BREAD NOW BEYOND REACH FOR MANY

UNCLAS HARARE 002183

SIPDIS

STATE FOR AF/EX
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON

E.O. 12958: N/A
TAGS: ECON EFIN AMGT ZI
SUBJECT: BREAD NOW BEYOND REACH FOR MANY



1. Summary: Bakeries have increased the price of bread from
Z$1,750 (US 26 cents) to Z$2,500 (US 37 cents),well beyond
the reach of most ordinary Zimbabweans who earn less than a
dollar a day. Bread has become increasingly important here
since most families use it as a substitute for the local
maize-meal staple, "sadza." End summary.


2. Most winter wheat growers are now illegally
circumventing the Grain Marketing Board (GMB) -- the sole
organization entrusted by GOZ to buy grain -- and
contracting with private millers. The GMB is offering just
Z$350,000 (US$52.63) per ton for wheat, well below
production cost. Because many farmers in question are
beneficiaries of fast track land reform's A2 scheme and
connected to the GOZ through military or civilian
affiliation, the GOZ is unable to act against them. These
new farmers are selling their wheat at Z$2 million (US$
300.75) per ton to bakeries, which are passing on the cost
to consumers. Private importers such as Bakers Inn now pay
the same price for flour. New farmers are gradually coming
to appreciate the cost of growing crops such as wheat. They
are increasingly willing to defy or ignore the GMB.


3. Comment: The GOZ now faces the dilemma of satisfying its
new farmers while subsidizing the purchases of an already-
restless population reeling from 456 percent inflation. The
authorities cannot move against these well-connected and
powerful new farmers just starting to come to grips with the
fundamentals of commercial farming: cost-recovery through
profit-making.

Sullivan