Bakers fear collapse as inflation weakens production

Reliance on imported raw materials, high foreign exchange, and supply chain issues contribute to the exorbitant prices of bread, threatening bakeries’ viability and worsening hunger, ARINZE NWAFOR writes

BAKERS have noted a marked increase in the cost of ingredients to make a loaf, which has reached unsustainable levels and is risking bakeries’ viability.

According to Statista projections, Nigeria’s bread market has the potential to reach revenue levels of up to $18.81bn by 2025, and the market size is expected to grow annually by 11.36 per cent from 2025 to 2029.

Statista also reports that, in terms of volume, the country’s bread market is anticipated to reach 5.07 billion kg by 2029, with an average per capita volume of 18.7 kg by 2025.

The data above hints at growth opportunities, but the consumer base is shrinking. Stakeholders, including the Premium Breadmakers Association of Nigeria, are less enthusiastic about what they deem a precarious market given the 39.84 per cent food inflation rate leaving the food subsector most vulnerable.

Moreover, the Nigerian Bureau of Statistics showed that “There was a notable price increase of bread (sliced) by 115.74 per cent on a year-on-year basis from N708.36 in September 2023 to N1,528.19 in September 2024.” Such price increases make bread—a staple food—unaffordable for many Nigerians.

The PUNCH learnt that baking materials’ prices increased across the board; flour (50 kg bag) rose to N68,000 as of November 2024 from N45,000 in 2023, indicating a 51.11 per cent increase, and a bag of sugar increased by 49.11 per cent from N56,000 to N83,500 within the same period.

Also, the price of butter (or margarine) (15 kg) increased by 60 per cent from N25,000 in 2023 to N40,000 in 2024 and 166.67 per cent since 2022 when it sold for N15,000.

The bread industry’s challenges are emblematic of the country’s broader economic woes. The sub-sector relies on imported raw materials and suffers from skyrocketing production costs driven by foreign exchange fluctuations and supply chain issues.

With hunger spreading, stakeholders have voiced concerns about the sector’s survival and national food security implications.

Breadmakers seek homegrown solutions

PBAN president, Emmanuel Onuorah, in a telephone interview, highlighted that the bread market relied heavily on imported inputs for breadmaking, including yeast, margarine, sugar, and bread improvers (ascorbic acid), saying, “Most of our inputs are imported into the country. For example, the yeast and the margarine we use are imported. For the flour we use, the millers import their wheat. The sugar; they import their raw materials (that is, the raw sugar from Brazil and the bread improver [ascorbic acid]).

“The bread softener is imported into the country—all of our line items. The only thing you (may) say is not even imported is the diesel we use to run the programmer that burns the furnace for our oven and the vehicles we use, the engine parts, and everything.”

However, Onuorah acknowledged local manufacturing, stating, “I think we can do a bread improver, the ascorbic acid that improves the bread before it goes into the oven and gives it a good oven spring, then try to degrade the starch as much as possible. A few companies are coming up to do bread flavours.

“Eggs are bought in the country, but it’s very expensive at N6,000 a crate. Salt is produced in the country. The kinds of margarine produced here by (Devon) King’s are more expensive than the ones imported from Indonesia and Malaysia.

“Sugar is manufactured in the country. Then the flour you get from Nigeria, (but they) import the wheat majorly from Ukraine, Russia, and other parts of the world. Wheat is a major raw material, as flour is the biggest input in the breadmaking process, about 63 to 65 per cent.”

The PBAN president decried the sparseness of local agro-allied manufacturing, which could influence price reduction, as he queried the supply chain of preservative manufacturers: “For some companies that produce their calcium propionate, you have to know that all their raw materials may be coming from outside (Nigeria). You are back to square one because the price dynamics are still subject to foreign exchange. They might have a blending plant here while most things come from China. Nigeria is just a dumping ground because we are not productive (in this sector).”

He further deplored the industry’s reliance on imports, as wheat used by millers is sourced from countries like Ukraine and Russia. “This dependence exposes us to foreign exchange volatility, making production increasingly unsustainable,” he warned.

Bakeries struggle to stay afloat

Operators say it is getting increasingly difficult to keep bakeries up and running, with energy and labour costs added to the proprietor’s living costs.

Onuorah highlighted the challenges businesses face, including high energy prices. He said, “They moved most of us to band A from band B and C, where you were paying around N600,000 or N700,000. For instance, I was doing about N800,000, then they moved me to about N2.5m. How do I pay, knowing fully well that capacity has dropped drastically, and for you to be able to sell bread, there must be expendable income in people’s pockets? Most people working have not gotten any pay raise, and bread keeps going up.

The businessman painted a bleak picture of the ripple effects of inflation. Families that once purchased multiple loaves of bread now ration their consumption or opt for cheaper alternatives, and operators are caught between bleeding money or partaking in underhanded breadmaking practices.

“Families that could buy two standard loaves of four are buying one,” he bellowed. “People are resorting to all sorts of cost-saving measures in the family to be afloat. Some are soaking gari in the morning while some don’t even eat breakfast. They will have to pay for the fuel increase. Most PBAN members use fuel for their delivery vans. Our distributors use fuel for their delivery vans. This has a multiplier effect, and that comes to one thing: inflationary rates.”

“Inflationary rates eat deep into people’s pockets,” Onuorah continued. “After (the bakery expenses), you have to take care of your needs, buying garri, yam, and tomatoes (with prices) out of the reach of your income brackets. (Also), because of the law, we ought to pay a minimum wage of N70,000; meanwhile, your bottom line cannot afford N50,000. What do you do? People are closing shops. The ones not in PBAN are resorting to all kinds of shenanigans to bake bread. But because we are a very detailed association, you can’t do that with us. Members are no longer producing.”

Similarly, a Lagos-based consultant and bakery manager, Oluwaferanmi Opakunle, reckoned that the breadmaking business took a hit and had not recovered fully since the COVID-19 pandemic. “It takes a lot of sacrifice and endurance to keep an organisation standing,” he blurted.

Opakunle told The PUNCH bakery operators endured over-taxation as he challenged what he perceived as a nonchalant government attitude to the breadmaking business: “Rent is very high, and you have to pay shop rent, unless you want to sell at the roadside. Even if you want to sell at the roadside, ‘Agbero’ will collect money.

“The Lagos State Residents Registration Agency will come for the advertisement board (sic), and the local government will come. How much are we selling? Local governments are worse as they will tell you to pay for radio and television. Do you see any television (set) here? Or a radio here? Instead, ask us to pay local government tax as is the standard globally. We can pay for that one. But charging for radio and television is not encouraging.”

Other costs, including mandatory fumigation of bakeries, build up to the priciness of a loaf of bread. “We have to calculate (the cost of) everything on one loaf of bread. As of last November (2023), our family-size bread was being sold at the rate of N600. Now, bread is at N1,300,” Opakunle disclosed.

Moreover, the bakery consultant suggested bread was pricier in northern Nigeria and other southern parts, excluding Lagos and Ogun States, as he maintained that the location of bakeries also contributed to bread pricing.

“Lagos State and Ogun State are still enjoying themselves a little,” Opakunle asserted. “When you go to northern Nigeria, and (other parts of) southern Nigeria, the flour we buy here at N67,000, they buy at N70,000.

“Sometimes we communicate among ourselves to know the price we (can) sell our bread. In Abuja, this family bread we sell at the rate of N1,030; they sell it for N1,900.”

Bread as ‘security food’

The ‘hunger protests’ of 2024 demonstrated how foods like bread are necessary for bodily health and are vital to state security.

PBAN president Onuorah described bread as a cornerstone of food security. He warned that breadmakers’ challenges need urgent intervention to prevent unrest and criminal activity that could arise if hunger is left unattended.

He stated, “I am very concerned because once the people are hungry, they are angry. Once they are angry, they take to criminality, and once they take to criminality, they exacerbate insecurity. The country, as it is presently structured, is not secure, as all six geopolitical zones have their fair share of security challenges.

“The #EndBadGovernance protests were a result of people being unable to eat. Once you price bread out of the reach of the common man, it becomes an insecurity problem because it creates a bit of hunger and insecurity leading to tension in the land. Bread is a safe food.”

The consultant, Opakunle, painted a more harrowing picture as he pointed to how his bakery’s small-sized rectangular bread, which was previously sold for N150 in 2018, cost N500.

“Even the poor cannot eat,” he bellowed. “Some students will be coming back from school and will be here requesting crumbs that fall when you slice your bread. You should reason how the poverty is skyrocketing, as people cannot afford the lowest amount of bread in their community.”

FIIRO’s 43-year-long cassava bread campaign

The Federal Institute of Industrial Research, Oshodi, has led innovative campaigns in the bread-making industry. The cassava bread flour is one of FIIRO’s major interventions to ensure local bread sufficiency.

Leveraging Nigeria’s high cassava yield, FIIRO developed the first cassava bread in 1982 but has struggled to mainstream its innovation. While stakeholders hold the agency to task, others are indifferent about the innovation.

According to Deputy Director Dr. Adetokunbo Osibanjo, FIIRO has developed composite flour innovations combining cassava, sweet potatoes, and other local grains like sorghum and millet with wheat to reduce production costs and reliance on imported ingredients.

Osibanjo maintained that FIIRO has “shown that cassava flour is viable, but implementation requires the willingness of bakers and support from stakeholders.”

While FIIRO still showcases its bread innovations 43 years later, the market has maintained an ever-growing appetite for bread made from imported wheat flour, not cassava.

The PUNCH learnt at a PBAN Members’ Day-Out held in Lagos in 2024 how most consumers’ dislike for cassava bread’s appearance contributes to its underperformance.

The goal of FIIRO’s intervention remains largely unrealised, and the country’s bread sufficiency continues to tank. Osibanjo submitted, “You cannot force human beings; they have to make their own choices and preferences. If Nigerians had embraced cassava bread earlier, we’d have overcome many of today’s challenges.”

How government and agritech can help breadmakers profit

There is a gap in agricultural technology and policy that defines the breadmaking business. Stakeholders have acknowledged their responsibility in innovation along with the many recommendations to the public sector, including exchange rate stabilisation.

A breadmaking ingredients manufacturer and managing director of Edcel Limited, Cletus Chibuko, explained the industry needs to invest in wheat adaptable to her environment, noting, “The most costly input in bread is wheat, and research has shown that it can be grown in Nigeria.

“At present the yield is low, mainly because our farming of wheat is still at the subsistence level. We need to domesticate investment in the development of wheat genotypes adaptable to our environment, use irrigation technology to overcome vagaries of weather, and extend services to ensure best practices in cultivation.”

Chibuko highlighted that the gravity of breadmakers’ challenges could be softened by growing local investment in bread industry manufacturing.

He stated, “We have continued to rely on the latest development in ingredient technology and for more than fifteen years have blended bread improvers and crumb softeners in our factory in Ikorodu, Lagos. This has made it possible for us to tailor-make products suitable to our local environment and share our knowledge of baking technology to help our customers manage costs and optimise operations.”