Posted on October 2, 2010


The Bread Coalition was launched in Cape Town last Sunday on the pavement outside parliament. But although the price of bread was the issue that brought out representatives from community groups and trade unions, it soon became obvious that the complaints were about “bread” in the broadest sense.

However, the millers and bakers — often one in the same — were the initial target and National Chamber of Milling executive director Jannie de Villiers was on hand to receive a memorandum of complaint from Cosatu’s Western Cape regional secretary, Tony Ehrenreich. Cosatu had also invited representatives from national and provincial government and Ehrenreich bewailed the fact that none had attended.

In the brief discussions and impromptu speeches that followed, especially from township residents, the fact that the poorest pay more was graphically illustrated. The bread price was, once again, a good illustration, with the same basic loaf selling at R6.49 in a suburban supermarket on Sunday, retailing at R8 at a Gugulethu spaza shop.

The spaza owners blame the higher price on higher transport costs and the fact that most of them have to buy from suburban supermarkets. This reasoning tended to be understood, even if the consequences were deeply resented.

But suggested answers to the problem, ranging from the redistribution of land to the establishment of community bakeries revealed a lack of clarity about the bread pricing mechanism and the market in general.

There was enthusiastic applause for a call for land to be redistributed to the landless “to allow for the growing of more wheat”. The call was made by Imraahn Ismail-Makaddam, the independent bread distributor who first blew the whistle on bread company price collusion. He correctly pointed out that, in 1997 1.2 million hectares had gone under wheat and that this had declined to some 660 million hectares.

This decline he blamed on collusion between the big baking companies, the millers and the farmers to keep prices high. But while it is certainly true that the farmers want higher prices — or at least prices that will ensure that they make a profit — the millers and bakers care about margins: how much profit they can make, irrespective of the price.

In fact, it could be argued that the lower the price, the more leeway for millers and bakers to increase margins and profits. The fact that less wheat is planted — or less maize or whatever — is usually the result of projected over-supply on the world market.

Another factor farmers have to deal with is the continuing supply of subsidised agricultural produce from the United States and regions such as the European Union. So long as these factors exist — so long as the livelihood of farmers is dependent on the vagaries of the market — it will not matter how much land is redistributed or to whom.

These booms and slumps which could make farmers rich one year and bankrupt them the next, were the reason many governments — including the apartheid regime with its core of farmer supporters — introduced guaranteed prices. This was a means to stabilise the market and ensure food sufficiency. Grain surpluses would go either into a strategic stockpile or be sold at higher prices on the world market.

Profits from sales (when the world price was high) were earmarked for a fund out of which farmers were paid when world prices were lower or to buy grain to cover shortfalls in domestic production
Such intervention no longer exists in South Africa. However, since 1995, the government has levied an ad valorum tax of 2 per cent tax on all grain imports. According to the baking companies, this now equates in the marketplace, to as much as 3 cents extra on each loaf of bread.

In this environment, community bakeries cannot survive. Many of them mushroomed in the townships several years ago. Today their garish red and yellow striped roofs are still visible, but they went under, victims of competition — fair and unfair — of the major bakeries.

However, as Ehrenreich warned, something has to be done unless the country wants to face the prospect of food riots.

* Originally published 08/2008

Posted in: Archive - 2008