Why bread price has to go up – Bakers President

The umbrella body of bread bakers in Nigeria, the Premium Breadmakers Association of Nigeria (PBAN) has increased the price of bread in the country. Tosan Jemide is Managing Director of Top Crust Classic White Bread base in Lagos and President of PBAN, he tells SULEIMAN IDRIS reasons behind the hike.

Why the agitations for government intervention by your associations?

The Premium Breadmakers Association of Nigeria (PBAN) and The Association of Master bakers & Caterers of Nigeria (AMBCN) decided to engage stakeholders, especially the press to draw the attention of the government and Nigerians to the near wipe out of the bread making industry.

What is the state of the industry at present?

Both PBAN & AMBCN employ millions of Nigerians directly and indirectly, making them a significant player in the Nigerian labour market. 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% 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.

How has all these affected your profit margin?

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.

How do you want the federal government to intervene in the aftermath of the Covid-19 pandemic?

Whilst 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, the period between March 2020 and August 2020, the price of flour which is our major ingredient has increased from #10,500 naira per 50kg bag to #13,500 naira per bag. Sugar increased from #13,500 per bag, went as high as #29,000 and down to #19,000 per bag in the corresponding period. Margarine, from #5,800 is almost #11,000. A 25 litre can of Vegetable oil which was about #13,000 thousand now sells for #16,000 while Milk which was hitherto #29,000, now goes for #52,000. Preservative (Calcium Propionate) increased from #25,000 to #34,500, with the possibility of further price increases not ruled out.

What are the challenges faced by the associations currently?

Over the last 6 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 go out of business. Most of us got loans with double digit 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 same measure in the prices of bread.

What have been the responses of millers, sugar refiners and other suppliers?

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 be 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. In reality, we have been busy helping them remain profitable while our businesses suffer, because we are more in tune with the purchasing power of the consumer and are deeply concerned about food security.

Don’t you think the price increase will negatively affect the purchasing powers of most Nigerians?

While there is a growing demand for bread products, it should be noted that the Nigerian consumers spending power has depleted significantly. The incessant and unannounced increases in prices of baking ingredients every month without recourse to the challenge’s bakers face as end users, renders business planning and forecast nugatory for us. We are using this medium to convey to the millers, sugar refiners and all other ingredient manufacturers/suppliers, that PBAN & AMBCN shall no longer take a seat and watch such blatant increase in prices going forward. We shall react with equal price increases or stiff resistance. 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.

What do you think is the way out of these challenges?

We are therefore calling on His Excellency, President Muhammadu Buhari to help sustain the industry as it strives to excel in its role of food security by relying on the millers or supporting them in whatever way they can to help them with the forex. In the same vein, we request that 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.

Specifically, what incentive should the government give the industry?

Currently, there is a 5% tariff on wheat imports, plus an additional 15% levy (earmarked for the national wheat development program) totaling a 20% duty. Since 2012, the wheat development program in Nigeria has been in place, yet 8years 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 program functions well to justify the additional 15% levy. If this is not a viable program, 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.

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. 

According to several financial reports, the size of the Nigerian bread industry is estimated at $621 million with a Compound Annual Growth Rate (CAGR) of 3% within the next year. As an Industry, we contribute greatly to job creation, food security and economic growth in Nigeria. We should be supported to remain sustainable by the federal and states governments by providing an enabling environment for our businesses to thrive.

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