Bread price hike to hit poor
FMCG SUPPLIER NEWS
SAPA - Aug 12th 2010, 00:00
The Federation of Unions of SA (Fedusa) is concerned about how the looming price hike of bread and wheaten flour will affect the country's poor.
In a statement on Wednesday, it said prices might rise after Russia had placed a ban on wheat exports while facing its worst drought in 130 years.
"Due to the fact that wheat prices were low before the disaster in Russia many farmers including South Africa, planted fewer crops this year and as such they may not be able to help bread manufacturers to keep prices low," Fedusa said.
Consumers could expect an increase in the price of a loaf of bread by October this year.
Fedusa's general secretary Dennis George said the crisis would result in devastating results since bread in South Africa was already costly for the poor.
"We have done a quick survey and noticed that an average loaf of brown bread can be between R8.50 and R10.10, while white bread can cost as much as R13.85.
"With bread being one of South Africa's staple diet any further increase in these prices will result in poor people either not able to buy their daily or weekly quota of bread or it will mean they will have less to spend on other daily essentials."
George said the increase in the bread price would also mean that local farmers would be adversely affected since for the first time in 100 years South Africa would have to import more than half of its wheat demand.
"Also the demand for corn due to the expanding ethanol sector added to the spike in grain prices that led to inflation across a host of grocery store aisles."
Fedusa has demanded that government urgently convene a meeting with organised labour and business at the National Economic Development and Labour Council to discuss the "potential harm" the bread price increase could have on the poor.
"Government should look at the transportation of our grain.
"If we for example shift the transport from road to rail... this could reduce the production cost by 30 percent."
George also called on government to reduce import taxation of grain of R200 per ton to zero.
"This would greatly reduce the cost to the poor and consumers."
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