Bread, a food made from grain-based dough, is a household name in the breakfast table of Nigerians. Taken with a hot drink or sandwiched with fish stew etc., bread has remained the most common breakfast dish in most Nigerian homes. It is cherished and paronized by adults and children alike, which takes its consumption beyond the breakfast table to even meet people’s lunch and dinner needs. It is quick and easy to assemble.
One good thing about this much-loved food is its ability to maintain an affordable and stable price over the years, an attribute that had endeared it most to every household. Hence, considering the place of bread in the household menu, there is no doubt that any decision made about it will affect the generality of Nigerian households and even beyond.
Last week, to the chagrin of Nigerians, Nigerian bakers embarked on a four-day withdrawal from services. Basically, this decision was intended to draw the attention of the federal government and the public to the crises in the industry. Furthermore, the National Association of Master Bakers and Caterers of Nigeria (AMBCN) said it was to ensure the survival of the bread industry in Nigeria. The association’s national secretary, Jude Okafor, explained that high production costs forced bakers to close shops, as Onuorah, a baker, said the capacity of bakeries had dropped to 70%, adding that they could no longer have the required turnover. be able to break even and some close their doors. “In my bakery, I had 150 employees, today I only have 45, because my production has dropped. Before, I worked three shifts in 24 hours, now I work 12 hours. “It has been very difficult with us as companies. We take out loans from banks and do not repay. But the bankers no longer want to give us a lifeline. This is why we want the federal government to look our way.
Beyond the closure of stores for four days came an increase in the price of bread, a situation that sent jitters down the spine of many households. Recall that around the same time last year, in October precisely, Olufunmilola Olukomaiya, a well-known journalist, sounded the alarm about the rise in the price of bread on the Nigerian market as it gradually became the prerogative of the rich. A loaf of bread previously sold for N500 during the reporting period sold for N700 while those for N200, were sold for N300. Amid reactions to the development, bread sellers insisted that the high cost of raw materials necessitated the increase. Nigerians from all over the country have complained bitterly about high bread prices.
Then, the President of the Association of Master Bakers and Caterers of Nigeria (AMBCN), Abuja Chapter, Mr. Ishaq Abdulkareem, said that the 30% increase in the price of bread was aimed at avoiding the closure of bakeries caused by the cost of ingredients. and manufacturing. Abdulkareem said the prices of all ingredients used for baking were too high, especially flour and sugar. “The cost of business registration is high, previously the cost of registration was N32,500 but now it is N90,000,” he said. Although the increases have been linked to rising commodity prices, insecurity remains a significant factor which has resulted in the high cost of commodities occasioned by their unavailability and, by extension, the exchange rate of the Naira per against the dollar. There were also insinuations that double taxation by the authorities as well as the high cost of purchasing diesel were also contributory.
Today, when people were still grappling with the realities of the market, the same big loaf of bread that seemed to have settled for 700-800# over the past year now costs just 1,000# . On Friday, a bread seller said that if the old price were to remain, manufacturers would run at a loss. And for Mrs. Maria Cardillo, general manager of Bon Bread, the price of bread had to be increased to avoid the collapse of the company. She said the price of bread needed to be increased because “we had an increase in raw material prices and we have no alternative”. Again, people reacted, but what could have caused their reaction?
Amazingly, the bakers aren’t even swayed by the public outcry, they decided to take the courage to do it and ignore the fear of the unknown. According to the head baker, “we all have strategies to keep customers on our side, but don’t let your pricing strategy eat away at you; there are other things to give your customer to keep them with you, like giving them incentives. The Secretary said: “We regret these price increases, it is due to economic indicators and we hope it will not last too long. However, these prices are valid as long as the cost of raw materials remains stable,” he said.
Yinka Kolawole & Providence Ayanfeoluwa, writing for Vanguard newspaper, revealed that prices have risen 50% this year, including 25% last month. According to them, available data showed that Nigeria imported around 99% of its wheat requirements in the first quarter of 2022 (Q1’22), and with the consequent demand pressure for foreign exchange (forex) this has been identified as one of the main factors responsible for the current bread crisis in Nigeria. The report also shows that bakers and other operators in the confectionery industry have marked up the prices of their products about four times this year. Like last week, the series of price hikes has seen the average retail price of bread rise by 50% this year. How long this intermittent rise in the price of bread will continue remains a puzzle for many Nigerians. still to solve
The Federal Ministry of Agriculture and Rural Development estimated Nigeria’s national wheat requirement at 5 million metric tons, and the National Bureau of Statistics (NBS) reported that the country produced only 36,943 metric tons. of wheat in 2021, which represents less than one percent of the country’s needs. total annual demand. According to the NBS, wheat was Nigeria’s second most imported commodity in the first quarter of 2022, accounting for N258.3 billion of total import value during the period. A 50kg sack of flour now costs around N30,000 compared to N12,600 in January 2021, an increase of 138%. Onuorah corroborated this. He said, “In bread making, our inputs are 100% imported because the wheat flour we use comes mainly from Russia. It’s not us but the millers because we don’t take care of the wheat, we take care of their finished product. And from what we got from them, they get most of the wheat from Russia, Ukraine and part of Argentina.”
From the analysis given, it is evident that the huge differential between import and in-country growth of the country’s wheat requirements can only be met by import and foreign currency (forex) needed to pursuing this can only be imagined. Who knows if the government has planned concessions on the forex. Undoubtedly, the danger of sourcing on the parallel market outside the government window is the possibility of an exorbitant rate. Unfortunately, the bakers, in addition, always complain about a levy which they call the 15% levy on the development of wheat. This tax, which would have been initiated by the Jonathan administration, was supposed to be a palliative for two years.
Onuorah maintained that the essence of this 15% wheat development tax was to help grow wheat in the country, but revealed that “Apart from that, the government also imposes a 15% tax on wheat. ‘import of wheat’. Cumulatively, what they consider to be an import duty on wheat is 30%, making it a problem compounded by the abnormally high diesel price. Finally, what we see is a spiral of production costs. According to reports, currently, “flour costs between N29,000 and N30,000, the same with sugar, softener and egg which was N800 per crate, is now N2,200 depending on size, smaller the size is N2,000 Yeast that was between N5,000 and N7,000 is now N21,000, calcium sulfate from N29,000 is now around N54,000, and the list goes on.
Listening to bakers recount their conflict with regulatory agencies, NAFDAC and SON, including touts who allegedly drive into bakeries to disturb, smashing the windshields and mirrors of bakery vehicles when drivers refuse their demands, you will conclude that it is indeed a mixed bag. for bakers. But how long will this trend last? If a levy is instituted for a certain purpose, which has a time horizon, shouldn’t this initiative be assessed within the time frame? From the administration of former President Goodluck Jonathan, which gave birth to the “wheat development tax”, until seven years after the administration of President Buhari, it is questionable whether such a tax continues to operate. unattended. If the objective was to help grow wheat in the country, then it is necessary to evaluate the initiative to determine the extent of progress made in this regard. A review of this levy is eminent
Again, bakers registered their aversion to the 154,000 naira penalty charged to bakeries for late renewal of certificates by NAFDAC. Although no sane person would encourage an investor to renew their business documents late, it is important that the authorities take into consideration the difficulties encountered by investors which lead to a delay in the renewal of statutory business documents. The said penalty of N154,000 imposed on bakeries for late renewal of certificates by NAFDAC will ultimately be borne by consumers. Thus, NAFDAC may need to reconsider the alternative sanction measure or, better yet, proceed with a downward revision of the existing sum.
Bakeries as available in Nigeria, fall under Micro Small and Medium Enterprises (MSMEs), having multiple taxation in the form of every agency coming to regulate, will only inflate their cost of production. To meet the needs of the common man, let’s make bread accessible by making it affordable.
By: Sylvia ThankGod-Amadi