No deal on wheat levy, declare bakers

MBONGENI MGUNI
Staff Writer | Friday April 12, 2013 00:00

And the bakers, under their association, have vowed to continue their fight to have government scrap the 15 percent levy imposed on wheat flour imports.The latest salvos in the battle emerged from a March 26 meeting of millers, bakers, retailers, attended as well by the Botswana Exporters and Manufacturers Association (BEMA) and the Competition Authority.

While millers emerged from the meeting claiming victory in their fight to retain the levy and BEMA officials say an agreement of sorts has been reached, bakers have outrightly rejected reports that they have given up their six-year fight to scrap the levy.The meeting was part of a multi-sectoral initiative driven by the Ministry of Trade and Industry to obtain industry consensus on the wheat levy. Any agreement will then be forwarded to the National Committee on Trade Policy and Negotiations for possible adoption.

On Tuesday, Bakers Association officials said contrary to reports of a deal being struck to extend the levy, members had steadfastly opposed its retention and rejected the offer of incentives from millers.'There is still no agreement on the levy and we did not agree,' said association secretary, Futhi Mononi.'There were suggestions about an extension but we did not agree and we said the levy must be scrapped. The millers, retailers and BEMA were all in agreement that the levy must be extended but we said there was no benefit to us.

'This issue is from 2007; why would we give up now after having fought it for so many years.' Bakers painted a picture of an acrimonious meeting, during which they had to box themselves out of a corner being the sole lobbyists for the levy's removal. Association officials told BusinessWeek that the meeting was a heated affair characterised by tensions.Bakers said the meeting pitted themselves against millers and retailers, whom they allege enjoy a relationship of cross-shareholding and mutual interests. Retailers were present at the meeting as they not only purchase bakery products but also have in-store bakeries of their own which receive wheat flour from the millers.

'At one point, one representative of the retailers stood up and told us that we were lying,' said Bakers Association chairperson, Joyce Coangae said.'Imagine saying that to adults! We felt that BEMA should not have chaired that meeting because the millers are their affiliates. We were just passengers.'Association members said they had also rejected a suggestion reportedly made by the Competition Authority that millers and bakers agree on an incentives package in order to pave way for a deal on the wheat levy.

Contacted for comment, the Authority said it could not immediately shed light on its participation in the wheat flour debates. The Authority has an advisory representative in the multi-sectoral effort formed to give recommendations to the trade ministry.'At this point, it would not be advisable to state what our advice is as we would rather meet with the concerned parties,' said the Authority's spokesperson, Gideon Nkala.BEMA director, Sithembile Dube was reported to be in Zimbabwe and unavailable for comment. It is however understood BEMA's take on March 26' meeting is that general agreement was reached on the need for incentives from millers to bakers in order to retain the levy.

'The bakers are the main players in this issue and if they don't agree, there's nothing that can be done,' one source said.'They have strong bargaining power.'Government imposed the wheat flour levy in 2003 to protect local millers against predatory pricing or 'dumping' from outside the country, specifically South Africa.  Local bakers have pushed for its scrapping on anti-competition grounds, saying the two major millers, Bolux and Bokomo lord it over the industry in terms of prices, supply terms and conditions. Bakers have also questioned the quality being produced by the local millers as well as their capacity to supply the local market.For their part, millers argue that the levy stands between erosion of the sector's industrial capacity as well as the direct loss of nearly 1,000 jobs.