Bakers in Nigeria have explained that the prices of bread will keep increasing. Data suggests that the galloping inflation that Nigeria is experiencing is, to a significant extent, as a result of wheat prices. The December 2022 consumer price index (CPI) report published by the National Bureau of Statistics (NBS) shows that increased bread costs are a contributing factor to food inflation in Nigeria. The inflation rate in December 2022 according to the CPI and inflation report was 23.75 percent on a year-on-year basis.
This was 6.38 percent higher when it is compared to the rate recorded in December 2021, which was 17.37 percent. On a month-on-month basis, the food inflation rate in December was 1.89 percent, which was 0.49 percent higher when it is compared to the November 2022 rate (1.40 percent). The NBS identified inflation as being caused by the rise in prices of bread and other food items like potatoes, yams, fish, oil, fat, and cereals.
Costs of major ingredients have been increasing since 2022.
Mrs. Okafor, a caterer, told the press that the cost of flour, sugar, and milk for the production of bread has been increasing since 2022. The increase is mainly due to the increase in the cost of importing wheat as a result of the Russia-Ukraine war as well as Nigeria’s foreign exchange challenges. Nigeria is the second largest wheat importer in the world. Because of this, it becomes hard for bakers and even big bakeries to run their businesses effectively without increasing the cost of bread, which is a staple food for families in Nigeria.
She said that her customers have been complaining about the rise in the cost of bread especially the family loaf which costs between N900 or N1000 per loaf. Okafor gave the press a breakdown of the average costs of large quantities of flour, sugar and milk, which are major ingredients needed for bread production. According to her, a 50kg bag of flour costs between N30,000 and N32,000; a 50kg bag of milk costs between N32,000 and N34,000; and a 50kg bag of sugar is N34,000 and N36,000.
Production costs typically determine the burden that bakeries carry.
The General Manager at an Abuja-based FQ Loaf Bakery, Ada Abel, told the press that aside from the rising cost of ingredients, the bakery business carries many other costs. She said that the bakery has multiple products but two are more popular among customers – the Jumbo loaf and the Family loaf. She said that the average unit cost of a Jumbo loaf is N700 and there are over 40 in a batch, which has to be produced mostly using a diesel generator. Meanwhile, the average unit cost of a Family loaf is N650 and there are over 70 per batch.
To mitigate some risks, the bakery adds the cost of only a loaf of bread to each batch. Most times, it is even less than the risks later encountered. There are other risks like loaves going bad in passing through the value chain. These are borne entirely by the business. The bakery buys diesel at N880 per liter. The full production process could take over an hour and has to be run using the diesel generator.
There are other costs which are not factored into the price of bread.
Also, as the loaves pass through the chain of distribution, money is added before the bread gets to the final consumer. Ms. Abel also said that there are other costs that do not factor into the price of bread. She mentioned over 15 levies by the local government council, public health cadet charges, and food handling tests which cost the bakery N5000 per staff and which have to be done every two years. The Public Health Act inspection has to be done every three months and costs N3,500 per staff as well as a N30,000 certificate. She also highlighted the inspection of business premises by officials of the Abuja Municipal Area Council (AMAC), as well as levy increases by the National Agency for Food and Drug Administration and Control (NAFDAC).
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