The news becomes more and more bizarre as the economic situation tightens in Zimbabwe. The Grain Millers Association of Zimbabwe Chairman Tafadzwa Musarara warned bakers not to “waste” flour on confectionery items such as biscuits as the nations flour supply was still dire despite small improvements
The GMAZ is not new to these sort of ideas. They spearheaded the national price monitoring program which we have heard little about since its inception, perhaps that’s a good thing. The idea that flour is wasted on confectionery is laughable at best.
The GMAZ currently limits the supply of flour to bakeries at 500 tonnes per day. This they estimate can produce 1 million loaves a day against an estimated national demand of 1.4 million loaves per day. The government also recently allowed private sector players to import 100000 tonnes of wheat to meet demand. The GMAZ is set to become the sole importer of wheat and grains for the nation.
As we should all know by now control and command don’t work in systems that are information efficient and have fairly autonomous units. Matter of fact, a recall to 2008 would do well to remind the GMAZ what happens when you try to control such things. In 2008 price controls on standard bread left many bakers with little choice but to stop baking standard loaves and produce premium and confectionery type bread. The result; there was no price control on premium bread just pain for the customer.
A lesson from Lobels
Bread is a problem in the country because of many factors. Our wheat is grown in winter when we have shorter daylight hours and requires floodlights to extend the hours of light it receives. Floodlights, unfortunately, require something else we really don’t have in spades now; electricity. To make up the shortfall wheat must be imported with something else we don’t have, foreign currency. So we have constrained supply both domestically and internationally of a critical input. To add to that the price of bread is closely monitored.
Lobels one of the largest bakers in Zimbabwe was one entity. After analyzing the terrain the owners chose to sell the bread division of Lobels in 2002, together with the brand but maintained ownership of the Lobels confectionery division, now known as Lobels biscuit and sweet. This probably should have been a sign that all was not well to the wise. Since this sale, Lobels bread division has struggled with viability having to convert overdue debt to equity. Many shuffles in the ownership and finances while they have conceded considerable market share to bakers Inn and Proton in some areas. The confectionery unit though troubled by the same economic woes as any other Zimbabwean manufacturer continues to operate.
Surely there are better ways to address the shortfall in bread supply. It is well known that bread already has a black market due to the regulation of the price. Many bakers are believed to be involved in getting this bread to the black market. Efforts by the government to establish small community bakeries were scoffed at by the public and that was before a demonstration showed just how bad an idea that was. The GMAZ has chosen to walk a very narrow path with this one.