Agony as costs of flour, sugar, electricity threaten $621m bread industry

Bread industry, bakers

Breadmakers Association of Nigeria, PBAN, and the Association of Master Bakers and Caterers of Nigeria, AMBCN, have cried out to the Federal Government over the worsening business climate, which they said could kill the $621 million industry in Nigeria.

Complaining about the rising costs of flour, sugar and other baking ingredients, fuel and electricity, they said they were getting to a point they can no longer produce.

At a briefing on Thursday, they said: “Data has shown that about 70% of the flour consumed in the industry goes into bread production.

“It is, therefore, expedient for the Federal Government of Nigeria to do everything within its means to ensure that the industry does not die as we can’t breathe any longer.

“Our businesses have become comatose due to the incessant increase in the prices of baking ingredients, and our inability to pass on the cost to the Nigerian consumer.

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“Profit in our line of business has been wiped out completely. 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.

”While we acknowledge the challenges the ghastly COVID-19 pandemic has thrown the entire world into, and we are not oblivious of the difficulties ahead, we call on the Federal Government to come to our aid as we can no longer breathe.

“Although we have been experiencing difficulties for a while, between March and August 2020 the price of flour, which is our major ingredient, has increased from N10,500 per 50kg bag to N13,500 per bag.

“Sugar increased from N13,500 per bag to as high as N29,000 and then 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.

“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.

“As associations, it is either we do something about the incessant increase in prices of baking ingredients in which there is no solution in sight, or we shut down.

“Most of us got loans with double digits interest rates from banks and other financial institutions to fund our bakery projects and are finding it extremely difficult to meet our loan repayment obligations.

“Both associations shall, henceforth, be responding correspondingly to any indiscriminate price increases by millers, sugar refiners and ingredient manufacturers and suppliers with the same measure in the prices of bread.

“As critical stakeholders in the bakery industry, we raise concerns over the fact that the flour millers, sugar refiners and baking ingredient manufacturers/suppliers do not deem it necessary to consult us before they increase their prices.

“We expect that at the very least, they would give us enough time to plan and get psychologically prepared to absorb the shocks that come with price increases.

“While we clearly understand their predicament, and their strong desire to remain profitable, it would worthy of note to mention that they would be out of business if all the bakeries adopt their approach to profitability as the demand for flour-based products would drop significantly once the price exceeds a certain threshold.

“We, therefore, appeal passionately to the government, to do everything within their means to see how they can support the millers, sugar refiners and baking ingredient manufacturers/suppliers to ameliorate whatever challenges that make them increase their prices this often. This is a matter that requires urgent attention as we no longer can breathe.

“Currently, there is a 5% tariff on wheat imports, plus an additional 15% levy (earmarked for the national wheat development program) totalling a 20% duty.

“Since 2012, the wheat development programme in Nigeria has been in place, yet eight years later, we are yet to see the benefits of the 15% levy in the local wheat supply chain.

“We, therefore, call on the government to look into ensuring that the wheat development programme functions well to justify the additional 15% levy.

“If this is not a viable programme, we appeal to the government to scrap it and give the millers this 15% back so it can cascade to the entire flour industry and the Nigerian citizens alike.”



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