The hike in the price of flour, announced yesterday by the National Flour Mills (NFM), has triggered a panicked ripple effect in the country, especially after the company admitted that prices could rise again in the future.
In a media statement yesterday, NFM said that “soaring” wheat prices and supply chain delays were to blame for the suggested 19 per cent retail increase in the cost of flour.
In a media release yesterday the NFM said that the increasing cost of wheat and freight globally, the NFM took the decision to increase the wholesale price of flour by between 15 per cent and 22 per cent, with a suggested increase averaging 19 per cent on the retail price of flour to the consumer.
“Flour prices have not been adjusted since 2008,” the company said.
The adjustment is set to be implemented next week.
The company said that additional increases on related wheat-based items will be determined by factors beyond the NFM’s control, including the price of raw material and shipping.
“However, we will continue to focus on the items within our control and do everything we can to run an efficient operation and to keep our milling and processing costs as low as possible,” the company said.
It said that if the cost of grain continued to rise, it would have no choice but to increase prices again.
“We cannot sell a product for less than our production costs, especially where raw and packaging material makes up 64 per cent of that cost. Therefore, if the cost of these inputs continues to increase, we will have no choice but to adjust the prices of our products to reflect those increases,” it said.
“The direct impact, assuming use of four 2Kg bags of flour per month, is estimated to be an increase of $10.00 for the typical family, e.g., an increase from $12.50 to $15 on a 2kg bag of Ibis,” the company said.
With regards to the knock-on effect of the price increase, the NFM said that while flour is the main ingredient in a range of food items, it is not the only one.
“So an average increase of 19 per cent in the price of flour should not necessarily translate into a 19 per cent increase in the price of everything that contains flour,” the company said.
The NFM said that the price of wheat has increased more than 100 per cent, yet NFM has only increased prices by about 19 per cent.
“During the past 18 months, NFM has embarked on a number of initiatives to improve its levels of efficiency and streamline internal processes in an attempt to reduce processing costs. We are acutely aware of the knock-on effect that any increase in the price of flour, a basic ingredient in many products, could have in the market, so we have set the price at the lowest practical level to maintain commercial viability,” the company said.
SATT: An unfortunate yet harsh reality
Meanwhile, the Supermarkets Association of T&T (SATT) said that the 19 per cent price increase could be seen as an indication that the Ministry of Finance cannot absorb the associated cost of operations impacted by the global pandemic by allowing market forces to dictate the price at which it remains available for consumers.
“This is the unfortunate yet harsh reality we are seeing at a time when as a national collective we should be seeking the interests of the most vulnerable that this will impact,” SATT president Rajiv Diptee said in a media release.
“NFM like any other commercial entity has to operate within the confines of its operations being able to manage its inputs, overheads and so forth. The perfect storm alluded to in this is a conflagration of exigencies including supply chain disruption, adverse yields, loss of cycles of production, decreased access to inputs and increased prices of raw materials for a variety of reasons which have been repeated ad nauseam
by importers and suppliers within the wider supermarket industry,” the SATT said.
“Consumers have faced periodical cycles within the nearly last two years of eroded savings, no upward adjustment of their earnings and the erosion of the value of their dollar in the face of unmitigated inflation across all sectors,” Diptee said.
Diptee said that over the Christmas period, there was a 5 per cent to 10 per cent decrease in sales. That decrease, Diptee said, was coupled with an average 25 per cent increase in prices.
“In particular, it must be noted that seeming crowds at stores do not represent any significant increase in sales rather an appetite for a periodical deal,” he said.
Doubles can rise to $10
The T&T Doubles Association is warning that the increased flour cost could mean an increase in doubles prices but bread manufacturers like Kiss Baking and Linda’s are currently going over their processes and both said they would revert to customers at a later date.
Head of the T&T Doubles Association Kurt Nigel Mason said that as all raw material costs go up, the final product price would have to be adjusted.
He said that citizens would have to learn to adapt to wheat flour mixed with another type of grain.
“If doubles is made with cornflour instead, prices may be controlled,” he said.
“In Guyana to cut the cost, wheat flour is mixed with cassava flour to make bread,” Mason said.
Mason said that for food to remain affordable, Trinidadians must learn to adapt to corn, cassava, rice and potato flour instead of the traditional wheat.
“T&T belly must adapt to hard times,” he said.
“$10 for doubles coming soon,” he added.
Businessman Peter George, who runs Linda’s Bakery yesterday said that the executive was in a meeting to discuss the NFM announcement.
“We got the notification, it is January 3 so there is not a great deal of time,” he said in an interview yesterday.
George said that the NFM increase did not come as a surprise.
“I was not by any means surprised that this happened. We had been anticipating it given the inflationary environment around the globe,” George said.
“Flour is a fairly substantial blow but I mean we have been dealing with so many other things as well,” George said.
George said that he planned to “let the dust settle” and expected to have a response by the middle to the end of next week.
Head of the Root and Tuber Producers Association Ramdeo Boondoo, has said that the time is right to produce cassava flour on a large scale. Boondoo said since 2012 the association had approached the Minister of Trade with a proposal to produce cassava flour locally with the aim of reducing T&T’s dependency on wheat.
Boondoo said the association again approached Minister of Agriculture Clarence Rambharat in 2016 on the matter.
“Minister Rambharat then told me that wheat was cheap, we also wrote to the Prime Minister and nobody took us seriously. I then told the Minister that we were looking at food security down the road, and look today what is happening flour prices are skyrocketing.”
Boondoo said the project was to be done over a three-year period to replace up to 30 per cent of wheat imports with local cassava.
“There are high yielding cassava varieties with a high starch content. To start this, around 50 acres would be needed. We intended to use all the available Caroni two-acre plots under a financial arrangement. When we put this idea in 2012, farmers in the South were willing to go with it. We now need to speak with the private sector to get this going and the Ministry should act as the facilitator.”
Meanwhile, at least one Central business, Cunupia-based Sheik Lisha Limited, has said that it will keep the prices of flour the same for as long as possible.
CEO Churchill Akaloo told Guardian Media prices would remain as long as stocks last.