Mixed views on effect of import duty on bread prices
IOL Business/ - Jul 21st 2016, 09:32
Johannesburg - There has been speculation that the price of bread is expected to rise following the imposition of a higher duty on the imported price of wheat.
GrainSA and major food producers have argued about whether this will result in higher bread prices.
GrainSA says the price of wheat last year was at a record low and manufacturers did not pass this on to their customers, while manufacturers claim the price of bread is ultimately set by the major retailers and not by them. In fact, says Viccy Baker, of the consumer website Retail Price Watchbread, prices have already risen significantly this year.
“We looked at the average price of four standard 700g brown loaves in 2015 and 2016. Sunbake (made by Foodcorp) increased its price from the first quarter of 2015 to the first quarter of 2016 by 7.4 percent, with a further jump of 5.4 percent in April. A loaf that cost an average of R8.94 in the first quarter of 2015 now costs R10.12."
“Sasko (Pioneer Foods) increased its price in Q1 2016 from Q1 2015 by 7.1 percent, and then again by 2.8 percent in April. A loaf that cost an average of R9.30 in the first quarter of 2015 now costs R10.24; Albany (Tiger Brands), the most costly of the four for a standard loaf, increased from the first quarter of 2015 to the first quarter of 2016 by 7.5 percent. By contrast, the average price dropped by 2 percent in April. A loaf that cost R10.46 in the first quarter of 2015 now costs an average R11.02. Brown bread is something of a commodity and many consumers tend to buy the cheapest they can find on the shelves. As a result, the lower-priced brands are quickly exhausted and people who can least afford it are forced to pay more."
“GrainSA says there is no reason why increased import tariffs on wheat should raise the price of bread. Millers say they have little influence over the price of bread.”
According to the SA Institute of Chartered Accountants, the government zero rates VAT on brown bread “to benefit the poor. Yet the price keeps on rising”, Baker says.© Independent On-line 2013
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