Nigerian bakers and flour millers have warned of further pricing pressures in the industry, which would result in more price increases for bread and other wheat-based foods.
AFRIPOST reports that the increase is being driven by several factors, including rising flour prices, which are exacerbated by Nigeria’s reliance on imported wheat, high currency rates, transportation expenses, and energy prices.
Despite cost-cutting initiatives, firms in the industry claim considerable gains in sales and profit, implying that customers are paying more than the real increase in production costs.
The three biggest businesses in the industry had a 47.2% gain in revenue in 2023, despite a 45% increase in manufacturing expenses.
Nigeria produces less than 1% of the wheat it requires. Therefore, flour costs have gone up, while local consumption has gone up by over 40% in the last decade.
The scenario is further made worse by issues including a lack of foreign exchange, instability in areas that produce wheat, and inadequate infrastructure.
With luxury loaves now costing about ₦2,500, a 51.5% rise year over year, and low-income loaf portions selling for ₦1,500, a 76.5% increase, bread costs have surpassed inflation.
Due to the rapidly rising costs of materials and taxes, bakeries are nevertheless passing these increases on to customers.
“To be very honest, businesses in Nigeria are facing various forms of challenges,” said Engr. Emmanuel Onuorah, president of the Premium Bread Manufacturers Association of Nigeria (PBAN), in an interview with Vanguard.
“All I can say is that the incessant increase in the price of flour, which makes up about 60% of our cost is not good for the bakery industry in Nigeria.
“The challenges facing bakers are so numerous; the price of our ingredients like flour, sugar, calcium Propionate (preservative), margarine, yeast, bread softener, ascorbic acid etc keeps increasing at an alarming rate.
“Multiple taxation by Federal, State and Local governments is stifling and almost crippling the bread-making business.”