Get Guardian on GoogleNigeria’s baking industry is facing mounting pressure from rising production costs, declining consumer purchasing power and weak regulatory enforcement, with industry leaders warning that many bakeries are struggling to remain operational.
The concerns emerged during the fourth edition of the Premium Bread makers Association of Nigeria (PBAN) Day Out, an annual gathering of bakery owners and industry stakeholders designed to network, share knowledge and discuss challenges confronting the sector.
Speaking at the event, PBAN President, Emmanuel Onuorah, described the industry’s situation as precarious, explaining that the theme, “Baking Through the Storm: Innovation, Efficiency and Growth for the Sustainability of the Economy and Bakery Industry,” reflected the difficult realities facing operators.
Onuorah said the industry was experiencing a significant decline in production due to rising energy and raw material costs, alongside consumers’ inability to afford bread at previous levels.
He illustrated the situation with the example of a bakery that previously processed 120 bags of flour daily but now produces only 40 bags, representing a decline of approximately 67 per cent.
According to him, the downturn affects not only bakery owners but the entire wheat-flour value chain, including flour millers and other suppliers.
He argued that declining household incomes were a major contributor to the crisis, noting that consumers who previously purchased two loaves could now afford only one, while others had stopped buying altogether.
The PBAN president advocated a shift towards alternative energy sources, particularly solar power and compressed natural gas (CNG), to reduce dependence on expensive diesel.
However, he acknowledged that the high capital requirements and commercial lending rates, reportedly reaching 34 per cent, made such investments difficult.
Although the association had engaged the Bank of Industry, Onuorah said bureaucratic bottlenecks, collateral requirements and other administrative challenges continued to restrict access to affordable financing.
Similarly, PBAN Deputy President, Dr Abayomi Awe, disclosed that bread sales had declined by 50 per cent or more in recent years. He attributed the situation not only to economic hardship but also to intense competition among bakeries.
Awe revealed that approximately 50 bakery operators known to him had shut down because of declining sales and escalating operating expenses.
He also raised concerns about inadequate government regulation, warning that some bakeries operated without proper standards and safeguards. While PBAN imposes requirements such as standard operating procedures, appropriate equipment, product registration with the National Agency for Food and Drug Administration and Control (NAFDAC), and health checks for its members, enforcement remains limited to association members.
He warned that the absence of effective government oversight could expose consumers to substandard and potentially unsafe bread products, stressing the need for stronger regulatory intervention across the industry.
Also speaking, General Manager, Sales and Marketing for Lagos and Southwest, Olam Agric, Gbenga Shotimiri, identified changing consumer demand as another factor reshaping the industry. He observed that demand was increasingly shifting towards modern and modular bakeries, while traditional operators were gradually losing market share.
Shotimiri explained that Olam’s partnership with PBAN was informed by the growing opportunities in the modern bakery segment.
On the rising cost of flour, he attributed the pressure largely to Nigeria’s dependence on imported wheat. He explained that wheat production was constrained by Nigeria’s climatic conditions, making the country heavily reliant on imports and exposing flour manufacturers to foreign exchange volatility, international shipping costs, insurance expenses and geopolitical disruptions, particularly the Russia-Ukraine conflict.
