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Zim food price showdown
18/07/2003 19:33 - (SA)
Harare - Government attempts to enforce price controls on key foods triggered a showdown with producers on Friday and was expected to plunge the collapsing economy deeper into crisis.
Four main bakeries were ordered to pay fines for allegedly increasing the price of regular bread four fold in violation of a government price freeze, police and bakers reported on Friday.
The Ministry of Industry also told millers of the corn meal staple in a letter that a 500% increase in the price of corn meal this week had not been authorized by the government and was illegal.
Ronald Madombe, the third ranking ministry official, said offenders may be prosecuted for violating price control laws.
The state-run Grain Marketing Board, which has a monopoly on grain sales, announced earlier this month massive increases in the price of wheat and corn to bakers and millers.
It increased the price of a ton of corn about 2 000% from 9 600 to Z$211 000. It raised the price of a ton of wheat about 1 000% from 30 000 to Z$366 584.
Armitage Chikwavira, head of the Bakers Association, said bakers had sought approval of increases but the government had not responded. Retail prices were hiked anyway to about Z$1 000 a loaf, defying the fixed government price of Z$250.
The official currency exchange rate is Z$824 to the US$, but trading on the thriving black market is as much as 2 700-1.
Police spokesperson Cecilia Churu said four Harare bakeries were each ordered to pay fines of Z$5m for overcharging.
She said the action followed an outcry about consumers about the increases.
Chikwavira said bakers will go out of business, worsening the shortages, if they cannot pass on the government increases.
"There is no way the baking industry is going to survive under the current conditions," he said, adding his association may go to court to challenge the fines.
Milling companies and food stores said despite Madombe's letter no action had yet been taken against them for raising the price of the corn meal staple from the controlled price of 100 to Z$680 a kilogram.
Executives at one of the nation's largest food store chains said they would refuse to pay fines and would challenge the price freeze in the Supreme Court, Zimbabwe's highest court.
Corn meal began reappearing on store shelves at the new price this week.
Official inflation rose last month to 364%, according to the state Central Statistical Office, up from 300% in May.
Unofficial inflation estimates taking into account a wide range of price increases and a thriving black market in food and gasoline put it nearer 600%.
Black market gasoline and corn already fetch as much as five times fixed prices. Most regular gas stations have been dry for the past month.
Part of the deepening economic crisis is blamed on a state program that seized thousands of white-owned commercial farms for redistribution to black settlers.
Hard currency earnings from tobacco, tourism and mining have collapsed.
Investment and foreign aid has largely ended in protest of human rights abuses and the disputed presidential elections last year that gave President Robert Mugabe another six-year term in office.
- SAPA
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