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Top bakery executives jailed over prices in inflationary Zimbabwe
Associated Press (AP)
December 01, 2006

http://www.iht.com/articles/ap/2006/12/01/africa/AF_GEN_Zimbabwe_Jailed_Bakers.php

HARARE, Zimbabwe: Two of the nation's most senior bakery executives served the first day of four-month jail terms Friday after being convicted of raising the price of bread without government approval.

The government fixes the price of bread under price control laws, and bakers have been in dispute with authorities since the beginning of the year over soaring costs of producing bread in the hyperinflationary economy.

The official inflation rate is over 1,000 percent.

Burombo Mudumo, chief executive officer of Lobels, one of the nation's biggest bakers, and his operations manager Lemmy Chikomo were sentenced Thursday by Harare magistrate Faith Mushure who ruled they "openly defied and flouted the law" on pricing, court officials and attorneys said.

In September, the bakery increased its price of a regular loaf from 185 Zimbabwe dollars (US$ 0.74 €0.56) to 300 Zimbabwe dollars (US$ 1.20 €0.92) without the approval of the Trade and Industry Ministry.

Mudumo is also the head of the independent National Bakers Association.

Mushure refused to free the executives on bail pending an appeal by their attorney, Eric Matinenga.

"A correct message should be sent to other would-be offenders lest they get attracted to this fast-becoming-notorious practice of overcharging," she told the executives.

Last week, the bakers' association asked for a price increase in a letter to the trade ministry to 500 Zimbabwe dollars (US$ 2.00 €1.53) for a regular loaf, citing massive increases in prices of flour, fats, sugar and other baking ingredients and gasoline needed to deliver their products.

Mudumo's organization said many smaller bakeries had already gone out of business and warned that bread would likely disappear from the shelves altogether in coming months if prices were not increased — with the loss of thousands of jobs as more bakers shut down.

Bakers battled to trim production costs by phasing out printed packaging with their brand names, finding inferior ingredients, blending flour with corn meal and shutting down slicing machines, it said.

The imprisonment of the two respected executives was expected to send shock waves through Zimbabwe's embattled industrial sector.

Facing acute shortages of gasoline and spare parts as well as regular power and water outages in the crumbling economy, many factories are operating at below 30 percent of capacity, according to the independent Confederation of Zimbabwe Industries.

In recent months, executives of the main dairy products producer and a fertilizer company were briefly detained by police for alleged violations of the Pricing of Goods Act. None has been convicted.

Mushure sentenced the two bakery executives Thursday to six-month prison terms with two months suspended.

Meanwhile, prices of uncontrolled goods continued to soar amid government efforts to curb inflation.

Beer and soft drinks rose by up to 60 percent on Wednesday, and producers cited soaring costs of ingredients and transport. Regular beer exceeded the equivalent of US$ 4.00 (€3.00) a bottle, representing an increase of more than 2,000 percent in at least six rises this year.

Acute shortages of food, hard currency, gasoline and medicine and other essential imports, along with regular power and water outages, have crippled production, and revenues from agricultural and manufactured exports, mining and tourism have dwindled. The meltdown has largely been blamed on the often violent seizures of thousands of white-owned commercial farms since 2000, which disrupted the agiculture-based economy.

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