Wheat shortage threatens baking industry

By Lance Guma
17 October 2005

Just a couple of weeks after National Foods shut down four milling plants because of wheat shortages, baking giant Lobels Bakeries has embarked on a retrenchment drive targeting half its workforce. The weekly Standard newspaper says 100 out of a remaining 900 workers were retrenched in September.

The retrenchment is being done in phases with more workers set to lose their jobs in coming months. Its also reported that the increasing cost of diesel and shortages of wheat have forced the company to reduce the quality and quantity of bread produced. Diesel costs Z$90,000 per litre while flour costs Z$8m a tonne.
Lobels' chief executive officer, Burombo Mudumo, denies the story and says the retrenchments are negotiated agreements to part ways with a group of employee’s accused of stealing bread in the factory. Instead of going to court they had agreed to negotiate with their lawyers to part company, because of a lack of trust between the two parties.
The whole industry is in turmoil. National Foods, which controls a 70 percent share of the flour market, closed 4 milling plants because of wheat shortages. It was the only milling company that until now was still supplying most bakers. The second biggest miller Blue Ribbons Foods stopped milling 3 weeks ago after running out of wheat. Victoria Foods, which is the third biggest miller, is said to have a few more tonnes of wheat left in stock.

A disastrous land seizure policy has turned the country from a net exporter of food to one that relies on imports. The new farmers have not done well in growing wheat and fewer and fewer hectares are being devoted to growing the crop every year. The crucial irrigation infrastructure has also been badly vandalized or looted.

Industry expert Eddie Cross says wheat is an expensive crop to grow and requires huge capital investment. It needs to be under 100 percent irrigation while the planting and harvest times have to be adhered to strictly. Fertilizer, seeds, irrigation equipment and weed control are also very costly. Wheat used to attract premium prices in the market but now the prices on offer are uneconomic and hence the incentive to grow has also shrunk.