The cost of baking bread has seen dramatic increases due to the rising prices of essential raw materials. Over the past 12 months, the cost of wheat flour, butter, sugar, and packaging materials has more than doubled. As a result, bread prices have surged by 40-80 percent, as reported by Nairametrics.
Bakers have experienced a nearly 100% hike in wheat flour costs since April 2023. Mr. Banjo Adeyanju, a bakery manager in Lagos, observed that a bag of wheat flour’s price soared from N32,000 in May 2023 to N62,000 in May 2024, a 94% increase. The National Bureau of Statistics confirmed a 94.29% rise in wheat flour prices over the last year in its March 2024 Food Price Watch.
The price of sugar has also escalated dramatically. Bread makers indicate that a 50kg bag of sugar now costs N88,000, a 167% increase from the previous year’s N33,000. The Nigerian Sugar Development Council noted the wholesale average price for a 50kg bag of sugar reached N84,099 in March 2024, with retail prices marginally higher at N85,329.
Costs for less obvious materials like label sachets for packaging have also spiked. Mr. Afisoye reported spending nearly N700,000 on label sachets, a significant rise from the N350,000 to N400,000 range earlier in 2024. The prices for other key ingredients such as butter, eggs, and yeast have surged by over 100% in the past year.
Mr. Raji Omotunde, Vice President of the Association of Master Bakers and Caterers in Lagos, attributes these cost increases mainly to the naira’s significant depreciation. He pointed out that the depreciation directly affects the prices of many imported baking ingredients. Additionally, he criticized flour millers for using the naira’s depreciation as a pretext to continually increase prices.
Despite the doubling of input costs, bakers have struggled to raise their prices accordingly. Though bread prices have increased in the last 12 months, they are not in the same proportion as inputs.
A piece of bread sold at Kubwa, Abuja, sold for N700 in May 2023 has had its price increased to N1,100 in May 2024, representing 58 percent increase. A piece of jumbo bread sold for N1,500 at Lagos stalls in 2023 are now sold for N2,500, indicating a 67% jump.
Some loaves have risen by 80% to N100%, but not in the same proportion as inputs.
“Even when we increased bread prices by N400 in Kubwa, Abuja, they were not raised at the same time. We started by adding N100, then another N100, then N200. If you add N400 at once, many people will stop eating bread,” said a baker in Kubwa, Mr John Adejumo.
Bakers are facing price ceilings that, if exceeded, could significantly reduce demand since bread competes with other staples such as yam and plantain.
This situation has led to a severe erosion of their profit margins. The NBS data indicate that bread prices have risen by nearly 100% year-on-year, yet this has not sufficed to offset the increased costs of inputs, leaving many bakery managers reporting that they are no longer making profits.
For Mr. Adeyanju, earlier quoted, running his bakery has become more of a perfunctory act than a profitable business, and he anticipates exiting the industry soon if the current conditions remain or worsen.
The shrinking profit margins, compounded by rising costs, are forcing many bakeries to shut down. Mr. Banjo, who recently closed his bakery, cited unprofitability as his main reason and has shifted his focus to his water business. Mr. Omotunde, earlier quoted, noted that Mr. Banjo’s case is not isolated, as about 35% to 40% of the association’s members have closed their facilities in the past year.
He said, “So many of our members have shut down since 2023. Around 35% to 40% of bakeries have shut down and more are on the horizon if the spate of increase continues unabated.”
