Flour imports were only allowed into the country at a time of crisis. The milling industry says it has now fully positioned itself to supply the country’s monthly requirement of about 20 000 metric tonnes of flour for bread baking and confectionary. Although the Government put in place import permits to control imported quantities, it has failed to control flour imports because of the porous borders and corruption.
GMAZ has complained that there has been an influx of flour imports from Turkey, Mozambique, Russia and Asia to the extent that a number of flour mills have been put aside, with others falling down on capacity utilisation to levels as low as 30 percent. Apart from job losses, operating at such low levels of capacity is catastrophic to business, since the millers are incurring high fixed costs for low business activity, and not accruing economies of scale. GMAZ feels that Zimbabwe has become more reliant on foreign suppliers for its flour requirements, than other countries that are at war.
Cases of flour dumping, where the landing price is much lower than that from the source country, have been also identified. In 2011, for example, the price of flour in Mozambique was $605 per tonne and yet it was exporting to Zimbabwe at $540 per tonne. Dumping has distorted the level playing field to the disadvantage of local millers, and made it difficult for them to maintain jobs or create more. Dumping is also not compatible to the rules of trading blocs such as World Trade Organisation, Common Market for Eastern Southern Africa and Southern African Development Community.
Millers have urged the responsible authorities to review customs duty and surtax on flour in order to discourage imports and save the milling industry from collapse.
Flour is a raw material to bakers and a finished product to millers. Bakers argue that the price of locally produced flour is very high, compared to imported flour, since local millers incur high input costs on items such as labour and utilities. Bakers further argue that for them to be competitive, they need to have access to cheaper raw materials. Bakers have also got jobs to protect and would be uncomfortable with the idea of imposing duties or quotas on imported flour.
In the battle between millers and bakers, it is difficult to tell who is right. Bakers are in a comfort zone, since they do not have to compete much with imports. Bread goes for as little as $0.20 in some countries, and it could have been much cheaper to import if it was not perishable and difficult to transport in large volumes. The important question is: How should the concerns of millers and bakers be reconciled in a manner that ensures that both industries can grow and contribute to the national output?
Post published in: Business