Business Correspondent
The baking industry, which is currently plagued by high utility costs and lack of working capital, is actively seeking technical partners who can inject capital to boost production, a top industry official has said. 

In an interview with The Sunday Mail Business last week, National Bakers’ Association of Zimbabwe (NBAZ) president Mr Dumisani Moyo said the baking industry is working on ways of accessing funds to boost production.
He also noted that capacity utilisation in the sector presently stands at 44 percent, indicating that there is a lot of spare capacity.

“The sector is working on accessing funding meant for distressed companies. Others (bakeries) have started looking into options of technical partners who can inject capital.

“If the situation remains dire as it is, one cannot rule out the possibility of big fish swallowing the small fish. It is clear that a few others will go under as well,” said Mr Moyo.

Power outages and water cuts have also conspired to affect production in the baking sector.
It is believed that some operators have even closed shop as they could not afford to power their operations with generators.
Added Mr Moyo: “Bakeries, like the rest of the manufacturing industry, have been forced to procure generators to supply power during outages. This is a cost others have failed to meet.

“Generators require service and maintenance and are running on fuel, which is an additional cost. This affects viability of businesses. Power and water charges have rendered operations unviable.
“The huge utility bills have created profitability challenges for our members.
“. . . this is an industry whose margins have already been compromised by escalating costs all round and these have not helped the situation at all.

“For as long as the current situation continues, the industry viability will remain threatened; jobs will continue to be threatened. We are hoping that lines of credit will be opened to allow bakers to recapitalise their businesses.”  
Despite the mounting costs and challenges, the price of bread has remained $1 per loaf since the adoption of the multi-currency system.

In addition to water and power shortages, there has also been increased pressure, especially from raw material, rental and labour costs.
According to the NBAZ, labour costs in the baking industry have ballooned by 120,4 percent since 2009, while energy costs have soared by 31 percent.

“The majority of our members are operating from rented premises (and) rental costs have continued to skyrocket.
Dwindling disposable incomes are shrinking the market and threatening the viability of the industry.
“Duty on imported flour is hurting the baking industry as well and any further duty increases will worsen an already bad situation. We need policy that promotes the survival of the industry.

“The industry is not clear yet on the accessibility of Distressed Industries and Marginalised Areas Fund (Dimaf). We look forward to the fiscal review and national budget for policies that stimulate growth in the general economy to improve consumption of our products.
“We also expect Government to rein in other stakeholders to contain the price of raw materials, particularly local flour so as to arrest runaway costs,” explained Mr Moyo.