Bakers take sweet news with pinch of salt
Mbongeni Mguni | Friday August 28, 2020 11:53
Bakeries have fallen great heights from their heydays when they were the pride of the village, to their current shamed status, small entities squashed in busy industrial areas, barely getting by and surviving only through the cut-throat battles for schools’ feeding tenders.
In a sort of tribute to the humble local bakery a few years ago, I described their glory days.
“Not too long ago, the small-time bakery was a convenient communal meeting point of sorts, children darting in and out of the doors on errands, adults queuing up early for the freshest loaves and confectionary items, as the syrupy aroma of baked goods filled the air and wafting out to entice other customers on the streets.”
At that time, in 2015, the fight between bakers and local millers over the wheat levy was at its hottest. Bakers wanted the levy scrapped altogether in order to allow greater imports of cheaper wheat flour and to break the local millers’ monopoly, while millers argued that the levy was protecting hundreds of citizen jobs and promoting local industrialisation.
Even as that fight was going on, another threat was fast rising against the local bakeries – the in-store bakery. Today, it is estimated that at least 96% of the country’s bakeries are located in-store, robbing the humble local baker of space on the shelf of the country’s leading retailers.
The major chains such as Choppies, Shoprite, Pick n’ Pay and others all have in-store bakeries, providing their shelves with all the confectionary they need a few feet from their ovens.
The traditional bakery, meanwhile, is classified as light industrial and has to locate itself outside of major retail areas, away from high walk-in traffic and also meaning even in the rare occasion the baker has a sniff at a supply contract with a retailer, they would price themselves out of the race by adding transport costs.
The result has been that the humble bakery survives through government tenders, many of which are so strongly fought for that they are settled in court. Bakers estimate that walk-in sales account for as little as 10% of their income, while the balance comes from the tenders.
Since my 2015 tribute, the situation has not improved for local bakers, with many of them making regular appearances in “the matter between”.
Thus, government’s decision this week to suspend the importation of baked goods, appears to have come as Godsend to a troubled sector.
The move, on paper, means the removal of the competition posed by baked goods imported from the region, thus, on paper, providing more shelf space for locally produced products. For local bakers, however, the fight for market is more against the in-store bakers set up by the major retailers and to a less extent, the imported confectionary.
“The issue is about economies of scale, where the major shops are able to secure big discounts for their bakeries’ inputs, sell diversified products other than confectionary and save on labour, while being located in high population areas,” says Reuben Keddy, managing director of Prestige Bakery in Molepolole.
“The way these shops operate is that bread is supposed to be part of the groceries, done for auxiliary or convenience purposes, but they go further and supply the market in bulk.
“They are diversified and can spread their costs.
“Unless and until the market opens up fully, local bakers will remain in trouble.”
Bakers Association secretary general, Futhi Mononi-Morupisi says while the industry has welcomed the baked goods import ban “with both hands,” bakers still face stiff market access challenges. As the operator of Crown Bakery in Good Hope, Mononi-Morupisi has first-hand experience of how difficult it is to break into the retail sector supply chain.
“We have long been telling government that monies are going outside the country when these things can be done here in Botswana,” she says.
“As a bakery, when you try and sell to these shops, they don’t want to hear anything. Maybe they would listen if you approached them speaking Seburu.”
She continues: “We used to supply one of the retail chains and they would dictate the price and say they pay after a month. However, they would actually only pay after three months and even then, they would charge a five percent settlement fee.
“So, basically, they are buying from us ka sekoloto and selling for cash.
“We tried to get onto the supplier list of another chain and even went for training in South Africa at our own expense, making sure our branding and packaging was up to scratch. They stopped communicating with us.
“We would travel all the way and meetings would be cancelled without our knowledge.”
Mononi-Morupisi wants government to probe the issue of fronting amongst in-store bakers. By law, bakeries are a sector reserved for citizens, but there are high suspicions that some of the in-store bakeries are only citizen-owned at face value.
“Many times, you will find that it’s a question of fronting.
“Government has to look at these share certificates, these licences, the tax returns, the bank records.
“They must go deeper and they will uncover fronting going on.”
In Selebi-Phikwe, a town whose economy is still grappling with the closure of BCL Mine in 2016, Ruth Gandi Boyina says her Bophelo Bakery has had to fight “tooth and nail” to survive.
After the Mine closed, the town experienced an exodus of residents, with the previously income earning miners and associated workers leaving for other opportunities. The market has shrunk and those with money to buy have shrunk even further.
“Fortunately, wholesalers like Eureka and Sefalana buy in bulk and sell to us even cheaper than we would get if we bought from the millers directly,” she says.
“We have been able to drop our prices quite low and focus our sales on those who sell to others.
“We are also tendering for supply to schools and also sales into the market.”
Bakers’ woes this year worsened after the lockdown meant public schools were suspended for a prolonged period from March 23, depriving many of the village bakeries of their main line of revenue.
For Wanatsha Mokgwathi, however, the lockdown proved a blessing in disguise.
“During the lockdown, I was trying out my cooking skills and realised I was actually quite good at baking and doughnuts.
“I have been doing this for three months now and business is quite good.
“I recently did a crowdfunding on Twitter to buy a stove and move from frying to baking. I was able to raise P5,000 in 24 hours,” she says.
For the upcoming entrepreneur, the ban on imports of baked goods is an opportunity for a greater foothold in the market.
“It’s a good opportunity to open doors,” she says.
“I hope it is implemented well because government often has good initiatives, but poor implementation.
“Getting the retail stores to buy from local bakers could be an issue but this is an opportunity.”
From the established veterans to the upcoming, the issues in the baking sectors appears to be market access. The ban on imported baked goods has done half the job. The local bakers are hoping government goes further and clearly demarcates the lanes each of the players in the market should keep to in the race.