…costs of flour, sugar, salt jump on FX crunch
Bread, a staple food, may soon disappear from the breakfast tables of many low- and middle-income Nigerians. This follows the rise in the price of the staple across the country, driven by sharp increases in the prices of sugar, flour, salt and butter, which are the major inputs for bread, BusinessDay findings show.
Confectioners and bakers blame the surging prices of bread on the foreign exchange crunch, which has made the costs of sugar, flour and salt prohibitive.
Market checks yesterday showed that a 50 kg bag of flour sold for N22, 000 in Abuja, Nigeria’s capital, and N20,500 in Onitsha, Anambra State. This same size of flour was sold for N19, 000 in Lagos two days ago.
In February this year, a 50 kg bag of flour sold at only N7,000 across the country. The price rose to N9,000 in March; N12,000 in June, and N19,000 in September. Further checks show that flour bought at these rates are those produced by major local millers in Nigeria.
Similarly, a 50kg bag of sugar, which went for N12,000 per bag in August, went for N19,000 yesterday. In June, the prices of a 50 kg bag of sugar in Kano and Onitsha was N11, 080 and N10, 850 respectively, BusinessDay found. Prices of salt, butter, flavour, and glucose used by bakers and biscuit makers have also shot up by between 30 and 120 percent in the last six months, bakers say.
“There are increases in the price of raw materials and overhead costs. We had to increase the price of bread, which took effect yesterday (Monday), ” Jude Okafor, national publicity secretary, Master Bakers and Caterers’ Association of Nigeria, told BusinessDay yesterday.
“We are now planning to reduce our staff strength so that we can still remain in business. The flour millers have capitalised on the exchange rate differentials to hike price unnecessary,” Okafor said.
Abayomi Adeyinka, a baker in Lagos, said, “The prices of sugar, flour, butter, yeast and other inputs have increased. We now buy a 50kg bag of sugar which was sold for N7, 000 early this year and later increased to N12, 000 for N20, 500.”
Last month in Onitsha, Anambra State, a small loaf of cassava bread produced by Yale Foods sold for N70. This was no longer the case yesterday, as this same size sold for N100 at kiosks and mini shops. A bread seller in Onitsha, Ogechukwu Ani, told BusinessDay that the bread, which was sought-after by families and students, had suddenly become scarce, as suppliers claim they were no longer able to get same from the company at the required quantity.
A medium-sized loaf of bread which went for N200 in Onitsha and Awka, both in Anambra, sold yesterday at between N220 and N250, while larger loafs shot up to N500, from between N400 and N500 last month.
Benin City is another hub of bread making, where travellers to Eastern Nigeria often stop to buy special types of bread at N300 per loaf. The bread, which is believed to be low in sugar, is now priced at N400. In Benin town, medium-sized loaves, which sold for between N200 and N250 in the last four months, have increased by N50.
‘Agege bread’ in Lagos, which was a cheap, sought-after meal by the people of the state, selling at N70, now goes for N120. Findings are that medium-sized loaves of bread which went for N250 and N300 three months ago, have had their prices raised by N50. Bread sellers say the price will shoot up by at least another N50 within two weeks.
Aba and Umuahia residents now pay N80 for the small-sized loaves which went for N50 in June. The medium size loaves which sold for N200 and N250 in July, now go for N250 and N300, according to checks. Bread makers expect prices to be reviewed upwards in the state between one week and three weeks.
In Port Harcourt, the large-sized Genesis Coconut bread, which sold for N400 a few months ago, now goes for N500, while the medium-sized Nibbles Bread which went for N350 is now N450. Genesis Sweet Bread has had its price raised to N450, from N350 a few months ago. Bakers say the price will go up by as much as N100 this month.
Retail stores in Owerri, Imo State, such as Shoprite, Kilimanjaro, and Everyday have raised the prices of the medium size loaf of bread by N50.
BusinessDay found that the prices of major inputs in bread have risen by over 50 percent. The price increases will also biscuits.
“I will cut down on my purchase of biscuits. I won’t stop buying bread because it’s a major combination for my meal. I will just reduce the rate at which I purchase biscuits and other confectionaries,” said Adebambo Akeem, an Abuja-based civil servant.
Nigeria is currently hard hit by an FX crunch, resulting from oil price lows. Africa’s biggest oil producer depends on oil and minerals for 70 percent of foreign exchange and 90 percent of revenue. Poor management of the FX market has hit manufacturers hard as they struggle to import inputs. The country is now in a recession as inflation rate has hit 18 percent while unemployment and lending rates remain in double digits.
‘’Recession drives inflation. The input costs have risen, yes, but people also raise their prices because prices of other things have risen. If your costs rise in other areas, you will likely raise the prices of your products,’’ said Tunde Oyelola, head of public affairs at A.G Leventis Nigeria.
‘’We tried to raise the price of our bread above N400, but we found out that consumers were not happy, so we reversed it,’’ Oyelola said.
Nigeria’s sugar capacity in 2015 was 12,000 metric tonnes as against N1.5 million demand. Most of the country’s needs are met from Brazil. The country imports raw sugar and refines locally.
“The price of sugar increased as a result of the change in foreign exchange,” said Sule Abdullahi, acting group managing director, Dangote Sugar Refinery, recently.
Tajudeen Ibrahim, team head at Chapel Denham Hill had earlier told BusinessDay that soaring sugar prices would further deepen the woes of raw sugar importers.
“If the price increment takes effect, I’ll have to reduce my consumption of bread. Alternatives will also be sourced for the children taking biscuits to school,” said Nnamdi Obiabunmo, an engineer in Port Harcourt.
Adeolu Adegoke, publisher of X-ibits magazine, a bread consumer , said: “They are all for daily use and since there is no other substitute for them, I’ll continue buying.”
Adeyemi Richard, senior legislative aide at National Assembly, said: “Confectionaries like bread and biscuits are necessities at home, especially for the children. I will cut down the rate at which I buy until the price comes down.”