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Not only will consumers have to pay more for petrol, but the price of bread is also likely to rise in the near future

By unknown | Apr 03, 2007 | COMMENTS [ 0 ]

Lihle Mtshali

Lihle Mtshali

Households face a double whammy from midnight's fuel price hike. Not only is petrol going up by 11percent, but bread will also become more expensive once farmers, bakers and truckers pass on the 7percent higher diesel price to the customer.

Retailers and suppliers are predicting that the price of bread will go up in the next three months. The increase is attributed to fuel price hikes along with low rainfall this year, which has pushed up crop prices.

"By June or July we expect an increase of between 5 and 7percent on the price of bread," said Roelf Venter, marketing director at Spar.

A standard 700g loaf of white bread currently sells for R4,98.

Jannie De Villiers, executive director at The South African Chamber of Baking, said that a huge portion of distribution costs goes towards fuel.

"Truckers pick up most of the fuel costs with fresh bread being delivered to customers sometimes twice a day," he said.

Bakers used gas or paraffin ovens and fuel price hikes would affect them tremendously, thus affecting the price of bread, said Dave Emerson-Cousins, category marketing manager of the Millbake Division within Tiger Brands.

He said that another driver of bread prices was the price of wheat, which South Africa imports from different countries depending on seasons, but mostly from the European Union, South America and Canada.

"The price of wheat is negotiated globally and if there are shortages internationally or there are changes in global farming structures, like wheat growing areas being transformed into bio-fuel areas, then there will be a sharp increase in wheat," said Emerson-Cousins.

According to De Villiers, 21percent (R1,03) of the price of a standard loaf of white bread goes directly to the farmer for wheat.

In August a ton of wheat cost R1600 and yesterday that same ton would have set you back R2000.

The additional R400 translates into an increase of 25c a loaf of white bread.

Once wheat has been imported it is transported to the mill where it is ground into flour. Transportation takes place by road and rail, using diesel trucks and trains, which shows that the fuel hikes affect all sections of the bakery business, said De Villiers.


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