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Could Soaring Bread Prices Cause Political Instability

By on July 19, 2012

The price of bread is responding to the increases in the duties and levies placed on Wheat commodity and show no signs of slowing anytime soon.

A loaf of bread that used to sell for N 100 now sells for N 120, and prices could continue to surge. In an economy where majority of the people are poor, it is uncertain if the continuous price increases especially in basic necessities like bread will cause political instability as more people go hungry.

President Jonathan’s administration recently reviewed upwards the levy on wheat imported into the country.

The levy on bread has been fixed at 65% by the Federal Government, in addition to a 35% duty also applicable to the commodity.

This is as government tries to promote the utilization of 20% minimum cassava flour in the bread baking process nationwide.

Nigerians spend N 635 billion annually to import wheat and the government wants to reduce the pressure on our foreign reserves and promote local substitues, thus revitalizing the economy.

However it is uncertain that the Nigerian cassava market has adequate capacity to transition to the substitute seamlessly. This could mean price shocks that take the poor and middle-class by surprise and may lead to political instability as crime and lawlessness could increase.