Bakers, confectioners hurt by rising prices of raw materials

by | December 18, 2017 12:34 am

In spite of ease in the foreign exchange market, input prices for confectioneries and bread are rising, according to industry players.

Bakers say that manufacturers and distributors of inputs must cut prices as naira strengthens against dollar.

“When the dollar price was rising, our suppliers were increasing their prices. They blamed it on the dollar price, but now that the dollar price is dropping, they do not want to cut down their prices,” Jude Okafor, national publicity secretary of the Association of Master Bakers and Caterers of Nigeria, told Real Sector Watch in a telephone chat.

According to Okafor, there is a need to cut prices of sugar, butter, yeast and flour to enable Nigerians buy bread.

He urged for a price drop to enable bakers assimilate workers that have been sacked on the basis of jumping production costs. Bakers use sugar, butter, flour and yeast as inputs but the prices of most of them have doubled in the last one year on the back of dollar crunch.

Manufacturers import raw materials needed to produce these products but dollar crunch has doubled their production costs in the last 24 months.

But with the parallel market selling dollar at N360- as against over N470/$ in the last three months, bakers want manufacturers to drop their prices to ensure their survival.

According to the Association of Master Bakers operating in south-west geopolitical zone, there is a need for the federal government to intervene and stem the rising cost of ingredients and inputs that are being used to bake bread and make confectionery.

The cost of major ingredients for baking has risen by 90 to 120 percent from January this year up to date, the association said, making the business of baking unattractive and unlucrative.

Abibu Abolusodun, south-west head of the association, said the cost of 50kg wheat flour and sugar, which were used to be N6,500 and N8,000 respectively in January this year, now cost over N11,200 and N18,000 respectively.

While appealing to government to find necessary solutions, he explained that upward review of prices of bread loaves would pile unnecessary burden on the consumers and increase people’s cost of living, which will, in return, put more pressure on economy and naira.

“Bakers cannot break even at the end of production. Many bakers are now indebted, forcing them to close shops, thereby adding more to the number of unemployed people in the country,” Abolusodun said.

A confectioner told Real Sector Watch that the cost of production has been on the rise, thanks to rising input prices.

“This is not out of place because many of our raw materials are still imported,” the confectioner said.

At a recent event in Osogbo, Osun State, Kolawole Adedayo, a representative of Flour Mills of Nigeria Plc, explained that import duties being charged on wheat have risen to 35 percent from the previous 10 percent.

Adedayo said the fluctuating foreign exchange rate was also to blame for the high cost of wheat, urging the government to cut import levies to stabilise prices.