Bread producers who are part of the Premium Bread Makers Association of Nigeria have expressed their concerns about the impact of economic reforms on their industry.
In an interview with AriseTv, the president of the association, Mr. Emmanuel Onuorah, conveyed the sentiments of its members. He highlighted the adverse effects of the unification of the exchange rate on the importation of wheat and sugar, leading to significant price increases.
According to Mr. Onuorah, importers of sugar and wheat previously claimed to acquire foreign exchange (FX) from the parallel market. However, with the exchange rate now unified, they are attributing price hikes to the unification.
During their meetings, the leaders of these milling companies used to inform the bread makers that they obtained FX from the parallel market at a rate of N750/$1. However, the recent liberalization of the exchange rate has caused them to state that they are sourcing FX from official channels. This sudden shift in their stance suggests an attempt to corner the bread makers, rendering their businesses unprofitable and forcing them out of the market.
Mr. Onuorah also disclosed the intentions of wheat importers to raise the price of wheat, which they momentarily put on hold due to escalating tensions. Additionally, he mentioned that sugar refiners have already increased prices by N10,000 since April. The president of the association explained the impact of these developments on production, stating that flour accounts for more than 50% of the total cost, followed by sugar, while energy costs are now competing with sugar and may even surpass it.
The bread makers are further burdened by the planned electricity tariff hike by the Nigerian Electricity Regulatory Commission (NERC). Mr. Onuorah shared that he used to spend N7,000 weekly on energy, but now he only spends N4,000. This decrease in capacity by 70% has been compounded by the anticipated electricity hike and the introduction of a 7.5% value-added tax (VAT) on diesel imports. With these challenges, it becomes increasingly difficult for businesses to survive.
When asked about the new exchange rate set by the customs, Mr. Emmanuel made an appeal to the President, urging him to exercise caution and provide incentives to support Nigerians during these reforms. He emphasized the need for the government to give back and avoid pushing the citizens to the brink.
Furthermore, Mr. Onuorah revealed that some members of the association are prepared to raise prices, given that their profit margins have been eroded by the escalating costs of raw materials and energy. He has granted them permission to do so.
