April 21, 2016Bread price-fixing scandal claims in SA

The South African Food Sovereignty Campaign and the Consumer Action Network have accused food manufacturers and retailers of artificially inflating the price of bread in the country.

In what it calls “blatant profiteering”, the groups said in an open letter to the ministers of finance and trade and industry that bread makers in SA were blaming rising bread prices on an increase in the tariffs on imported wheat.

However, grain farmer association, Grain SA, has stated that the new import tariff on wheat is not expected to result in higher bread prices.

Grain SA has also questioned why the price of bread has not fallen since January 2015 in line with the low international wheat prices.

GrainSA said that the price of wheat last year was at a record low and manufacturers did not pass this on to their customers – while millers and manufacturers claim that the price of bread is ultimately set by the major chains and not by them.

Research compiled by Viccy Baker of Retail Price Watch shows how bread prices have increased over the past 12 months.

According to Baker, bread prices have already risen significantly in 2016, when looking at the average price of 700g brown loaves of bread across four brands.

Bread prices – 2015 vs 2016

Brand Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 April 2016 Q1 2015 vs Q1 2016 April 2016 vs Q1 2015
Albany R10.46 R10.46 R10.84 R10.82 R11.24 R11.02 7.5% -2.0%
Blue Ribbon R9.66 R9.59 R9.92 R10.09 R10.14 R10.99 5.0% 8.4%
Sasko R9.30 R9.23 R9.31 R9.52 R9.96 R10.24 7.1% 2.8%
Sunbake R8.94 R9.22 R9.02 R9.49 R9.60 R10.12 7.4% 5.4%

Sunbake (made by Foodcorp) increased its price from the first quarter of 2015 to the first quarter of 2016 by 7.4%, with a further jump of 5.4% in April. A loaf that cost an average of R8.94 in the first quarter of 2015 now costs R10.12.

Sasko (Pioneer Foods) increased its price in Q1 2016 from Q1 2015 by 7.1%, and then again by 2.8% in April. A loaf that cost an average R9.30 in the first quarter of 2015 now costs R10.24.

Blue Ribbon (Premier Foods) increased its price by 5% over the same two periods, but the price in April was 8.38% higher than in the first quarter of 2016. A loaf that cost R9.66 in the first quarter of 2015 now costs 10.99.

Albany (Tiger Brands) the most costly of the four for a standard loaf, increased from the first quarter of 2015 to the first quarter of 2016 by 7.5%. By contrast, the average price dropped by 2% in April. A loaf that cost R10.46 in the first quarter of 2015 now costs an average R11.02.

“Brown bread is something of a commodity, and many consumers tend to buy the cheapest they can find on the shelves. As a result, the lower priced brands are quickly exhausted and people who can least afford it, are forced to pay higher prices,” Baker said.

“GrainSA says there is no reason why increased import tariffs on wheat should raise the price of bread. Millers say they have little influence over the price of bread. According to the SA Institute of Chartered Accountants, the government zero rates VAT on brown bread ‘to benefit the poor’. Yet the price keeps on rising.”

the date: Friday, April 22, 2016
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