Home ›› 28 May 2022 ›› Front
Soaring prices of baking ingredients, invasion of automation and intervention of giant businesses in the bakery industry have put the traditional bakers in Bangladesh who produce handmade bakery items on a bumpy ride.
“We are passing through the hardest possible time,” said Mohammad Jalal Uddin, president of the Bangladesh Bread, Biscuits O Confectionery Prostutkarak Samity (BBBOCPS). The continued price hike of baking raw materials has pushed the traditional bakers into deep trouble, he said.
Jalal Uddin also thinks the intervention of giant companies equipped with automated machines has rubbed salt onto their wounds.
The market of bakery items is now dominated by conglomerates and they dominate over 60 per cent of the market, according to the Bangladesh Auto Biscuit and Bread Manufacturers Association (BABBMA). There are more than 100 automated bakeries but only 52 are enlisted with the BABBMA.
The bakery industry is now thriving because of investment by big businesses along with medium and small entrepreneurs in the sector over the past decade, said industry insiders.
The present market size of the total bakery industry – including handmade ones and automated factories of small, medium enterprises and conglomerates – is estimated at Tk 8,000 to Tk 9,000 crore which was Tk 6,000 crore in 2018, said Md Abu Bakar, president of the Bangladesh Auto Biscuit and Bread Manufacturers Association.
The leading automated companies in the bakery sector are – Olympic, Pran, Partex, Haque, Nabisco, Bangas and Akij. Conglomerates like Bashundhara Group, Meghna Group, Kohinoor and some others have also entered the market in recent times.
The bakers said the price of a 50-kg sack of wheat now reached Tk 3,000-3,200 which was Tk 1,600-1,800 just six months ago and it was Tk 1,200-1,300 a year ago. A 50 kg sack of sugar is now sold at Tk 3,800 which was Tk 3,000-3,100 six months ago and Tk 2,600 a year ago. The bakers said now they have to buy a drum of 185kg palm oil at Tk 33,000-35,000 which was Tk 20,000-22,000 six months ago and Tk 13,000-14,000 one year ago. A 16-kg carton of vegetable fat or dalda is now sold at Tk 3,000 which was Tk 2,000-2,100 six months ago and Tk 1,200-1,300 one year ago.
Plight of traditional and small bakers
Md Jasim Uddin invested Tk 10 crore to set up his small baking plant just before the Covid -19 pandemic hit hard. During the pandemic, he was forced to suspend production and he is yet to resume production at his factory located in the commercial town of Chowmuhani in Noakhali.
A frustrated Jasim told The Business Post, “I couldn’t resume production due to the price hike of the raw materials.”
He said now big businesses have captured the market. “Creating a new brand in the market is very difficult and the skyrocketing prices of bakery ingredients added fuel to the flame. The market is very competitive. If we fail to impress the consumers with the very first production, we will never be stable in the market,” said Jashim.
BBBOCPS President Mohammad Jalal Uddin also echoed Jashim saying no small investors came forward to the baking sector in the past two years for the unstable price of raw materials.
China Bakery was a popular name among the working-class people in Kamrangirchar of Dhaka. Its owner Md Kawser has closed it down failing to compete with the giant companies and the soaring prices of raw materials.
Kawser told The Business Post that prices of almost all the ingredients are soaring. “It is now very tough to realise the production cost from the market, let alone make profit. I had no alternative but to close down the factory three months ago where 25 workers used to work,” an appalled Kawser said.
Md Shahjahan established a traditional bakery named National Bread Bakery at Adabar of Mohammadpur in Dhaka in 2000 which ensures the employment of 50 workers. “I’m even unable to recover the money I invested in the plant because of the soaring price of bakery ingredients. I think only one option remains for me. It’s closing down the bakery,” said Shahjahan.
Working-class people bear the burden
BBBOCPS secretary Rezaul Haque Reza said the people from lower and lower-middle-income groups such as day labourers and apparel workers are the prime consumer of handmade bakery products. “If we increase the price of our products, it will create an extra burden on them and on that ground, we did not increase the price till now. But now we are up against the wall. We have decided to go for raising the price,” said Rezaul Haque Reza, secretary BBBOCPS.
An apparel worker Nurul Afsar said his four-member family used to have a loaf of Tk 30 in breakfast as it is the cheapest. Now the price rose to Tk 35 and the size went smaller. “If the price goes up further, we might not able to have it in breakfast or pass days without breakfast,” he said.
Big investments engulf small ones
Alongside soaring prices of ingredients, the market for local traditional bakery items is shrinking every day for the invasion of conglomerates.
BBBOCPS President Mohammad Jalal Uddin said the shortage of workers is one of the main obstacles to the survival of traditional bakers. “Workers are often switching over to other sectors as it becomes tough for them to manage families with the minimum wage. And, the bakery owners now fail to pay the demanded wage of the workers. So, they are leaving traditional bakery and joining other trades,” he added.
President of automated bakery owners association BABBMA, Md Abu Bakar, however, said, “I requested to the stakeholders including small and medium entrepreneurs, and conglomerates not to increase the prices of their products during the ‘artificial crisis’, though this is very tough for us to survive this industry.”
Secretary of BBBOCPS, the platform representing traditional bakers, Rezaul Haque Reza said, “Now, we are facing a two-fold problem – one is the soaring price of ingredients such as wheat, sugar, and oil and the other is the invasion of conglomerates of our market.”
Rezaul said they are now facing an existential threat as at least 100 bakeries were closed down in the past six months. Among the closed down factories China Bakery and Fatema Bakery of Kamrangirchar, Khaza bakery of Mohammadpur, Easy food bakery of Narayanganj, Moni Bakery of Shanir Akhra are prominent ones.
Rezaul said still there are around 20 lakh workers in traditional and small bakeries.
Future of traditional and small bakeries
“Gone are the days of the traditional bakers, particularly those who produce handmade products, as they lost their market gradually for their negligence to the modern technologies,” said the Md Abu Bakar president of the BABBMA.
Meghna Group’s general manager for Fresh brand bread and bun line, Md Shofikur Rahaman, said, “There is no doubt, because of conscious consumers, the market of the handmade and small bakery factories is shrinking but still there remains demand for the items.”
“Though our economic condition is developing and it changes the lifestyle and eating habit and taste of consumers, a good number of the consumers still prefer purchasing handmade and small bakeries food,” he added.
