Nigerians have been advised to prepare themselves for a rise in the prices of bread, a staple food consumed by almost every Nigerian.

The bread producers stated that their production costs have increased due to the elimination of fuel subsidies and the liberalization of the foreign exchange (forex) market by the federal government.

Engr. Emmanuel Onuorah, the President of the Premium Breadmakers Association of Nigeria (PBAN), revealed during an exclusive conversation with Vanguard that the situation evokes a sense of déjà vu for those involved in premium bread production.

He emphasized that a majority of the baking ingredients rely on imports, and the introduction of a floating foreign exchange (forex) system has resulted in higher clearance costs for these ingredients.

According to Onuorah, a significant portion of our baking ingredients relies on imports. This includes wheat-produced flour, Ascorbic Acid, Calcium Propionate, Yeast, and bread softener, among others. The implementation of a floating foreign exchange (forex) system has resulted in higher clearing costs. Consequently, we anticipate an inevitable increase in bread prices.

On top of that, the flour millers have contemplated using the forex floating as an excuse to raise the price of wheat flour. Such an action would have a substantial impact on the cost of bread, as we would need to pass on these expenses to the consumers. Unfortunately, any increase in bread prices at this point would lead to a decline in sales, potentially causing more bakeries to close down.

Regarding the removal of fuel subsidies, he expressed his belief that the decision was made hastily, without a well-defined strategy to mitigate its effects on businesses and Nigerians. It seemed as if the policy was announced without sufficient consideration for managing the consequences, akin to putting the cart before the horse.

The immediate impact on his association members was significant, as their workers struggled to afford the drastically increased transportation costs. This, in turn, hindered production due to the unavailability of workers.

A number of our members operate delivery vans that rely on fuel, and the sharp increase in fuel prices has directly impacted their delivery costs. As a result, the overall cost of production has risen, leading to reduced profit margins. Similarly, our distributors, who also utilize fuel-dependent delivery vans, have experienced a decline in sales as a consequence, resulting in a decrease in our overall volume of business.

The chief of the bakers' association also mentioned that the introduction of a 7.5% value-added tax (VAT) on diesel by the new government had an immediate impact, causing a significant increase in its price. This, in turn, had a detrimental effect on both our production and sales.