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Cosatu fumes over rising bread prices

Johannesburg - Cosatu on Wednesday accused food companies of exploiting the poor by increasing bread prices at a time when the cost of wheat had come down.

The federation said the companies had maintained higher prices against the drop in wheat prices over the past few months.

Cosatu accuses bread companies of failing to reduce the bread price when the wheat price goes down. File picture: Sxc.hu. Credit: FREE IMAGES

It said it would embark on a march next week if the food companies refused to lower their prices.

“Cosatu has noted that bread prices have risen over the last few months when other costs increase. But when the price of wheat comes down by 12 percent there is no commensurate reduction in the price of bread,” Cosatu said. “The bread companies must explain why the bread price is not coming down and how they keep their prices the same. It looks like the collusion of the prices that they were fined for in the past has not taught them to stop robbing poor people.”

Colluded

The federation said consumers were charged at least R12.50 for a loaf of brown bread and R14 for a loaf of white bread in retail shops, while retail companies such as Shoprite, Pick n Pay and Spar who had in-house bakeries charged as little as R6 a loaf.

In 2007, Tiger Brands was fined R98.8 million by the country’s competition authority after admitting that it colluded with rivals to fix the price of bread. Pioneer Foods was fined R200m in 2010.

The SA Chamber of Baking, a body that represents bakers said while it was sympathetic to the plight of the poor, the price of bread was determined by factors beyond its control.

The executive director, Geoff Penny, said while companies benefited from the drop in global wheat prices, the prices were not sustainable. “They can change any time and gain and cost more,” said Penny. “As the chamber we would like to keep the price of bread as low as possible, but the price of bread depends on a number of things like the rand/dollar exchange rate and the contracts were concluded about six months ago.”

Agricultural Business Chamber (Agbiz) economist Wandile Sihlobo said it was too early for the review of the bread price. Sihlobo said the wheat contract for delivery in July reached a record high of R5 220 per ton in May but it had since dropped to about R4 052 per ton yesterday.

He said South Africa still relied on other countries for its wheat because of the recent drought.

Volatile

“It is true that wheat prices have dropped in the last month or so. But we must remember that (the) wheat price is also volatile, meaning it goes up and down within a short space of time. So it will take time before the consumer benefits from the weaker wheat prices,” said Sihlobo.

“There are other costs involved like distribution channels and mills to consider that can determine if the price should fall and by how much.”

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