The new bread price will affect mainly the consumers living in the suburban and rural areas, who two weeks from now will have to pay four meticais for a loaf of bread 200 grams, up from the current 3.5 meticais (there are about 25.5 meticais to one USD).
To the contrary, the bakers in the urban areas, despite facing higher production costs due to electrical power, fuel, water and other overheads, they have decided to keep the current bread price, while decreasing their profit margins.
"We have made a cost break down according to the areas. There are certain areas in the city of Maputo with a high cost structure. Taking into account the last price increase in place since last May of 20 meticais per kilo of bread, when there was a huge price increase of flour, now we agreed to adopt a new strategy", said Victor Miguel from AMOPĆO, adding that the price adjustment will be only enforced in the suburban and rural areas of Maputo.
Three major wheat mills in Maputo announced last week that as from this Monday a bag of 50 kilos of wheat flour would be sold at the price of 755 meticais, which amount to an increase of 80 meticais per bag. This latest increase forced AMOPĆO to convene a meeting on 29 August to discuss a new strategy based on each individual province.
Miguel explained that the new bread price would be enforced two weeks from now because most of the bakeries are still using old stocks.
According to Victor Miguel, the bakers agreed to keep the current prices, at least for the time being, in detriment of their profit margins.
"Taking into account the last adjustment of wheat flour and after a break down of the production costs, we decided that there was some thing we could do in terms of the profit margin. Thus, in the urban areas the margin of profit will decrease from the current 25 per cent to 15 per cent", explained Victor Miguel, who foresees new price hikes in the next few months.
Under the new strategy to deal with the current price increase, the price gap between the bread sold in the rural areas and urban areas will come down from the current 1.5 meticais to just one metical.
Last week "Companhia Industrial da Matola" (CIM), "Merec Industries" and "Socimol", the largest wheat mills in Mozambique, announced an increase of 80 meticais per bag of wheat flour 50 kilo that has come into force as from this Monday. This amounts to an 11.85 per cent increase.
Last month, the price of wheat was increased by 30 meticais per 50-kilo, and with the new price, this amounts to 110 meticais in less than one month.
The millers blame the soaring prices in the international market for the current increases of wheat flour, which is exacerbated by the costs of transport.
According to the millers, the constant increases in the international market is due to a decline of the amount of wheat grown worldwide, which is being replaced by other crops such as maize and Soya due to the increasing demands of bio-fuels.
The sources claim that in the current year Canada has grown less 18 per cent comparatively to 2006 and that volumes of export is set to decrease by 25 per cent, and also Australia is said to have lost 50 per cent of its crop due to the drought that hit that country.
On the other hand, in the European Union vast areas of wheat crop have been destroyed by the floods. Thus, the harvest of wheat by the end of 2007 is expected to reach its lowest levels of the last 30 years.
SOURCE: AIM
