- Premium Bread Makers Association of Nigeria expresses concern over the impact of economic reforms on their industry.
- The unification of exchange rates affects wheat and sugar imports, leading to price increases.
- Rising energy costs, potential electricity tariff hikes, and VAT on diesel imports put bread makers at risk of reduced profitability and business viability.
Bread bakers under the aegis of the Premium Bread Makers Association of Nigeria have lamented the effects of the economic reforms on their industry.
The group’s President expressed the views of its members in an interview on AriseTv.
Mr. Emmanuel Onuorah said the unification of the exchange rate has affected wheat and sugar imports, which have seen a significant increase.
He noted that sugar and wheat importers had always claimed they sourced FX from the parallel market. However, with the unification of the exchange rate, they now claimed they will increase prices as the exchange rate has been unified.
In his words
- “The top echelon of these millers during our meetings will tell us that they source FX from the parallel market, and we thought they were getting it at N750/$1 then. All of a sudden, President Tinubu’s administration has come and liberalized the whole thing and then the people (wheat and sugar importers) are now trying to say oh, we are getting this thing (FX) from an official source… what this tells us is that they are trying to put us in a Cul de sac as bread makers and make us unprofitable and drive us out of business.”
The association’s President also spoke of the plan of the wheat importers to increase the price of wheat and only put it on hold because of rising tensions.
He went further to say sugar refiners have increased prices by N10,000 since April. Mr. Onourah narrated the impacted-on production thus
- “In our costing, flour takes above 50% of the total cost template, followed by sugar, then energy comes close. The energy that was like 2% to 3% before now competes with sugar and from the look of things, it may surpass it”
He complained of the planned electricity tariff hike by the NERC and how the effects it has on break makers.
- “I spend about N7000 weekly on energy but now I do N4000. My capacity has dropped by 70% and coupled with this there is a planned electricity hike and a 7.5% VAT on diesel imports. How does a business survive in this?”
When quizzed on the new exchange rate by the customs, Mr. Emmanuel appealed to the President to take things easy and provide some incentives to Nigerians.
- He responded; “The government should give back and avoid pushing Nigerians to the precipice in the course of these reforms”
He also said some of the association’s members are ready to increase prices since raw materials and energy costs have eroded their margins and he has given them the go-ahead to do so.
What you should know
Data from the Premium Bread Makers Association of Nigeria (PBAN) shows that flour- derived from wheat constitutes 54% of the cost of bread production, followed by milk at 17.46%, sugar at 13.64%, and yeast at 3.82%.
Nigeria produces only about 420,000 mt of wheat annually but its annual consumption stands at 6.5 million metric tons according to data from the fed Ministry of Agriculture.
Data from Nairmaterics in 2021 reveal Nigeria spent around N1.21 trillion on wheat importation. For the first 9months of 2022, the country imported wheat valued at N753.6 billion.
For sugar, Nigeria imported over 1.5 million metric tons of sugar valued at $433 million in 2019 data from the Nigeria Sugar Development Council reveals.
The Nigerian government in 2021 introduced a policy in which only three companies were provided licenses to import sugar into the country.
The Nigerian sugar industry can only supply around 5% of the country’s total demand.