Bread producers have announced a possible rise in the product due to fuel subsidy removal in Nigeria.
President of the Premium Breadmakers Association of Nigeria (PBAN), Engr Emmanuel Onuorah stated that the federal government’s removal of fuel subsidy and liberalization of the foreign exchange market increased bread production costs.
Onuorah pointed out that most of the baking ingredients depend on imports, adding that exchange rate fluctuations have increased the cost of customs clearance of the ingredients.
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He said:
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“Most of our baking ingredients are import dependent; ranging from flour produced from wheat, Ascorbic Acid, Calcium Propionate, Yeast, bread softener etc, are mostly imported. The forex floating led to increase in amount used for clearing; we know this will certainly lead to increase in prices of bread.
“The flour millers even wanted to use the forex floating as an alibi to increase the price of wheat flour; if they do that the price of bread would go up significantly because we would pass on the cost. With any increase in the price of bread now, there will certainly be more drops in sales and more bakeries will certainly close shop.”
The PBAN President emphasized the effect of the fuel subsidy abolition.
On that, he said:
“We feel that the decision was hasty without a clear-cut plan on how to mitigate the fall-out of the policy on businesses and Nigerians. The President announced the policy before thinking of how to manage the fall-out, more like putting the cart before the horse.
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“The impact on my members was spontaneous because our workers were not able to afford the transport fare that spiked astronomically thereby impeding production due to unavailability of workers.
“Some of our members have delivery vans that use fuel; it spiked their cost of delivery which dovetailed into increased cost of production and reduced margins. Our distributors use delivery vans that use fuel likewise, it affected their sales with the attendant drop in our volumes.
“The imposition of 7.5% VAT on diesel by the new government, the price shot up immediately and this affected our production and sales negatively.”
