Manufacturers of biscuits, noodles, and animal feed are sounding the alarm, urging policymakers to intervene on the impacts of escalating wheat prices. VAT requirements, soaring production costs, and plummeting sales were cited as struggles in the plea submitted to the Ministry of Finance months ago, shedding light on the broader manufacturing woes.

The Ethiopian Millers Association has issued a warning, stressing that the survival of many of its 200 members hangs in the balance without prompt action. Tedla HaileGiorgis, president of the Association and head of Chilalo Food Complex, argues that biscuits and noodles constitute an essential source of daily sustenance for a significant portion of the community.

"They are not luxury items", he told Fortune.

The "Ok" brand biscuit and noodle manufacturer said the crippling effect of skyrocketing input prices is evident, particularly for wheat. He warns that the tax burden could spell widespread closures for many factories, with some already teetering on the edge.

Nearly 30 biscuit manufacturers and three major noodle manufacturers are struggling. Notable companies like Sawaya Food Manufacturing Plc with known brands like "Indomi" and Prima Food Processing Plc with "Prima Biscuit"  are among those faced with the price hike.

Khalid Omer, CEO of Omer Biscuits, based in Sheggar City, has been tirelessly advocating for VAT reduction, citing the doubling of essential input costs like flour to 8,000 Br a quintal since last year, alongside rising sugar prices. His company, boasting a daily production capacity of 800 cartons of biscuits, relies heavily on markets in Amhara and Oromia regional states, both of which are grappling with security issues.

"Rising costs and security issues are squeezing our profits," he told Fortune.

These urgent calls for intervention coincide with the government's revision of the two-decade-old Value Added Tax (VAT) proclamation, which last year included 15pc tax exemptions on previously taxed products like wheat flour, spaghetti, and macaroni to combat inflation. The proclamation made its way to parliament a month ago after receiving a nod from the Council of Ministers, while exemptions on the three items were ushered in through a letter last year.

However, officials from the Ministry of Finance question whether previous tax exemptions have effectively mitigated inflationary pressures. Zelalem Abate, a public relations expert at the Ministry, underscores the need for a careful assessment of the manufacturers' concerns to avoid unnecessary burdens on consumers.

Meanwhile, the Ministry of Industry acknowledges some concerns raised by noodle manufacturers. Habtamu Taye, head of the Ministry's Food & Beverage Desk, argues that noodles are a vital food staple for many low-income households, contrary to being perceived as a luxury item.

"We're prepared to present our assessments," Habtamu told Fortune.

However, he contends that biscuits lack sufficient justification for VAT reduction, citing their less essential economic contribution.

The animal feed sector, reliant on wheat byproducts, faces its own taxes following VAT waivers last year. Despite assurances of refunds, Abraham Negash, general manager of Dina Animal Feed Processing, said the burden on production capacities amid wheat shortages and price hikes was impactful.

"The taxes have only complicated matters," Abraham told Fortune.