What Russia, Ukraine face-off portends for bread consumers

Ukraine and Russia are among the world’s largest producers of wheat. With President Vladimir Putin’s invasion of Ukraine since February 24, which attracted economic sanctions from the West, ONYEKORMAKA ASABOR writes on the fate of wheat product consumers

There is no denying the fact that the Russian invasion of Ukraine has weighty and wide-ranging consequences for wheat-dependent consumer goods, especially if it gets protracted.  One of the products that unarguably appear threatened is bread.

Not only will the war escalate the cost of bread as a result of the high price of wheat, there are fears that the escalation of fuel prices, such as diesel and petrol, will equally compound the situation, even as there is mounting petrol import, subsidy bill and the aggravation of petrol smuggling. The foregoing factors, no doubt, would create more intense inflationary pressures for consumers of bread and pastries. Besides, the speculated increase in the price of bread and other confectioneries may also take a hit. The summary is that if the conflict is protracted, these would be the downside risks to the baking industry.


Threats to Nigeria

The invasion of Ukraine by Russia could affect Nigeria’s importation of wheat, as it is a major ingredient used for the production of a wide range of foods, including bread, pasta, cakes and many more.

Since the invasion by the Russian military on Ukraine, the price of wheat has surged worldwide, intensifying the already high food prices across the globe. It was reported that Russia and Ukraine, put together, are responsible for about 14 per cent of global wheat production and control about 29 per cent of all wheat exports.

Russia is the top exporter of wheat, while Ukraine is among the top five, competing with Egypt, Bangladesh and Turkey.

According to the Food and Agriculture Organisation, the price of a bushel of wheat rose by 5.7 per cent to $9.347 following the escalation of the war. The FAO also warned about the possible implications of the crisis on food security beyond the region, including countries that rely on varying degrees on wheat sourced from that region.

The organisation predicted that disruptions in international food markets resulting from the conflict could potentially put pressure on import-reliant countries, especially those already experiencing high levels of food insecurity or grappling with their own food crises.

Nigeria and other import-reliant countries, therefore, have two options: to either invest massively in critical infrastructure in states where it has competitive and comparative advantage to boost wheat production or look elsewhere away from Russia and Ukraine to buy wheat.

The National Bureau of Statistics stated that Nigeria imported N898.2 billion worth of wheat within nine months as at September 2021. The top sources of wheat to Nigeria in 2021 were United States of America N194.2 billion, Canada N136.4 billion, Russia N124 billion, Lithuania N122.3 billion and Latvia N115.9 billion.


Bread inflation looms

Following the disturbing effect of Russia’s invasion of Ukraine leading to difficulties in the importation of wheat, costly energy and foreign exchange challenges, the Association of Master Bakers and Caterers of Nigeria has advised Nigerians to expect another increase in the price of bread and other confectionaries.

Chairman of AMBCN, Lagos chapter, Raji Omotunde, said that beyond the Russia/Ukraine war, the spiralling cost of production that has been with the bakery and confectionery industry will worsen, to the extent that consumers should expect 100 per cent increase on the commodity.

He insisted that the hike in energy cost brought uncertainty to the baking industry in the country, with severe economic implications.

Sadly, the looming inflation in the cost of bread and other baked items will take toll on Nigerians’ low purchasing power.

Omotunde, who said he had had several engagements with flour millers, lamented that constraints in accessing foreign exchange to procure materials for flour production was killing the baking business.

His words, “All ingredients used for baking are too high in cost, especially flour and sugar. Between March and September last year, there has been a monthly addition of N500 on a bag of flour, and bakers have been bearing the additional cost.

“But as it is, baking bread and selling at the current price is no longer profitable. Now, it has been a different ball game with the Russia/Ukraine war that has made it impossible for wheat to be imported amid high FX crisis and others by flour millers. We have been appealing to the millers, but they are groaning under the absence and increase in price of FX.”

As a result of the foregoing, majority of bakers are seriously constrained. The only option, according to the master baker, is for them to cry out, so that government can come to their rescue.


LCCI expresses fear

Meanwhile, the Lagos Chamber of Commerce and Industry also noted that the Ukraine/Russian conflict is already putting pressure on Nigeria’s wheat importation. The President, Dr Michael Olawale-Cole, said at a media parley in Lagos that Nigeria’s food supply would surely come under some pressure, as it imported four per cent of wheat from Ukraine and 27 per cent Russia in 2021.

Nigeria, he noted, imports durum wheat, herrings, blue whiting and mackerel from Russia.


Nigerians lament impending bread inflation

Some residents of Ogun and Lagos states have lamented the impending increase in the price of bread.

Financial Street gathered that some of the residents expressed displeasure over the issue.

Mrs Mercy Ogunlesi said, “We understand that the impending crisis will not, in any way, be the fault of the bakers, but at least they should find a way of managing the situation, so that it will not affect their customers much.

“We know that the prices of all the household essential commodities are high in the market, but they should begin to strategise on how the situation can be managed, as bread is one of our staple foods.”

Another resident, Matthew Obanor, also appealed to bakers to look at a way of managing the situation.

He said, “Things are terribly bad. There is no amount of money we give our wives that will be enough to cook. The prices of vegetables, rice, beans and even matches are on the increase daily and this is what I think has resulted in the increase of prices of bread too.”

Taju Nurudeen, a baker at Pakuro, Mowe, Ogun State, while linking the recent increment in the price of bread to the high cost of essential baking materials, noted that with the crisis in Russia and Ukraine, the situation in the bakery sector may likely worsen.

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