Fol­low­ing a meet­ing with the Min­istry of Trade and In­dus­try (MIT) Na­tion­al Na­tion­al Flour Mills (NFM) has changed the pro­posed price in­crease of Hi­bis­cus Flour from 19% to 10%. Ac­cord­ing to a press re­lease from MIT,  NFM has al­so agreed to lim­it the in­crease in the re­tail price of Ibis Flour, its flag­ship brand, from 19% to 17%

The fol­low­ing is a press re­lease from the Min­istry of Trade and In­dus­try:

The Min­istry of Trade and In­dus­try (MTI) notes the re­cent an­nounce­ment by the Na­tion­al Flour Mills (NFM) to in­crease the whole­sale price of flour.

The in­crease in prices has ex­pect­ed­ly been at­trib­uted to in­creased sup­ply chain costs and sub­stan­tial­ly soar­ing com­mod­i­ty prices. NFM has not­ed that the price of Spring Wheat has moved from as low as US$5.00 per bushel in 2020, to as high as US$10.91 per bushel this year (more than 100%). The com­pa­ny has in­di­cat­ed that the land­ed cost of spring wheat in its si­los as at No­vem­ber 2021 is 46% high­er than the cost as at Jan­u­ary 1, 2021 trans­lat­ing to an in­crease in cost of TT$47.5 mil­lion dol­lars us­ing the cost of its last ship­ment and TT$64.7 mil­lion us­ing to­day’s prices. NFM has al­so in­di­cat­ed to the MTI that the cost of en­zymes, pack­ag­ing and spare parts has al­so sig­nif­i­cant­ly in­creased dur­ing 2021. The cost of freight in this in­stance has al­so in­creased by more than 110% dur­ing 2021.

The in­creased prices of grain (which is the largest year-over-year jump in prices since the late 2000s) and the rise in sup­ply chain costs are a glob­al phe­nom­e­non which has been at­trib­uted to a range of fac­tors in­clud­ing the im­pact of the COVID-19 pan­dem­ic on tighter avail­abil­i­ty and in­creased de­mand glob­al­ly; ad­verse weath­er con­di­tions which has re­sult­ed in low crop yields and har­vest­ing; and in­creased costs of agri­cul­tur­al in­puts in­clud­ing fer­til­iz­ers. As a con­se­quence, through­out the world (in both pro­duc­ing and non-pro­duc­ing wheat na­tions in­clud­ing those in the Caribbean such as Ja­maica and Bar­ba­dos) the price of flour has in­creased sig­nif­i­cant­ly dur­ing 2021.

In Sep­tem­ber 2021, the Food and Agri­cul­ture Or­ga­ni­za­tion’s (FAO) Food Price In­dex re­vealed that since Sep­tem­ber 2020, glob­al food prices shot up near­ly 33% in Sep­tem­ber 2021 com­pared with the same pe­ri­od the year be­fore (Sep­tem­ber 2020), reach­ing lev­els not seen since 2011. 

Dur­ing Fis­cal 2021, the Gov­ern­ment im­ple­ment­ed sev­er­al mea­sures to mit­i­gate the im­pact of ris­ing food prices in­clud­ing:

                      i. Ze­ro-Rat­ing of Ba­sic Food Items;

                    ii. The Sus­pen­sion of the Com­mon Ex­ter­nal Tar­iff (CET) on Ba­sic Food Items;

                   iii. In­creased al­lo­ca­tion of For­eign Ex­change to the EX­IM­BANK;

                   iv. Im­ple­men­ta­tion of a $500 Mn. Agri­cul­ture Stim­u­lus Pack­age;

                    v. Strength­en­ing Link­ages be­tween In­dus­try and Agri­cul­ture to build sus­tain­able food sys­tems; and

                   vi. Im­ple­ment­ing the Im­port Sub­sti­tu­tion of a Se­lect­ed List of Items.

It is to be not­ed that the CET (i.e. im­port du­ty) on wheat, en­zymes and flour ad­di­tives are al­ready 0% and flour and sev­er­al re­lat­ed prod­ucts in­clud­ing bread, roti skins and crack­ers are cur­rent­ly ze­ro-rat­ed un­der the Val­ue Added Tax Act. The Gov­ern­ment there­fore re­ceives no di­rect rev­enue from the im­por­ta­tion and sale of flour in Trinidad and To­ba­go. In ad­di­tion, the Gov­ern­ment is con­strained by mul­ti­lat­er­al trad­ing rules in not be­ing able to pro­vide sub­sides to state trad­ing en­ter­pris­es.

It is to be not­ed that NFM is a pub­licly list­ed com­pa­ny on the Trinidad and To­ba­go Stock Ex­change. While the ma­jor­i­ty of its shares (51%) is owned by the Gov­ern­ment of Trinidad and To­ba­go through Na­tion­al En­ter­pris­es Lim­it­ed (NEL), the oth­er 49% is pub­licly held and is re­quired to bal­ance the in­ter­ests of all its share­hold­ers. The com­pa­ny com­mer­cial­ly op­er­ates in the open mar­ket and is not sub­ject to price con­trols. In ad­di­tion, NFM op­er­ates in a com­pet­i­tive en­vi­ron­ment and is sub­ject to sig­nif­i­cant lo­cal, re­gion­al and in­ter­na­tion­al pres­sures. 

The Gov­ern­ment urges the Board and Man­age­ment of NFM to con­tin­ue pur­su­ing in­ter­nal ini­tia­tives to im­prove op­er­at­ing ef­fi­cien­cy and re­duce pro­cess­ing costs in an at­tempt to fur­ther con­tain ex­pen­di­ture. It is ex­pect­ed that NFM will con­tin­ue to ag­gres­sive­ly pur­sue grain buy­ing strate­gies in­clud­ing price op­tions in or­der to re­duce price risks to en­sure the most rea­son­able price of flour which is a sta­ple for most house­holds in Trinidad and To­ba­go.

Based on dis­cus­sions be­tween the Min­istry of Trade and In­dus­try and NFM ear­li­er to­day, NFM has re­viewed the pro­posed price in­crease for Hi­bis­cus Flour, the brand that is used by sig­nif­i­cant seg­ments of the pop­u­la­tion, and agreed to re­duce the in­crease of all sizes of this item from 19% to 10%. NFM has al­so agreed to lim­it the in­crease in the re­tail price of Ibis Flour, its flag­ship brand, to 17% down from 19%.

While this will af­fect the com­pa­ny’s mar­gins, the com­pa­ny has com­mit­ted to ex­plor­ing all pos­si­ble av­enues to see how and where it can elim­i­nate oth­er costs to main­tain com­mer­cial vi­a­bil­i­ty. The MTI has al­so not­ed that the com­pa­ny has giv­en a com­mit­ment that should the price of wheat fall, it will re­duce prices to en­sure that con­sumers ben­e­fit from the re­duc­tion and con­tin­ue to get the best val­ue for mon­ey.

While flour is the main in­gre­di­ent in a range of food items, it is not the on­ly one and it is ex­pect­ed that the in­crease in the whole­sale price of flour should not con­comi­tant­ly trans­late in­to a sim­i­lar in­crease in the price of fi­nal prod­ucts. In this re­gard, busi­ness­es uti­liz­ing flour as the main in­gre­di­ent in their prod­ucts as well as su­per­mar­kets are re­quest­ed to con­strain any in­crease in the mark-up of re­tail prices as far as pos­si­ble.

The Con­sumer Af­fairs Di­vi­sion of the Min­istry of Trade and In­dus­try cur­rent­ly mon­i­tors the price of all-pur­pose flour and will con­tin­ue to close­ly mon­i­tor the in­crease in the re­tail price of this item. This in­for­ma­tion will be pub­lished on all of its so­cial me­dia plat­forms to pro­vide con­sumers with guid­ance on pur­chas­ing op­tions. Ad­di­tion­al­ly, con­sumers are urged to take note of the dif­fer­ent prices at­tached to the var­i­ous brands and pack­ag­ing sizes of flour.