The National Bakers’ Association of Zimbabwe (NABZ) has warned that the upward adjustment of import duty on wheat could trigger an increase in the price of bread and affect viability of the sector.
Finance minister Tendai Biti in his Mid-Term Fiscal Policy review last week announced an increase in customs duty on wheat flour to 20% from 5% as from August this year, in a bid to discourage the continued surge in imports.
NABZ president Dumisani Moyo said the move by the minister was “wrong” given the current state of the agriculture sector.
“Already the industry is in trouble. When we look at the baking industry where over 50% input is flour, an increase in duty on flour is really a threat to the industry,” Moyo said.
Biti said the local milling industry had capacity to meet national demand as the installed plants were not optimally utilised, due to continued surge in wheat flour imports.
“The continued importation of flour inhibits growth of the local milling, agro-processing, packaging and transport industries, as well as revival of the national herd, since the by-products of wheat milling are currently inadequate to meet requirements for stockfeed,” he said.
Biti, however, said the rise in duty was unlikely going to push the price of bread up saying the baking industry would continue to import 25% of its wheat flour requirements or 3 000 metric tonnes per month necessary for blending, at the current rate of 5% duty.
“Flour imports at reduced rates will be linked to licences issued by the Ministry of Agriculture, Mechanisation and Irrigation Development.
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“The above measure will not translate into a higher price of bread since local millers will abide by the agreed price of wheat flour,” he said.
He said the government would continue to monitor the price and capacity of local millers to supply wheat flour, in order to ensure stable prices of bread.
Official figures show that the country’s wheat output has been declining amid indication that a substantial number of wheat farmers are switching to other crops.
This year about 8 000 hectares (ha) of the cereal was planted compared to 15 982 ha in 2011. Productivity levels also dropped to 3,4 tonnes per hectare compared to an all-time high of 5,7 tonnes per ha recorded in 1993.
In June, the Grain Millers’ Association of Zimbabwe warned that failure to mobilise funding for winter wheat farming would result in the government forking out $100 million towards the importation of the cereal.
