Con­sumers should be pre­pared to pay al­most $20 or, in some cas­es, even more for a two-ki­lo bag of flour ef­fec­tive to­day, as they will have to fork out as much as 28 per cent more on the re­tail price of flour, the Na­tion­al Flour Mills Lim­it­ed has an­nounced.

While the coun­try is al­ready faced with ex­or­bi­tant food prices and ris­ing in­fla­tion, the NFM said yes­ter­day that the cost of wheat has in­creased by a fur­ther 49 per cent in 2022 due to the on­go­ing war in Ukraine, leav­ing it with no choice but to in­crease its prices.

Ac­cord­ing to the NFM, a two kg bag of Ibis flour, which was $14.77, will now cost $18.93, an in­crease of $4.16 or 28 per cent.

This comes less than six months af­ter NFM an­nounced an in­crease in the price of its flour.

De­piste this, glob­al wheat prices fell yes­ter­day, co­in­cid­ing with fore­casts of favourable har­vests and pro­duc­tion ahead in ma­jor wheat pro­duc­ing coun­tries, in­clud­ing Rus­sia, ac­cord­ing to a re­port in Bloomberg.

In a re­lease is­sued yes­ter­day, how­ev­er, NFM CEO Ian Mitchell de­scribed the glob­al sit­u­a­tion as “the most tur­bu­lent pe­ri­od for wheat sup­ply and food se­cu­ri­ty in re­cent his­to­ry.”

The com­pa­ny ad­vised that while flour is the main in­gre­di­ent in a range of food items, it is “not the on­ly one, so an av­er­age in­crease of 28 per cent in the re­tail price of flour should not nec­es­sar­i­ly trans­late in­to a 28 per cent in­crease in the price of every­thing that con­tains flour.”

How­ev­er, when the NFM raised its prices in Jan­u­ary this year, this re­sult­ed in a rise in re­lat­ed prod­ucts like bread, dou­bles and pas­tries.

But the com­pa­ny yes­ter­day as­sured that it has been able to se­cure suf­fi­cient wheat stocks to guar­an­tee that Trinidad and To­ba­go has an ad­e­quate sup­ply of flour for the re­main­der of 2022.

But it ex­plained that its lat­est move was to en­sure the com­pa­ny re­mains vi­able.

“As a re­sult, to re­duce loss­es in its flour di­vi­sion, Na­tion­al Flour Mills has had to in­crease the whole­sale price of flour by 33 per cent, with a sug­gest­ed in­crease av­er­ag­ing 28 per cent on the re­tail price of flour to the con­sumer,” the com­pa­ny said.

It added that this de­ci­sion fol­lowed con­tin­ued ini­tia­tives to re­duce op­er­at­ing costs to main­tain the price of flour, in the face of in­creased sup­ply chain chal­lenges and soar­ing com­mod­i­ty prices.

Regional flour price comparison

The com­pa­ny added that the emerg­ing cri­sis in east­ern Eu­rope and the de­ci­sion by In­dia and at least sev­en of the world’s wheat sup­pli­ers to cur­tail ex­ports, saw a re­duc­tion in the quan­ti­ties avail­able to non-pro­duc­ing na­tions like T&T and re­sult­ed in dra­mat­ic in­creas­es in the price of wheat glob­al­ly.

The NFM fur­ther ex­plained that this “geopo­lit­i­cal hur­ri­cane” has caused Spring Wheat fu­tures to jump from as low as US$8.55 per bushel in Jan­u­ary 2022, to as high as US$14.06 per bushel in May 2022, an in­crease of 64 per cent in four months. This al­so rep­re­sents a 138 per cent in­crease in Spring Wheat fu­tures from US$5.90 per bushel at the be­gin­ning of 2021, the com­pa­ny added.

Ac­knowl­edg­ing that flour is an im­por­tant in­gre­di­ent in lo­cal di­ets, Mitchell said while the NFM has been able to se­cure wheat to en­sure a re­li­able sup­ply of flour, the next few wheat ship­ments have been pur­chased at “record high prices” due to the cri­sis in Ukraine, cou­pled with de­ci­sions by many ex­port­ing na­tions to halt the ex­port of wheat.

Still, he said the com­pa­ny hopes to mit­i­gate these ef­fects.

“We con­tin­ue to ex­plore ways to im­prove the ef­fi­cien­cy of our op­er­a­tions and man­age those costs that we can con­trol. While we are acute­ly aware of the knock-on ef­fect that an in­crease in the price of flour could have in the mar­ket, we must en­sure that there is prod­uct avail­able on the su­per­mar­ket shelves. We must al­so en­sure that we can gen­er­ate enough pos­i­tive cash flow and op­er­at­ing sur­plus to pay for these raw ma­te­ri­als.”

NFM pre­pared to drop prices if wheat cost de­clines

Should the price of wheat re­turn to its pre­vi­ous lev­els, how­ev­er, NFM said it will be pre­pared to re­duce prices.

“NFM op­er­ates in a com­pet­i­tive en­vi­ron­ment, and we are con­tin­u­ous­ly ex­plor­ing ways to im­prove our lev­els of ef­fi­cien­cy and to en­sure the con­sumer gets the best val­ue for mon­ey.

“Trinidad and To­ba­go has tra­di­tion­al­ly pro­duced flour at com­pet­i­tive prices com­pared to oth­er CARI­COM coun­tries and we will seek to main­tain this po­si­tion,” the com­pa­ny added.

And while the price of wheat has in­creased more than 49 per cent for 2022, NFM has in­creased prices by about 33 per cent.

On whether this price in­crease was suf­fi­cient to cov­er the in­crease in costs, the com­pa­ny said, “While we have not passed on the full in­crease in cost, we are con­fi­dent that oth­er in­ter­nal ini­tia­tives to im­prove op­er­a­tional ef­fi­cien­cies will al­low us to man­age op­er­at­ing per­for­mance to make a prof­it with a 33 per cent in­crease in price.”

On whether con­sumers can al­so ex­pect in­creas­es in the prices of oth­er NFM prod­ucts where wheat is a raw ma­te­r­i­al in­put, the com­pa­ny said this will be de­ter­mined by fac­tors be­yond NFM’s con­trol, such as the price of raw ma­te­r­i­al and ship­ping.

How­ev­er, it said it will con­tin­ue to fo­cus on the items with­in its con­trol and do every­thing to se­cure sup­plies and run an ef­fi­cient op­er­a­tion, keep­ing its milling and pro­cess­ing costs as low as pos­si­ble.

It added that if the price of wheat falls, this will be passed on to con­sumers.

Re­gard­ing an in­crease in the price of grain, the NFM is yet to make a de­ci­sion. The com­pa­ny said like all im­porters of raw ma­te­ri­als, the NFM’s pric­ing re­flects the prices on the world mar­kets.

It said it will con­tin­ue to do what it can to man­age the volatil­i­ty in the mar­ket and will act “in a re­spon­si­ble man­ner in the best in­ter­est of our cus­tomers and all oth­er stake­hold­ers to min­imise the ex­tent to which in­creased glob­al prices af­fect the end price of our prod­ucts.”

That said, the NFM main­tained that con­tin­ued sig­nif­i­cant up­ward shifts in prices will im­pact the price of flour lo­cal­ly.

“En­sur­ing that food is avail­able to the peo­ple of Trinidad and To­ba­go is our para­mount re­spon­si­bil­i­ty,” the com­pa­ny added.

Source: Spring Wheat May ‘22 Futures BarChart - Barchart.com

Su­per­mar­ket As­so­ci­a­tion: Glob­al sit­u­a­tion tak­ing toll on prices

In re­sponse to the in­crease in flour, Su­per­mar­ket As­so­ci­a­tion of T&T pres­i­dent Ra­jiv Diptee stat­ed: “We have been mon­i­tor­ing the prices of grain and wheat as de­scribed with­in the re­lease and it has been soar­ing for some time, so the fears have now been con­firmed and un­for­tu­nate­ly, we are see­ing that the State’s pro­duc­er, the largest pro­duc­er of flour in the coun­try, Na­tion­al Flour Mills ,sig­nalled its price in­crease and they are pass­ing the prices on right now to the trade which will have to be passed on to the cus­tomers.

“And it is some­thing that while we feel the tim­ing is very un­for­tu­nate, it re­flects the glob­al sit­u­a­tion right now where we have had a con­sol­i­da­tion of fac­tors from the pan­dem­ic brought for­ward, as well as the war in Ukraine tak­ing the toll as it has on the sup­ply chain to date.”

Diptee said the sit­u­a­tion per­fect­ly high­light­ed that su­per­mar­kets are “price tak­ers.”

“We feel very strong­ly and I will say I do per­son­al­ly as well, where the food se­cu­ri­ty projects are very crit­i­cal to en­sur­ing that we have some sort of lever­ag­ing of giv­ing our­selves a hedge fund against the ris­ing prices in­ter­na­tion­al­ly, be­cause these sit­u­a­tions show us how sus­cep­ti­ble we are to what is tak­ing place out­side of T&T and how a war in a Eu­ro­pean coun­try can con­tin­ue to af­fect us as well as the pan­dem­ic,” he said.

“As far as agri­cul­ture is con­cerned, there are projects that can have great ben­e­fits and use and with­in the in­tra-re­gion­al basin, there must be an ap­petite as well as do­mes­ti­cal­ly in­side of T&T to see what can be done.”

Diptee said the on­go­ing sit­u­a­tion needs to be seen as a learn­ing tool.

“We have had to learn from this ex­pe­ri­ence that we need to be able to pro­vide for our­selves where wheat va­ri­eties are con­cerned, where sev­er­al of these projects per­haps may be fea­si­ble in the medi­um term and it is some­thing that we have to pri­ori­tise,” he said.

“What I am very hap­py about right now to note is that NFM is al­so say­ing that there is enough cov­er for su­per­mar­ket shelves for the re­main­der of 2022 so we have that time to work out what is our strat­e­gy.”

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