/ 14 January 2008

Cosatu slams bread-price increase

Tiger Brands began charging 40 cents more for a loaf of Albany bread on Monday, with Pioneer Foods and Premier Foods in the process of considering their increases.

In response, the Congress of South African Trade Unions (Cosatu) suggested the increases were linked to last year’s bread price-fixing scandal.

”Tiger claims that this decision was made independently of other bread producers and had nothing to do with the R99-million fine imposed on them last year for price-fixing. Yet the other two big companies, Pioneer, which produces Sasko, and Premier, which makes Blue Ribbon, are expected to announce similar increases almost immediately,” said Cosatu spokesperson Patrick Craven.

But Tiger Brands group executive for corporate affairs Jimmy Manyi denied this, saying: ”No, not at all. It’s not that.”

”It is because of an increase in input costs, like wheat prices, escalating the whole of last year.”

Fuel and energy costs had rocketed and the group had been absorbing these for the whole of 2007.

”The price of wheat didn’t go up yesterday, it’s been doing so throughout [2007],” said Manyi.

He denied that it was to recoup the fine imposed by the Competition Commission on the company.

Pioneer Foods managing director Andre Hanekom said the company expected increases of between 35 and 40 cents depending on the loaf and the region it was sold in, while Premier Foods’s corporate affairs manager Steven Mallach said the company would finalise its increase within the next 10 to 14 days.

Hanekom said the increases for Pioneer Foods and Tiger Brands appeared similar because they procured their wheat and fuel on the same markets.

Condemning the increase, Cosatu said it would add to the hardship faced by millions of poor families struggling with the prices of food, fuel, school uniforms and other essential items.

”Food-price increases are the biggest single driver of inflation, yet the Reserve Bank, which claims its mandate is to target inflation, says nothing to condemn these increases,” said Craven.

Cosatu renewed its call for an investigation into the food-price chain and would ask its research arm to conduct its own research into the matter.

In December 2006, Western Cape bread distributors complained about alleged bread and milling cartels.

After an investigation by the Competition Commission, Tiger Brands admitted to being involved in illegal price-fixing in the bread industry, along with, among others, Premier Foods and Pioneer Foods.

Manyi said that although this had been done by employees without the knowledge of the executive, the company had taken responsibility for it and was granted conditional leniency.

Premier Foods was also granted conditional leniency from prosecution in exchange for assisting the commission in its investigations.

Pick n Pay said a price of Albany brown bread cost R5,50 on Monday. — Sapa