Monday, May 16, 2022

The cost of daily bread…

“Give us our daily bread”, goes a Christian entreaty dubbed the Lord’s Prayer. This prayer has possibly now turned literal for many families across the region, if numbers shared by Numbeo, a leading global database of consumer prices is anything to go with.

Numbeo data shows that in the past few months since an outbreak of war in Europe bread makers across the globe, not just in southern Africa increased prices of bread blaming it on the rising cooking oil, fuel, wheat and packaging costs. The price of wheat, which is the main ingredient in bread making, has been on a steady increase since February 24 when Russia announced that it would be invading Ukraine.

In Botswana, in early March 2022 Bolux Group – one the biggest players in the bread supply chain locally announced a 16 and 10 percent uptick in wheat and bread prices respectively amongst other things.

Bolux said at the time that the unexpected arrival of Ukraine – Russia war has resulted in global commodities markets being volatile. The two European countries combined contribute 33 percent of global wheat hence Bolux cautioned its customers of monthly hikes.

“Under current circumstances be expectant of monthly prices increase”, reads part of a communiqué sent to Bolux customers in March.

Bolux said that the hike is necessitated by SAFEX prices which have been on the rise since January. Botswana buys wheat through the South African Futures Exchange (SAFEX), which manages price risk and market exposure in the South African agricultural markets.

Botswana Millers Association cautioned in previous years that Botswana as a net importer will always be subjected to price movements effected by SAFEX.

By the early months of 2022, global trading data showed that wheat prices skyrocketed to record high levels last seen in the 2008 global financial crisis fetching $13.63 (P164.23) per bushel. They have since retreated to just over $10 per bushel but are still more than 70 percent higher than a year ago. Wheat prices were trading at $7 to $8 per bushel in the last quarter of 2021.

Fast forward to May 2022, Numbeo database shows that a Loaf of Fresh White Bread (500g) in Botswana currently cost just over nine Pula (P9.07), a fact that can be verified by visiting any retailer in the capital Gaborone. This is in comparison to P8.63 in Windhoek (Namibia), P9.88 in Maseru (Lesotho), P8.87 in Mbabane (Eswatini) and P11.27 in Johannesburg (South Africa). 

Now with no sight to an end to the European war sparked by Russia’s invasion of Ukraine – the ‘breadbasket of Europe’ consumers in import reliant countries like Botswana continue to wonder whether the conflict could see loaves of bread disappear from supermarkets or the prices will keep skyrocketing.

Cargo Compass, a South African freight, logistics and warehousing company that operates worldwide cautioned in mid-April that goods prices would also rise sharply as supply chain bottlenecks were here to stay for 2022. The company says trade bottlenecks would not ease this year as it appears they are getting even more severe.

As it stands, the price of the ‘daily bread’ is facing a threat not only from wheat supply shortages but also from the rapidly rising freight charges.


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