How Ukraine crisis is impacting cost of bakery materials

Nigeria is currently facing a potential bread shortage as bakers across the country have announced plans to halt bread production starting from July 13th. The decision comes as a result of the global strain on wheat flour importation caused by Russia's invasion of Ukraine earlier this year. Ese Osamwonyi, a Senior Analyst at SBM Intelligence, joined CNBC Africa to discuss the implications of this move. Osamwonyi highlighted the challenges that Nigerian bakers are currently facing due to the soaring costs of baking materials, particularly wheat. With Russia and Ukraine being among the top 10 wheat producers globally, the ongoing conflict between the two countries has disrupted the wheat supply chain, affecting countries like Nigeria that heavily rely on wheat imports. Nigeria consumes approximately seven million tons of wheat annually, with only one percent of that being produced locally. The remaining 99% is imported from countries like the US, Russia, and others. The current war in Russia and Ukraine has led to a shortage of wheat supply, driving up the prices significantly. As a result, the cost of wheat has surged from $700 to $1,000 per ton, leading to a 60% increase in the price of bread in Nigeria. This spike in production costs, coupled with low consumer spending and inflation, has made it financially unsustainable for bakers to continue operating at a loss. Bakers are currently selling bread below production costs, which is not a viable long-term strategy. If the situation persists, bakers may have no choice but to halt production altogether. Wheat is a staple grain in Nigeria, used in a variety of food products such as bread, pasta, and noodles. The rising costs of wheat could potentially impact the availability and affordability of these products, affecting consumers across the country. Bakers are calling on the government to intervene by removing the 15% import duty on wheat to lower production costs and make bread more affordable for consumers. However, the challenges facing local farmers, including insecurity and other obstacles, make it difficult for them to meet the country's wheat demand. The looming bread shortage in Nigeria serves as a stark reminder of the interconnectedness of the global economy and the ripple effects of geopolitical conflicts on everyday essentials like food. If no immediate solutions are implemented, consumers in Nigeria may soon find themselves facing a bread crisis.