Bakers, consumers devise survival strategies as bread price shoots up by 150% in 1yr

For Olatunde Alausa, the chief executive officer of Rapid Bakers, which has two bakeries–one at Pleasure and the other at Oke Odo, along the Lagos-Abeokuta expressway, there are four key ingredients in the value chain of bread that have jerked up the cost of production.  “Normally, the high cost of materials will affect any business, […]

For Olatunde Alausa, the chief executive officer of Rapid Bakers, which has two bakeries–one at Pleasure and the other at Oke Odo, along the Lagos-Abeokuta expressway, there are four key ingredients in the value chain of bread that have jerked up the cost of production. 

“Normally, the high cost of materials will affect any business, not just bakery,” Alausa said, stressing that the profit margin in the bread business had shrunk to less than five per cent on account of the skyrocketing cost of production. 

700,000 displaced in Bayelsa as flood ravages 300 communities

Poor facilities, overpopulation hinder learning in Minna public schools

He noted that the problem is because “there is no regulated bread market.”  

“The most important thing is that one just has to accept the new reality. The high cost of materials is a general problem. The only problem we have here in Nigeria is that we do not have a regulated bread market. Anybody can just open a bakery, produce and start selling,” he said. 

He further explained that he had cut supply to resellers to reduce debt exposure and keep the business alive, adding that those who are into direct sales to customers have been able to stay afloat. 

“For those who are into direct sales, in my bakery, for instance, 90 per cent of the bread we produce is sold directly to customers. So, the heat is not felt like those big bakeries dealing with depots. 

“Most of the time, when I try to advise upcoming bakers, I usually tell them not to position their bakeries on selling to retailers because bread business is not that profitable. So you don’t have to sell to resellers who wouldn’t pay in time. You are contending with high cost of materials and you want to still contend with defaulting resellers,” he said. 

He said another step he took was to reduce the weight of his loaves.

“Bread prices would have risen beyond what customers can afford, but we can contain or curb it by reducing the weight of loaves. This will enable us to still stay in the business. Take away weight reduction, a lot of bakeries would have closed down,” he added. 

While identifying the high cost of diesel as another major production cost he said, “Early this year, we spent less than N7,000 per day on diesel, but recently, we rose from N7,000 to N40,000 per day.” 

He said if the government could address the issue of electricity the burden of the high cost of production would be reduced.

He said he had never retrenched workers because of the strategies he adopted to stay afloat. He however, confirmed that many people no longer afford bread and there is a low supply of the commodity because of the huge number of bakeries that closed. 

Like Alausa, many bread makers in Nigeria have continued to lament the effect of the rising cost of baking ingredients like flour, margarine, yeast, and sugar.

A survey carried out by Daily Trust on Sunday in Lagos and other major cities indicated that the cost of ingredients for the production of bread had jerked up by 150 per cent to 200 per cent in the past year.

While a bag of flour (50KG) was N19,000 this time last year, it is now N29,500.

As the price of flour is increasing, sugar is also increasing, a bakery owner said, adding, “Sugar is also around that range.”

Also for margarine, a bucket that was N10,000 last year is currently sold at N27, 000 at the time of filing this report. Similarly, from N8,000 last year, yeast now costs N23,000 per carton. 

Worried by the situation in the industry, the Premium Bread Makers Association of Nigeria (PBAN), comprising owners, managing directors and partners of bakeries in Nigeria, had threatened to embark on a four-day warning strike beginning from July 21, 2022.

They took the decision in protest against increasing prices of baking materials in the country, saying it had become impossible to operate bakeries in Nigeria.  

The president of the association, Emmanuel Onuorah, and public and industrial relations officer, Babalola Thomas, also asked the federal government to stop charging a 15 per cent wheat development levy on imports.  

In addition, they requested the National Agency for Food, Drugs Administration and Control (NAFDAC) to review downwards, the N154,000 penalty charged to bakeries on late renewal of certificates. 

The PBAN also called on the government to grant members access to grants and soft loans being given by the Central Bank of Nigeria (CBN) to Minor, Small, and Medium Scale Enterprises (MSMEs).

The association also called for the stoppage of multi-agencies regulation of the bread-making industry. 

“Operating a bakery in Nigeria has become near impossible as the incessant increase in the prices of baking materials and diesel rendered the industry comatose. Bakeries are mostly running on huge losses and this is no longer sustainable.

“Bread is a staple food and one of the cheapest ‘grab and go foods that are available for both the poor and rich. It, therefore, behooves the federal government to be mindful of this and ensure the survival and sustainability of the industry,” the association stated. 

Situation in states 

Like elsewhere in the country, almost all households in Kano depended on bread for easy breakfast due to convenience and hitherto friendly price. 

It was a norm for family heads to bring bread home on a daily basis whenever they were coming back from their respective places of work.

As such, many people ventured into the industry, either at production level, wholesale or retail due to high patronage. Kano streets, residential areas, and other places were flooded with bread production companies, vendors and tea sellers who make it easier and available for people, and in return, earn a living.  

However, bread is no longer what it used to be in Kano, as many baking industries have reduced  their production size, with some even shutting down. Tea spots and bread sellers kiosks that used to be filled with bread of different categories and sizes are now scanty.

Bello Muhammad, who owns a bakery – Glory Special Bread, in Yankaba, said that with the increase in the prices of raw materials for production, they had started giving up on the business as only few of them can survive.

He said majority of their customers were no longer buying bread as they used to, which forced them to reduce production and the number of their staff. He added that salaries of those that were not sacked were also slashed by almost 50 per cent.

“We have serious challenges in this business that we never witnessed. Our production has reduced by over 50 per cent since COVID-19. We used to finish eight sacks of floor in a day, but now, we hardly do 3.5 sacks.

“All the products we are using have witnessed over 100 per cent increase in price. Before COVID-19 we used to buy flour at N9,300, but now, it is sold at N29,000. The diesel that we used to buy at N200 per liter is now N850, while sugar, which was N13,000 now goes for N30,000,” he said. 

A bread seller, Bashir Abdulsalam, said that before the hike in price, he used to sell bread worth N400,000 in a day, but with the current changes in the market, he hardly makes up to N200,000 per day.

“I have spent 20 years in buying and selling bread. Things were not as bad as they are this time around. I own a lot from this business, including my two wives and 11 children. But this is the first time I ever thought of quitting the business because we are running at a loss.” 

A resident of Kurna, Sulaiman Abubakar Sulaiman, said although he buys bread every day, he is getting worried about the rising prices. 

“I buy bread every day for my family and parents. Before now, N500 worth of bread was okay for my two houses. But now, even N1000 is not enough. And a cheaper one is low in quality and the taste is bad,” he said.

Nazifi Sani, another resident, said he had resorted to using millet to make pap (akamu) for the family as an alternative. “Buying bread has become a thing of the past for me as the price is getting unaffordable,” he said. 

In Gombe State, there are mixed feelings between bread sellers and consumers over the recent hike in the price of the commodity by bakers.

While consumers are complaining over the rising price within a short period of time, vendors are happy because of an increase in their profit.

A shop owner in the Tudun Wada area of Gombe metropolis, Umar Juma Abubakar, told Daily Trust on Sunday  that people still patronise him despite the hike in price.

“People still patronise us because it is still one of the cheapest food items that can be purchased by low income earners.  With just tea and sugar one can feed his family without incurring other expenses.

“As you may be aware, people are no longer buying flour to prepare local food as it is expensive, but they are still buying bread because it is affordable and easy to prepare,” he said.

Abubakar, however, noted that people that used to buy two or three loaves now buy only one due to the harsh economic situation.

Another bread vendor, Abdullahi Bappale, said the hike in price had positive and negative effects on both the sellers of the commodity and consumers.

Bappale, who said he had been in the business of hawking bread for the past 25 years, added, “The hike in the price of bread has both positive and negative effects on sellers and buyers alike. The positive side is that our profit has increased, while the number of buyers has been on the decline.

“Generally, I can say that I am getting more profit now that the price is higher. The only unfortunate part is that the number of my customers keeps decreasing.”

Habibu Muhammad, a father of five and resident of the Tabra area of the metropolis, said life was becoming too difficult for low income earners to feed their families.

“The same loaf of bread we used to buy at N200 now is up to N400. It is difficult to cope,” he said.

A middle-class civil servant, Umar Abdulhamid, said he spent more on bread now. “I have a wife and two children. In the past, I used to buy two loaves of bread worth N400 and it could last for about a week. But now, while the size was reduced, the price has doubled. As such, the same loaf of bread I used to buy for N400 is now almost N1,000, and it doesn’t  last for more than three days,” he said.

In Benue State, although the rising cost of bread has not significantly affected consumption, many consumers have opted for alternatives.

“People are still buying as before, what has changed is their preference for a particular brand of bread. They now go for the ones selling at lower prices.  For instance, more people are buying Jumia bread from me now because the taste is good and the price affordable,” she said.

Also, Edwin Ankor said his family had opted for cheaper brands of bread.

“My family has since adjusted to eating the bread we can easily afford. The only difference is that the ones we are eating now are not as tasty as the ones we were buying. But I can tell you that the ones we are buying are still good and healthy for our consumption.  Again, we also reduced the loaves of bread we used to buy,” he said.

Jane Ejembi, whose family depended on bread for breakfast, said the hike in the price of the commodity had forced them to go for an alternative.

“We don’t eat bread regularly in my house again, and when we do, we go for the one that is less in price and with good taste,” she said.

In Taraba State, bakers and tea sellers are making brisk business despite the rising cost of bread, findings by Daily Trust on Sunday revealed. 

It was gathered that most bakers increased their production despite the cost of materials.

A baker, Musa Maiburodi, told Daily Trust Saturday that in the last few years, he was baking 10 bags of flour, but  despite the increase in the cost of flour and other materials, he is now baking more than 25 bags due to demand.

Maiburodi, however, said he used to take his bread to markets in rural areas, where there is high demand. According to him, a loaf of bread that was hitherto sold at N200 is now N500 because of the cost of production.

Another baker in Jalingo, Haruna Samaila, told our correspondent that bakers were not making good profit now because of production cost, but they remained in the business because of the patronage they are enjoying.

Samaila said tea sellers also patronised bakers, but most of them buy on credit, and in some cases, it would be hard to recover the money.

A tea seller, Haruna Lawal, said that despite the cost of bread, they were making brisk business as many people had formed the habit of taking tea and bread all the time, which makes the business attractive, adding, “There is no village, no matter how small it is, that you will not find tea and bread sellers.” 

 

Contributions from Abdullateef Aliyu( Lagos); Magaji Isa Hunkuyi, (Jalingo); Zahraddeen Yakubu Shuaibu(Kano); Haruna Gimba Yaya (Gombe) & Hope Abah Emmanuel (Makurdi)