesale price. “We charge the wholesale without any mark-up for the transport we use to deliver the bread to them,” he said, pushing away any possible claim by the retailers that they charged beyond the regulated price because they wanted to cover transport costs. He said as an association of bakers, they did discuss and raise concerns about these shops, but their approach was to inform the retailers and not to instruct them, and also to inform the regulator from time to time. “I think there are stores that don’t abide but the majority do abide but we do go around reminding them,” he said.

Minister of Commerce, Industry and Trade Manqoba Khumalo said he heard this concern being spoken about in some informal setting – that people were no longer buying bread because it was being sold at ridiculous prices. “But I’ve not received anything formally and I’ve not received anything specifically from the Bakers Association. So I’ve not even validated if this information is true or not,” he said. The minister said it would be nice if the bakers could document this, send it to his office and be explicit in terms of what intervention they were looking for and if there could be specifics as well. “That would help with the investigation because this is a matter that the competition commission could easily investigate and address,” Khumalo said. He suggested that the bakers should, therefore, do this because unless his office or the competition commission has received such, there was nothing they could do, but would be something they were not fully aware of except through just hearsay or informal comments.

He said alternatively, they can just approach the Eswatini Competition commission directly and ensure that this is rectified because one of their (commission) mandates is to ensure that goods and commodities are sold at the correct price to the consumer. “If there is some level of collusion with the retailers, then that needs to be fixed like yesterday. We will address this once we get a formal communication because that will give us legal basis and a formal basis to address it, which we don’t have at the moment,” the minister added. In neighbouring South Africa, there are commodities, including bread, that have different prices for rural and urban areas. As at February 2023, the urban price for a loaf of brown bread (700 grammes) was E16.84 while the rural price was E16.04, resulting to a difference of 77 cents. For a loaf of white bread (700 grammes), the urban price was E18.79 while the rural price was E17.66, leading to a difference of E1.13. Locally, the price of bread went up in July 2022 when the loaf of brown bread increased by E2.35 from E11.33 to E13.68; a loaf of white bread increased by E2.63 from E12.66 to 15.29.