Bakers accuse retailers of bread price gouging


Bakers accuse retailers of bread price gouging


A supermarket attendant arranges loaves of bread on a shelf in October 2020. PHOTO | EVANS HABIL | NMG

Retailers have been accused of overpricing bread from mainstream bakers to give a price advantage to the breakfast commodity they make in-house.

According to the Bakers Association of Kenya, supermarkets are selling 400gm bread at Sh2 above the Retail Recommended Price (RPP) despite the margin that they have been given by processors.

For instance, most bread makers have a RPP of Sh60 on their commodity. Retailers are, however, selling it at Sh63. The processors argue that this move makes them lose sales as consumers go for cheaper bread.

“Retailers are raising price of bread unnecessarily even with the good margins that we are giving them, creating unhealthy competition between our own product and the ones that they bake in their outlets,” the bakers said.

ALSO READ: Russia mulls easing wheat exports, sets stage for price drop

They said they had given retailers a margin of up to Sh9 for a loaf of bread, which they say is way above what manufacturers of other products would offer them.

Last year, bakers were forced to slice bread prices by Sh5 in under a month after revising it upwards on the back of stiff competition by supermarket in-store bakeries.

The price of bread in the in-store bakeries was cheaper by an average Sh5 when rival bakers raised their prices in a fresh attempt to pass the additional cost in the price of wheat to consumers.

The in-store bakeries did not adjust their prices — tilting the scales in their favour as price-sensitive consumers opted for the cheaper products.

The rising price of bread was occasioned by the high cost of wheat in the international market following the ongoing war between Russia and Ukraine, which has disrupted the supply of grain.

About 66 percent of wheat that Kenya imports come from the two countries and the current blockade has had a negative impact on the produce.

ALSO READ: Bread prices put pressure on rising cost of breakfast

Manufacturers have asked the State to waive a 10 percent duty on imported wheat to offset the current high international prices of the grain and offer a reprieve to consumers on skyrocketing cost of flour.

Kenya Association of Manufacturers and a host of other stakeholders in the grain industry said the government should remove duty for the next year in order to cushion consumers from high costs.

They said players in the sector have turned to the expensive importation of wheat from USA, Argentina, Australia and Canada on the back of the Russia-Ukrainian war that has cut supplies.

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