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AyRojgar
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What went wrongSmall bakery factory owners in Shariatpur, in a Prothom Alo report

Inputs up 30 percent in six months, and the price of a loaf unchanged

Sugar at 110 taka a kg, flour at 62, palm oil at 135 a litre and ghee at 154 — inputs rose at least 30 percent in six months while the price of bread and biscuits could not move. All 95 of the district's bakery factories were running at a loss, one owner putting his own at 30 lakh taka over two years.

All 95 bakery factories in Shariatpur were caught in the same squeeze when flour, sugar, palm oil and ghee rose at least 30 percent in six months: sugar at 110 taka a kg, flour at 62, palm oil at 135 a litre and ghee at 154. What a packet of bread or biscuits sells for is fixed in the customer's mind, so none of that increase could be passed on and all of it landed on the owners. The secretary of the bakery owners' association put his own loss at 30 lakh taka over two years, stopped production and rented out his premises instead. Another factory, getting through 400 kg of flour and 200 kg of sugar a day, was losing money every month with its bank debt growing, and a third with 60 workers could not cover the monthly wage bill. The report describes a whole district trade running below cost rather than one owner failing.

Lessons

  1. 1.Bread and biscuit prices are anchored by what customers expect per packet, so a 30 percent input rise lands entirely on the owner
  2. 2.When the plant is worth more rented out than run, that is the signal to stop: one owner took it, the others kept borrowing

Published with the person's permission, without revealing who they are.

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