Increase to take effect January 3,2022

The Trinidad and Tobago state-owned National Flour Mills (NFM) has announced a 15-19 per cent increase in the price of flour effective January 3.

In a media release on Wednesday (December 29), the NFM announced that the wholesale price for flour would be increased between 15-20 per cent and suggested a 19 per cent increase in the retail price.

NFM’s flour products include breading flour, cookie flour, cracker flour, fry bake mix, Good n’ Natural brand – cracked wheat, wheat bran, whole wheat flour – Hibiscus flour, Lion’s self-rising flour, Lotus all-purpose flour, Lotus bakers’ flour, Lotus whole wheat flour, Ibis flour, roti and doubles flour.

In justifying the increase, CEO Ian Mitchell explained that the company could no longer absorb the shocks of soaring international wheat and shipping costs, adding that since 2008 there has not been a price adjustment.

Causes for the price increase

NFM said the price of spring wheat moved from as low as US$5 per bushel in 2020 to as high as US$10.91 per bushel in 2021 and the cost of freight increased by more than 110 per cent.

NFM added that it tried over the past 18 months to offset the increases through by focusing on productivity and efficiency throughout its operations.

Mitchell contended that the decision to impose an increase came after several internal initiatives to improve operating efficiency and reduce processing costs as a means of containing expenditure and maintain the price of flour.

Making reference to the decision to impose an increase, Mitchell in in the news release stated, “this was by no means an easy decision, as we did everything within our control to try to hold our prices; but with the staggering increases in raw material and shipping costs, we were left with no choice but to make the adjustment. We are acutely aware of the knock-on effect that an increase in the price of flour could have in the market, but we cannot sell a product for less than it costs to produce”.

He said NFM was able to reduce indirect manufacturing cost per tonne by four per cent. However, the global impact of adverse weather affected crop yields and continued supply-chain challenges increased the cost of agricultural inputs, like fertilizers, and the overall impact of the pandemic caused shipping costs to skyrocket.

In November, NFM reported a steep decline of $4.1 million after tax profit for the nine-month period ending September 2021.

Supermarket Association stoutly defending the increase

In the meantime, the Supermarket Association of Trinidad and Tobago (SATT) is defending the increase, arguing that NFM has to manage its inputs and overheads like any other business.

The Supermarket Association added that the price hike was a result of a “perfect storm” caused, in part, by a 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.

According to the SATT, “at this yuletide period, however, it is with great consternation in the interest of the consumer that such price adjustments must be made by the major supplier of flour to the nation especially when it has such implications for those whom flour represents an essential input of production”.

The SATT made the point that said the 19 per cent hike serves as an indication that NFM cannot absorb the associated cost of operations by allowing market forces to dictate the price at which flour remains available for consumers.

The association concluded by saying, “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. We trust that all such entities, as well as our friends at NFM, who are faced with such challenges, shall try their utmost best to minimise the effects of these global forces on the local consumers”.

MP Paray fighting against the increase

However,Rushton Paray, member of parliament for Mayaro, wants the Dr Keith Rowley administration to intervene to protect customers, declaring that, as the majority owner of NFM, on behalf of taxpayers, the government must step in and forestall the planned 20 per cent increase, which would have a major ripple effect on the consumer market.

He said if NFM is permitted to “jack up” flour prices, the costs of bread, doubles, cakes, pastries, pizza, and other items would rise substantially, dealing another blow to consumers’ purchasing power.

Paray posited a solution, arguing that the government could introduce a policy of applying Value Added Tax and duties on the previous freight prices, which he said has been successfully done in Guyana with respect to certain commodities.