The sporadic hike of flour price by foreign dominated flour mills in Nigeria may be causing ripple effects on a rise in the price of pastries, bread and other consumables, an act local farmers and bakers have described acts as exploitative.
The price exploitation is not limited to Bread Flour; it affects all related products such as Semolina, Pasta and even wheat offal.
Bakers alert on planned hike in flour price
Foreigners manipulating flour market in Nigeria
According to documents, the foreign dominated flour mills include Flour Mills of Nigeria (FMN) led by a Greek management; Crown Flour Mill (Olam Flour Mills) led by Indians; Dufil Group (De United) also led by Indians; Life Flour Mills which is largely foreign owned; Kings Flour Mill, and Honeywell Flour Mill, which is owned by Nigerian management.
Bread is a basic staple in many homes in Nigeria.
In fact, it is easily accessible than other kinds of food. Both the rich and the poor consume bread, and it comes in various sizes, shapes, compositions and price tags to meet the needs of different categories of consumers.
The bread and flour industry creates jobs – those directly employed by the industry, armies of bread distributors, sellers and hawkers all over the streets.
The base raw material for bread flour, confectionery flour and noodle flour, semolina and pasta production is wheat, and 99 per cent of the 5.67 million metric tonnes valued at about $4.48 billion is imported annually without harnessing the local capacity, findings have shown.
Some local farmers told this paper that while they have capacity to produce enough wheat for the flour milling industry, the foreign firms prefer to import wheat.
Ahmadu Abdullahi, a wheat farmer in Nasarawa said, “We can produce enough to even export but Olam and other flour mills prefer to still import this commodity.”
Statistics from the National Bureau of Statistics (NBS), wheat was sixth among the top 10 products imported in the first quarter of 2020.
While the local farmers said there was capacity to grow enough to supply the flour millers in Nigeria, the data showed that N101.58 billion worth of Durum wheat was imported between January and March 2020.
Records obtained from sources in the flour milling industry show that six core flour millers in Nigeria have 30,032 metric tonne capacity of factories in the country.
The largest of these is Flour Mills of Nigeria (FMN) operated by a Greek owner; it accounts for 39 per cent of the entire capacity of flour mill firms in Nigeria.
It is closely followed by Crown Flour Mills (Olam) operated by Indians with 38 per cent of the entire capacity.
These two firms combined occupy 77 per cent of the flour market share in Nigeria.
While this rage of price hike is on-going, this paper reports that the Federal Government has granted permission for four firms to import 262,000 metric tonnes of maize.
The four companies are WACOT, Chi Farms limited, Crown Flour Mills and Premier Feed Mills (120,000).
The import waiver is for August to October, it was learnt.
A restricted letter from the Nigeria Customs Service dated August 6th 2020 conveyed the approval.
“Approval is strictly for the four companies,” the letter read in part.
Although the Poultry Association of Nigeria demanded for waiver to get 1.5 million metric tonnes up to December.
That has not happened as the farmers continue to feel the brunt as the cost of feed has gone up astronomically forcing many of them to cheaply sell their birds.
To add to that pressure, the Feed Industry Practitioners Association of Nigeria (FIPAN) also wrote to President Muhammadu Buhari to “urgently save the poultry and animal feed industries from imminent collapse due to the unprecedented maize supply crisis.”
Dr Folarin Afelumo, the president, along with other executives of the association warned that the shortage will shut down many feed mills.
This wave of waivers has attracted criticisms from the Maize Association of Nigeria (MAAN), who insisted that they have about 15 million metric tonnes capacity last year and can meet the local demand.
For the flour millers, our reporters learnt that at the onset of the COVID-19 pandemic, when they resorted to hiking the price of flour.
CFM controlled by Indians, between May and June 2020, increased the prices of bread flour, Semolina, Pasta and allied products, by over 19%.
It was also gathered that attributed the hike to the rise in the foreign exchange (forex) from the previous to N360/$1 to over N400.
The pricing template for CFM in Lagos shows that flour product price rose from N9,980 in April to N10,980 in June 2020, representing N1,790 increase (19.5%).
For CFM’s product price in Warri, Port Harcourt and Calabar, the price hike was from 19.2% to 19.5%.
For instance, its mix and Bake products rose from N9,630 in March to N11,130 in June; and N9,480 in March to N10,980 in June, which is a 19.5% hike.
– Bakers, consumers lament price hike in Abuja, others –
Owners of baking firms in Nigeria have lamented the hike in four prices, saying that has also affected the price of bread and other commodities from their bakeries.
In Abuja, John Ajala, the manager of Super Bakers, said: “We are suffering acute hike in the price of flour.
“A bag that we use to buy N9,000 has gone up to N12,000.
“The prices have increased about four times this year and we learnt it will still continue.”
Onuora Onuigbo, another operator of a bakery in Mararaba town of Nasarawa state said the flour price is one of the factors affecting the bakery business.
“With COVID-19, flour prices keep rising, and transportation is high too.
“We are passing the cost to consumers but we are careful too because the market is not much these days.
“If we hike the price of bread so much commensurate to what we buy flour for, then our consumers may not buy from us.
“So we are in a dilemma.”
In Nguru town in Yobe State, residents said they are being forced to change their menu following the sudden hike in the price of bread.
A loaf that went for N150 now sells for N200, our correspondents found.
Aminu Sale, a trader, said he had to drop bread from his breakfast menu and replace it with a cheaper alternative following the price increase.
Rabiu Ramu, a tea seller said that he has noticed a little drop in the number of his customers since the rise in the price of bread.
“You know both single and family men preferred bread to any food, because it is less costly but many cannot afford to buy it at this price now because of the rise in the price.
“It will take at least two to three months before people can cope with the current price.”
Alhaji Aminu Barde, a bakery owner said their association had to increase the price because they realised that they were running at a loss.
He said there was an increase in the price of not only flour but other ingredients for making bread such as sugar and butter in the last three months.
In Kano, residents who buy the loaves as their daily staples for breakfast said the new price hike was affecting their spending.
Auwal Sadauki, a family man with seven children said he used to spend N400 daily for bread, but will now have to increase the amount to reflect the new increase.
“The new increase will affect virtually everyone as bread is seen as a common food to most Nigerian houses, irrespective of their socio-economic status in both urban and rural areas.”
A tea seller in the Kofar Waika area of Kano metropolis, Abdullahi Garba said, “Whenever there is price hike like this, the bakeries usually lower the loaf quality instead of hiking the price.”
But the Association of Bakery Owners in Kano state attributed the increase in price of flour and other ingredients as some of the factors responsible for the increase in price of bread.
The secretary of the association, Kabiru Hassan Abdullahi, said: “It is true that we have increased the price and it took effect on Saturday.
The truth is, we are into business to make profit, and recently, there has been an increase of almost N4,000 in the price of a bag of flour,” Abdullahi said.
The secretary added that, “For every loaf of N50, N60 and N70, we have added N10 to their previous prices.
“As for N100 and N150 loaves, we have added N20, while the loaves of N200 and above have added N50 each.
In Lagos, bakers said the price of flour was raised this week, making it the fifth of such this year alone.
President of Premium Bread Makers Association of Nigeria (PBAN), Tosan Jemide, said from March 2020 when the COVID-19 pandemic hit the country, the millers had increased prices for the sixth time.
He said if the bread makers wanted to follow suit in arbitrarily increasing prices, a loaf of bread would be selling for N800.
“Our businesses are crumbling.
“We bakers are just unfortunate because we are sandwiched in the middle.
“It is not only flour, the same thing with other ingredients – margarine, sugar, all our ingredients have dollarized components,” he said.
The spokesman of PBAN, Engr. Onuorah Emmanuel, said, “They are increasing the price of flour as from tomorrow (today).
“We are now in the negative.
“People think there is so much money in baking but that is not true.
“The government is there looking at them, they are doing round tripping with the foreign exchange.
“This is the collateral effect of foreign exchange.”
President, Master Bakers’ Association of Nigeria (MBAN), Alhaji Raji Omotunde said: “While the millers have always complained about foreign exchange the government should sit them down and iron out what the problem is, stressing that government should come up with methodology to manage the crisis.”
He lamented that this is happening at a time of worsening economic challenges posed by the COVID-19 pandemic with people’s means of livelihood shrinking.
“Ordinarily if we want to do like the millers, bread is supposed to be selling for N450-N500 for a N300 loaf.
“If we are very inconsiderate like the millers, that’s the price we should be selling now.
“As it is now we are even subsidising bread for Nigeria.”
Commenting on this, the Flour Milling Association of Nigeria (FMAN) commented on this.
The Executive Secretary, Alhaji Olalekan Saliu, said: “There had indeed been some increases in prices by many of the players in the milling sector.
However, it is essential to mention that the change in price is not peculiar to Flour Millers, but it affects the Food and Beverages subsectors in general.
“As you can imagine, the volatile nature of the forex market had sadly produced a devastating impact on the manufacturing industry like several other sectors of the Nigerian economy.”
Meanwhile, the Federal Competition and Consumer Protection Commission (FCCPC), has confirmed that it was probing the continuous hike in the price of flour.
The Director General/Chief Executive Officer of the FCCPC, Barrister Babatunde Irukera, said the Commission became aware of a proposed 60% increase in the price of bread by a coordinated action of the bakers’ association.
“The Commission took on the frustrations of the bakers regarding increase in the prices of flour and sugar affecting their business.
“The target of investigation is cooperating and the Commission is awaiting further documents demanded for its continuing investigation,” he said.
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