Market News
‘40% of bakeries shut over high energy cost, others’ - DAILY TRUST
Breadmakers have lamented the high cost of borrowing and rising operating expenses, warning that the combination of expensive credit, energy costs and increasing prices of production inputs is threatening the survival of bakeries across the country.
The President of the Premium Breadmakers Association of Nigeria (PBAN), Engineer Emmanuel Onuorah, said the industry had suffered significant losses in recent years, with about 40 per cent of the association’s membership lost to economic pressures.
Speaking at the association’s 2026 Day-Out event in Lagos on Thursday, themed Baking Through the Economic Storm: Innovation, Efficiency and Growth for a Sustainable Industry, Onuorah said many bakery operators were struggling to remain in business amid rising costs and declining consumer purchasing power.
‘40% of bakeries shut’
He said the industry had also lost about 40 per cent of breadmakers in the last two years, attributing the situation largely to high energy costs and the difficult operating environment.
“The past year has been very tough. Words cannot even say how we feel. Our businesses are just in the lurch. Businesses are going down, our members are losing. We’ve lost close to 40 per cent of our membership to the economic strain. The energy is killing us. In the last two years, we’ve lost about 40 per cent of our jobs,” he said.
Onuorah said the rising costs of flour, sugar, fats and oils, packaging materials, transportation and other essential inputs had put considerable pressure on bakeries, making it increasingly difficult to maintain profitability while keeping bread affordable.
‘No plan to increase prices’
The President in a chat with our correspondent however clarified that there is no plan to increase prices even as he advised members to produce ‘smart’. He said this
“We can’t increase prices. Sales are dropping every day. We had a reason to do it two months ago but we have told our members to plan and begin to do smaller packs. That is why energy is very key for us. If we get energy, that money we spend on energy would come back to us.”
He also criticised the financial system for failing to provide adequate support to businesses in the real sector, particularly small and medium-sized bakery operators seeking funds to improve production and reduce operating costs.
According to him, commercial banks continue to demand high interest rates despite the interest rates’ cut by the Central Bank of Nigeria (CBN).
Daily Trust reports that the CBN during the 307th Monetary Policy Committee (MPC) meeting slashed the benchmark interest rates from 26.5 per cent to 23 per cent in what it called a reset of the Monetary Policy Rates (MPR).
However, despite the massive rates’ cut, the breadmakers, just like other manufacturers, say they are yet to start seeing the impact.
The PBAN President disclosed that he recently approached a bank for a N12m facility to finance the installation of solar-powered equipment for his business but was quoted an interest rate of 34 per cent, alongside a requirement for 20 per cent counterpart funding.
The PBAN president said the high cost of credit was undermining efforts by bakery operators to adopt alternative energy sources, including solar power and compressed natural gas (CNG).
He explained that the association was exploring a hybrid energy arrangement involving CNG-powered oven burners that could also operate on diesel, allowing bakeries to switch between energy sources when necessary.
However, he estimated that a small bakery would require between N40m and N50m to make the transition, adding that the cost of installing a CNG burner alone could reach N1m.
He further disclosed that an earlier proposal to adopt solar energy through a financing arrangement had been abandoned after the projected costs became higher than the businesses’ existing electricity expenses.
He called on the Federal Government to provide grants and affordable financing to support bakeries in adopting alternative energy sources and improving operational efficiency.
The association president specifically urged the Bank of Industry to make single-digit interest loans accessible to genuine businesses in the real sector.
“We are not saying we are going to get the loan free of charge. Then you can’t be doing 34 per cent and many per cent for small businesses. How do I pay the loan?” he asked.
Also speaking, the Chairman of the Organising Committee, Mrs. Hadijat Olopade, said the high cost of borrowing and rising energy expenses were threatening the survival of bakeries.
Olopade, who is also the financial secretary of PBAN, said the average cost of funds had risen to about 33 per cent, while profit margins on bread sales remained below 30 per cent.
She said the situation meant many bakers were operating at a loss and urged the government to provide access to cheaper financing to sustain their businesses.
She added that energy accounted for about 50 per cent of production costs, noting that her bakery’s monthly diesel expenditure had increased from about N9m to N19m, despite the inability to raise bread prices.
Olopade said the association was exploring alternatives, including firewood-powered ovens and compressed natural gas, to reduce energy costs.
On food safety, she said NAFDAC registration was compulsory for PBAN membership, stressing that the association would not compromise on product quality.
