For the umpteenth time, bakers across the country again increased the price of bread, amid the harsh business environment triggered by the surging production cost.
Before now, the bakers, under the aegis of Association of Master Bakers and Caterers of Nigeria (AMBCN) and Premium Bread-Makers Association of Nigeria, have jerked up the price, at least three times this year – March, April and June, according to investigations.
In the last one-year, reports have it that the wheat-based products such as the popular pre-packed wheat flour and bread have seen steady price increase across the country.
According to the recent report of the National Bureau of Statistics (NBS), the analysis showed that bread price rose with about 35 per cent between May 2021 and May 2022, due to rising food inflation.
With this new price regime, which took effect since last Monday, after a four-day nation-wide strike, a small size of bread previously sold for N200 is now sold between N240 and N250; N500 size increased to N600; that of N600 increased to N750; N700 size now costs N880; and that of N800, now sells for between N950 and N1, 000.
Though the bakers have attributed the incessant price increase and withdrawal of service to many factors – exchange rate, sourcing of foreign currency; insurgency; high cost of raw materials, and rising energy cost, among others, but principal among the challenges is the increasing price of the raw materials, especially flour.
The Guardian learnt that a bag of flour, sold between N8, 000 and N10, 300 before the COVID-19 pandemic, now sells for about N22, 500. A bag of Sugar previously sold for N13, 000 is now N23, 500; a crate of egg from N800 to N2, 200; and price of margarine increased from N5, 800 to N18, 000, among others.
Industry players say the record spike in the price of wheat is a major problem facing the baking industry. The commodity tops the country’s food import bill yearly. In 2021, Nigeria spending on wheat rose to about $2.5b from the $1.5b spent two years earlier.
They claimed that the multifaceted value chain crises, including the shortage of foreign exchange, mounting freight charges and hike in the price of diesel, worsened by the Russia and Ukraine war, have continued to disrupt the wheat value chain.
According to the NBS, Nigeria imported N124b worth of wheat from Russia in the first nine months of 2021. Since the Russia-Ukraine war, prices of commodities have surged.
Currently, flour millers are grappling with the rising production cost and low wheat cultivation in the country. It is the rising costs that have now passed down to the bakers, who are battling to stay afloat.
Based on investigations, while many bakers are increasing their production quantity to avoid running at a loss, those who could not cope with the unfriendly situation have shut down, after incurring debts.
For instance in Damaturu, Yobe State, 60 bakeries have closed shop from a total number of 90 bakeries in the town. The chairman of the bakers, Alhaji Isa, who confirmed this, decried the high cost of production, as well as insurgency. It was also gathered that a good number of the bakers have shut down in Lagos, Anambra, Kano and Delta states, among others.
The development, which has depressed the sector’s players, has sparked off debate for the failed cassava bread initiative, introduced by the Federal Government.
The fund, initiated in 2012 and released in principle in 2013, was meant for farmers, bakers, processors and others in the cassava value chain, to enhance productivity.
After years of foot-dragging on disbursement of the major portion of the N10b first tranche release from the Cassava bread fund by the Federal Ministry of Agriculture and Rural Development (FMARD), Bank of Industry (BoI) and other stakeholders involved in the project, stakeholders passed the verdict that the scheme had gone the way of previous failed interventions of government in food and cash crops production.
It was learnt that the approved work – plan of the initiative as spelt out, was to address the following components – development of robust cassava root supply chain – 6,400 hectares; 5,000 hectares would be established under the initiative’s mechanisation programme; 29,500 hectares would be established by small scale farmers and linked to SME’s for adequate supply of cassava roots and at the right price; support to High Quality Cassava Flour (HQCF) producers through equipment support; provision of working capital and institution of guaranteed minimum price; equipment support and capacity building for Master Bakers to improve the cassava bread production efficiency; and social marketing to create awareness of the cassava bread and ensure its acceptability by Nigerians.
Concerned bodies, which include the National Cassava Processors and Marketers Association (NCAPMA); AMBCN; and National Cassava Growers Association, appear to have resigned to fate due to lack of information on the fund, claiming that the fund might have been siphoned or probably stashed away in some accounts.
The National Secretary, AMBCN, who doubles as the Anambra State Chairman of the body, Jude Okafor, who described the cassava bread initiative as a good idea that is capable of bailing the country out of the current wheat quagmire, appealed to the Federal Government and other stakeholders involved to rejuvenate the botched initiative.
“It is a very good initiative, we are okay with it as bakers. We have made our position known and submitted it to the National Assembly. But we are saying that potato, sorghum and millet should also be considered as alternatives to wheat, so that there won’t be any monopoly on the HQCF.
“If we tied it to one crop, the monopolistic tendency can come in, but if you have alternatives, it will be better, so that the millers will come up and say the price of cassava has gone too high that’s why the price of flour increased.”
While lamenting that a lot of their members have closed shop in Lagos, Delta, Kano, and Anambra, among other states, Okafor said: “We have made our position known already on the cassava bread initiative; the only update is the need to include potato, sorghum and millet. We discovered that the sweet potato is very good, sorghum is equally good.
“It should be made mandatory for the millers as addition and inclusion in flour making, so that every bread must contain local content, that’s how we can have alternatives to wheat. More importantly, the Federal Government should remove the 15 per cent levy imposed on wheat grain importation and every levy on production materials, to avert production and major food inflation crisis.”
The Managing Director of Spectra Industries Limited, Lagos, Mr. Durodola Omolewa Kuteyi, who also called for the reintroduction of the initiative, noted that the move would help the country to save its foreign exchange. Said he, “The HQCF is relevant anytime, it depends on what the government want people to eat or do.
“The percentage of wheat used in bread production can be adjusted in a way that cassava flour will be accommodated in the bread, thereby saving foreign exchange for the country.
“So, the HQCF is relevant anytime, it depends on what the government want people to eat or do. Instead of bakers withdrawing their services, what they ought to do was to adjust their price because they want to make profit.
“It’s the consumers that should cry to government, not the bakers. The bakers just need to adjust their price to continue in business. If you look at what happened in the North Africa the other time, it was the cost of bread that forced change of government. So, government should be afraid of the public who are buying the bread, not the bakers going on strike.”
It’s gathered that an investigation was conducted at the National Assembly last year, which revealed that about N500b, has been diverted from the cassava bread fund.
The source said, “We saw the people that took the money, we just kept quiet because they warned us that we can be dealt with if we open up the case and this money came from the 15 per cent levy they are collecting. They continued to deduct that money; the money yields between N3b and N6b monthly. It’s unfortunate, we just need to keep talking until they drive all of us out of business…”