(MENAFN- The Conversation)
The Premium Breadmakers Association of Nigeria, representing the interests of all breadmakers in the country, recently embarked on a national strike complaining about the “incessant increase in the prices of baking materials” . Bread is one of the most regularly consumed foods across Nigeria. The strike meant that it wasn't being produced. Economist Oluwabunmi Adejumo spoke to the Association's president, Emmanuel Onuorah, about these developments.
Oluwabunmi Adejumo : Why did your association go on a four day strike ?
Emmanuel Onuorah : We went on the strike with our sister association, the Association of Master Bakers and Caterers of Nigeria after we agreed that our industry is in dire straits. We've been shouting ourselves hoarse over the rising cost of bread components.
The inflationary pressure is huge and post COVID, it's become worse. It has been exacerbated by the war in Ukraine which has affected the price of wheat used in flour production, our major component. Wheat prices have gone up by 60% in Africa between February and May this year and this has affected us a lot. Same goes for sugar. The price has also increased.
And not only that. Very critical to our survival as an industry is the current energy crisis . There is no public electricity in the country. Most of us are running on 24 hours generators using diesel. The price of diesel was N260 (about $0.61US$) per litre late last year and is now N850 (about US$2) in some states. Painfully too some of our ovens were designed to be run on public electricity supply and not generators. This has left a deep hole in our operational costs. Eggs' prices too have increased .
Some of our members have been forced to close down their operations. At the beginning of this year, we were about 35,000 members. Now we are 29,000. Bakery is a multi million naira investment and with all these reasons, you cannot run effectively. At the end of the financial year you'll discover you are running at a loss.
So that was why we went on the four day strike. And if the trend continues, we may stop producing bread again.
Oluwabunmi Adejumo : Why are you planning another hike in bread prices given the recent hike of between 10% to 20%?
Emmanuel Onuorah : The prices of bread materials have not stopped increasing so what do we do? We know things are tough for Nigerians but we have to survive too. Our family members too buy bread so we are affected as well. Bakers can't afford to just go and bake bread without proper accounting and we can't be giving people complimentary loaves anymore.
Oluwabunmi Adejumo : Can we then say your recent strike did not achieve its aims?
Emmanuel Onuorah : Well, I wouldn't say it did not achieve its aims. It did.
The first aim was to let the government be aware of the fact that we are suffering as bakers.
The second, a critical one, was to alert Nigerians. And we achieved that too. Now everybody is talking about bread prices and you are interviewing me too.
Remember also that we went on strike with our sister association, Association of Master Bakers and Caterers of Nigeria. So it was an industry and a country wide thing.
There is this erroneous belief in Nigeria that bread prices must never increase. They must always be constant. We succeeded in letting people know that bread prices will increase in line with economic vagaries. I think we got the message across that just as the flour millers increase their prices, bakers will increase theirs too.
We also sensitised Nigerians to begin calling our government to action. Let's start holding our government accountable. Let's start asking them to look at the economy more closely and also look at the bread chain, all the components together.
Fortunately the government called us for a meeting. The invitation came from the federal ministry of industry, trade and investment. The ministries of labour, agriculture and finance too were there. The flour millers were there too and the government listened to us and we made our position very clear. They promised they were going to get to the root of this matter and see what can be done to ameliorate some of the pain we are going through as an industry and businesses.
So the ball is now in the court of the Federal Ministry of industry, trade and investment.
Oluwabunmi Adejumo : In which areas do you want the government to intervene?
Emmanuel Onuorah : The first has to do with the import duties on bread components. Some, such as wheat, are as high as 30% cumulatively . We want them to be reduced.
The second is what is called wheat development levy introduced in 2012 - 15% to support the local production of wheat. This was supposed to help wheat cultivation. The levy was supposed to be kept in an escrow account to be used for this. And to support the industry when it was in distress. We also reminded the government that what we are witnessing is as a result of the Russian-Ukraine war and we need to do something to cushion its effects.
Another major thing was the fee we pay to the National Agency for Foods and Drug Administration and Control to register our products. This has gone up, and has to be renewed every two years. We suggested that the renewal should be four or five years.
There is also a plethora of agencies at state and local governments that we pay intermittently. And we are battling multiple taxation too. Most of us are small businesses and these levies affect us seriously. We want the government to look into that too.
And there's a fund held by the Central Bank to help small and medium enterprises. Access to this will go a long way to cushion what we are living through.
Oluwabunmi Adejumo : Most bread components are imported, why is this so?
Emmanuel Onuorah : This country cannot continue in this trajectory. Look at energy sector. We have four refineries that are not working now so we end up importing fuel. It is the same situation with bread. There are some things we can produce but we are importing them. While some components have substitutes, others don't. Flour for instance can only be got from wheat.
We know too that if we can improve our local content bread prices will go down. It means also that we will not be subject to vagaries of international markets.
That's why we need good research and development in our universities and research institutions. Why can't we have research into substitutes for bread components? What's happening in our food technology departments across the country?
We also have problem of capacity utilisation which has dropped to about 30% to 40% in our industry. We can't produce at the level we should because of many factors – security, energy and funding.
Some are still believers in the Nigerian project and we all must play our part well. That's a way we can reduce import dependency. That's why as an industry, we welcome any initiative by the government to help us because issues about food are very delicate.
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