Increase in bread price looms as bread makers squeezed over high cost of production
There may be an increase in the price of bread in Nigeria, as bread makers face incessant increase in the prices of baking ingredients, and their inability to pass on the cost to the Nigerian consumers.
The Premium Breadmakers Association of Nigeria (PBAN) and the Association of Master bakers & Caterers of Nigeria (AMBCN) have therefore called the attention of government and Nigerians to the near wipe out of the bread making industry in Nigeria.
In a press conference organised by PBAN and AMBCN, the associations called on the federal government to do everything within its means to ensure that the industry does not die as the association stressed that they “can’t breathe any longer.”
The associations noted that their businesses have become comatose due to the incessant increase in the prices of baking ingredients, and their inability to pass on the cost to the Nigerian consumer, adding that profit in their line of business has been wiped out completely.
They also disclosed that capital injection through loans and equity investments have been pumped into a lot of these businesses and repayments are no longer possible due to the prevailing situation in the industry and the economy as a whole.
The role of bread in food security of Nigeria cannot be over emphasized, as it has found its place on the table of every Nigerian household, regardless of social standing, making it the most popular staple in Nigeria today. Data has shown that about 70 percent of the flour consumed in the industry goes into bread production.
Speaking during a press conference to disclose the woes of bread makers in Nigeria to the federal government and Nigerians, Tosan Jemide, President, PBAN said whilst the associations acknowledge the challenges the ghastly Covid 19 pandemic has thrown the entire world into, and they are not oblivious of the difficulties ahead, they are calling on the federal government to come to our aid as we can no longer breathe. According to Jemide, although bread makers have been experiencing difficulties for a while, the period between March 2020 and August 2020, the price of flour which is the major ingredient has increased from N10,500 per 50kg bag to N13,500 per bag.
“Sugar increased from N13,500 per bag, went as high as N29,000 and down to N19,000 per bag in the corresponding period. Margarine, from N5,800 is almost N11,000. A 25 litre can of Vegetable oil which was about N13,000 thousand now sells for N16,000 while milk which was hitherto N29,000, now goes for N52,000.
“Preservative (Calcium Propionate) increased from N25,000 to N34,500, with the possibility of further price increases not ruled out. The data analysis below shows the percentage increase in prices of baking ingredients over the last 6 months of 2020, to enable you understand the precariousness the situation of the bread making industry is in presently,” he explained.
Buttressing the challenges, the president of PBAN said over the last six months, the prices of flour, sugar and other baking ingredients have skyrocketed without a corresponding increase in prices of bread by our member bakeries.
He noted that as Associations, it is either they do something about the incessant increase in prices of baking ingredients in which there is no solution in sight, or we may close shops.
He explained that most bread makers got loans with double digit interest rates from banks and other financial institutions to fund their bakery projects and are finding it extremely difficult to meet their loan repayment obligations, adding that both associations shall henceforth be responding correspondingly to any indiscriminate price increases by millers, sugar refiners and ingredient manufacturers and suppliers with same measure in the prices of bread.
Jemide called on President Muhammadu Buhari to help sustain the industry as it strives to excel in its role of food security by reining in on the millers or supporting them in whatever way they can to help them with the forex.
He also requested the government intervenes in the issue of rising cost of baking ingredients by prevailing on sellers as well as imploring millers to put a stop to the incessant increment of price, giving some consideration to the manufacturers.
“Currently, there is a five percent tariff on wheat imports, plus an additional 15 percent levy (earmarked for the national wheat development program) totalling a 20 percent duty. Since 2012, the wheat development program in Nigeria has been in place, yet eight years later, we are yet to see the benefits of the 15 percent levy in the local wheat supply chain.
“We therefore call on the government to look into ensuring that the wheat development program functions well to justify the additional 15 percent levy. If this is not a viable program, we appeal to the government to scrap it and give the millers this 15 percent back so it can cascade to the entire flour industry and the Nigerian citizens alike.
“Considering that bread has become the most popular staple in Nigeria, we suggest that the government revisits its forex policy, by giving wheat importers priority for accessing foreign exchange since our local wheat production cannot meet up with the growing demand for flour,” Jemide explained.