Achiever Project Material 08058580848 and 08140350866: EFFECT OF GOVERNMENT POLICIES ON THE BAKING INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1 THE PROBLEM AND ITS SETTING

Every industry operates within two sets of constraints. Internal constraints are those problems within the organization and over which the enterprise has reasonable amount of control. Personnel problem, capacity utilization and the techniques or process of production are some of such factors.

External factors could pose formidable problems to an enterprise. The problems are made more severe by the fact that these problems are caused by factors outside the competence of a given enterprise to control. Examples of such factors are government regulation, traditional or cultural values etc.

The bakery industry in Nigeria has been a victim of externally imposed constraint. Hitherto, bakers depended on local millers who produced their vital raw materials, flour from imported wheat. Government banned the importation of wheat and wheat product in 1986, thereby, sending shock waves to this very well established and expanding industry. Wheat products has started to consume an unacceptable amount of the nation’s foreign exchange as the table 1.1.1 below clearly demonstrates, as well as figure 1.1.1 in page 3.

Table 1.1.1 Foreign Exchange Spent on Wheat and Food Import 1981 – 1985

Import 1981 1982 1983 1984 1985

N,000 N,000 N,000 N,000 N,000

Total food 1,820,215 1,642,245 1,296,714 843,246 946,567

Wheat 159,422 79,629 255,717 243,067 327,870

C/o of total 9% 5% 20% 29% 35%`

Source: Federal Office of Statistics, Lagos

Given the above circumstances, there was a clear need for government action to check the outflow of the nation’s declining foreign exchange earnings through what important.

Besides, it can also be argued that there were suitable local substitutes of wheat flour for bread baking; rice, cassava, maize and sorghum have been mentioned as such suitable substitutes. To some people these substitutes were at least as good as wheat as it

FIGURE 1.1.1

FOREIGN EXCHANGE SPENT ON WHEAT AND FOOD IMPORT

1981 – 1985

Source: Federal Office of Statistics, Lagos

was suggested that local bakers rejecting them were doing so our of ignorance, or out of a slavish preference for imported products or whether one accepts the above arguments or not, what has become clear is that the effect of the ban on the importation of wheat was swift devastating on the bakery industry.

In Enugu Urban alone, some famous baking houses closed up. Nigerline bakery, St Georges Bakery, many bakeries and Mother’s Pride Bakery all shut down between the middle of 1986 and the end of 1987. As at the time of starting this project, not every Bakery has resumed operations.

A far more reaching effect on this ban on the industry as a whole is that it has quite clearly changes the eating habits of many Nigerians.

Ubiquitous bread on the breakfast table has vanished and the frequent sight of peoples snacking on bread in the afternoon has also disappeared.

The primary demand for bread products in this country has certainly contracted since then.

1.2 STATEMENT OF THE PROBLEM

Such is the background for this study. Most baking houses are small scale business who face the task of devising survival strategies to deal with major changes in government policy that threaten their very existence.

Our focus is on suitable survival strategies for the banking industry given their operating circumstances since 1986. We are interested in finding out how those who are still in business dealt with the new condition in which they found themselves. In particular, we will be looking at the organizational changes, financial management strategies, and other operating techniques that they had to adopt in order to survive.

As for the baking houses that closed down, we shall explore whether there were forces other that the ban on imported wheat that engendered their demise. The study will cover a broad section of the bakeries in Enugu urban. See Appendix A.

1.3 OBJECTIVES OF THE STUDY

In general, the study hopes to take a close look at the baking houses in Enuguu urban since 1986. Specifically it is intended to find out the following:

(a) What changes have those who continue to operate made in their structure and method of operation in order to cope with the ban?

(b) What new financial arrangement have they made following rising production cost resulting from the ban?

(d) What new challenges they now face three years after the ban or import flour?

For completeness, it is also necessary to examine the cases of those baking houses that were found to have closed down as a result of the ban. Although there may be problems obtaining information from some of these outfits, whose operating records may no longer be available, an effort would be made to access the general operating state of such baking houses before the ban. This should enable one determine whether such baking houses were already having serious operating difficulties before the ban or whether their extinction is to be blamed on the ban.

1.4 SIGNIFICANCE OF THE STUDY

This study should be of considerable interest to policy makers in government, to the bakers and distributors of bread products and consumers and to the public at large. The study hopefully, will give government some documented information on the effect of the major policy changes introduced in 1986. The information should enable government to establish what new measures need to be taken as well as provide some basis of determining in advance, the likely consequences of similar measures in future.

Bakers should use the study to understand fully the impact of the changes on their industry. The study will highlight how they have fared; the successful ones will see what it was that enabled them weather the consequences of the ban on wheat importation. Those who failed to do and indeed why they have ceased to be in business. In the end, the industry will be better placed to cope better with similar situations in the future.

The researcher’s understanding on the challenges and the survival strategies of small scale industries will be greatly impacted.

The bread consumers, through this work, shall gain first hand information of the difficulties the bakers go through to provide them with the bread they love to eat. They will better appreciate the need to pay a little more for this product.

The general reader will equally find the work a useful contribution to knowledge.

1.5 HYPOTHESIS

In this study, the following hypothesis have been formulated:

1. The ban on wheat importation did not cause any significant changes in the methods of operation of bakeries.

2. New challenges faced by bakers are not as a result of ban on importation of wheat and its products.

3. The sources of raw materials for bakeries remained unchanged after the ban on wheat importation.

4. New financial arrangement are made by bakers are not as a result of the increase in costs of wheat flour.

5. The ban on wheat importation did not cause the demise of a significant number of bakeries.

1.6 SCOPE OF THE STUDY

The emphasis of this study is on small scale bakeries in Enugu Urban. The study intends specifically to investigate the impact of ban on wheat importation on bakeries and the strategies adopted by them to survive.

1.7 LIMITATION OF THE STUDY

This study was constrained by many factors among which were time, funds, and the unco-operative attitude of some respondents.

The researcher found the study very time demanding in data collection and production. Often the researcher is rebuked for being absent from work in process of carrying out the study. Owing to the pressure of work, more intensive and extensive investigation could not be carried out.

Some respondents were unwilling to complete the questionnaire, some others completed their own reluctantly.

The study turned out to be very expensive on purchase of materials, field work and production.

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Thursday, 23 February 2017

EFFECT OF GOVERNMENT POLICIES ON THE BAKING INDUSTRY

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