Bread prices take a hit from Russia-Ukraine war

  • as prices of ingredients increase abnormally 

“At the beginning of the year, we bought a bag of flour for GH¢210 – but now we are buying it at GH¢440. A bag of sugar was also sold at GH¢170 but is now selling at GH¢400. A bucket of margarine which sold at GH¢150 now sells at GH¢250. A pack of yeast, which is one of the cheapest ingredients for making bread, now sells at GH¢17 compared to the GH¢7 at beginning of the year.

“Even common salt has also seen a jump in price – from GH¢15 to GH¢40 per bag within the period under discussion; and nutmeg has moved from GH¢55 to GH¢120 per pack,” laments Ama Charlotte, a baker at Nkawkaw.

Bread loafs which began the year at GH¢6 now sells at GH¢8. Those which were sold at GH¢10 are now selling at either GH¢12 or GH¢13. And the GH¢15 loafs are now selling at GH¢18 or GH¢20, depending on the area.

This is a situation many bread bakers and retailers can identify with, especially in the past six months as prices of their ingredients – flour, sugar, margarine, yeast, nutmeg, among others have increased by at least 100 percent or more; a situation madam Charlotte says she has never encountered in her 25 years of being in the business.

In an interview with the B&FT, she said suppliers of the ingredients have blamed the sky-rocketing prices on sharp depreciation of the cedi against the dollar this year, and the Russia-Ukraine conflict.

There is no argument over this, as the cedi in the first quarter registered its sharpest quarterly decline in 7 years – plummeting by 15.6 percent against the American greenback. According to Bloomberg, the cedi declined in value by about 19 percent to the dollar during the year’s first four months.

And ever since the Russia-Ukraine war began on February 24, 2022, the price of wheat in Africa has soared by 60 percent according to the African Development Bank (AfDB). The two eastern European countries produce one-third of global wheat exports.

These factors and other local challenges have shot up the cost of production for these bakers, leaving them with no option than to pass on costs to the final consumer. Bread prices on the shelves have also reflected in the same direction.

Akyaa, a bread baker in Accra said: “The price of a loaf of bread from us starts at GH¢7, GH¢18 to GH¢20. The price change started in February this year when a GH¢6 loaf was increased to GH¢7; the GH¢15 loaf moved to GH¢18, and the GH¢17 loaf is now selling at GH¢20. The change is a result of increments in price of flour, sugar, margarine and even items like nutmeg”.

In fact, data from the Ghana Statistical Service (GSS) affirm the anecdotal evidence picked up by our reporters. Bread recorded 41.3 percent inflation in May, leaping from the 31.8 percent recorded the previous month.

As a result, the country has been ranked third among nine African countries with the most expensive prices for bread, a report by Business Insider Africa has indicated.

The bread bakers say the sporadic increment in price of the ingredients is not the only factor battering the industry, as the rise in energy prices, high cost of electricity among others, are also taking a toll on their business.

For example, Ama Charlotte quoted earlier says the kneading factories have also increased their rates due to the rise in fuel prices and high cost of utilities. “Just at the beginning of the year, kneading one bag of flour was GH¢8, but now it is GH¢18-20. The machine operators say cost of diesel and electricity have become high.”

The bakers say current challenges are giving them a hard time in the business, as they are no longer making margins on making their bread, with some saying they are operating at a loss and will soon fold-up.

“Now business is very bad, because for if instance today I go and buy flour for GH₵400 and it gets finished within a week and I go back to buy the same flour, there will be an increment on the price. We do not get profit anymore. Business is very bad.

“Seriously, some of us are planning to quit the business because it is no more profitable. We are parents, we cannot work without profits. So, most of us are planning to quit the business. We are really suffering. It is affecting sales,” the owner of Abisam Bakery in Takoradi, Abigail Brace, told the B&FT in an interview.

Besides the bakers, bread retailers have also not been left out of the predicament.

“Last year, the bread was given to me at GH¢4 and I wiould retail it at GH¢5. Now, the lady gives it to me at GH¢6 and I sell it at GH¢8 – but I hardly get even GH¢1 on it after cost deductions.  Things are expensive, but because you cannot do without it you just have to buy,” said a retailer who prefers to be anonymous.

The development, together with many other challenges that consumers are facing, has forced some people to cut down their consumption of bread.

One regular bread consumer, Gloria Mensah – a resident of Adenta Frafraha, said sometimes she has to buy a half-loaf of the GH¢10 bread just to keep within her budget of spending GH¢5 on bread. In more tight situations, she just buys the small round loaf at GH¢2 whereas previously she could afford a full loaf.

From the perspective of bakers, consumers should expect prices to further increase – as almost every two weeks on the market cost of the ingredients sees a rise.

The bakers are therefore calling on government to intervene, or else things will get even gloomier.

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