NFM raises wholesale flour prices between 15-20 per cent

The content originally appeared on: Trinidad and Tobago Newsday

A range of NFM flour products on sale at a Port of Spain supermarket. – File photo/Roger Jacob

The country has been hit with another food price increase as the National Flour Mills (NFM) announced on Wednesday that its wholesale price would be increased between 15 per cent and 20 per cent and suggested a 19 per cent increase in the retail price of flour. NFM said its wholesale price increase takes effect from January 3.

In a media release, CEO Ian Mitchell said NFM could no longer maintain the shocks of soaring international wheat and shipping costs.

NFM, a state-owned company, said since 2008 there has not been a price adjustment and the decision came after several internal initiatives to improve operating efficiency and reduce processing costs to contain expenditure and maintain the price of flour.

Mitchell said, “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.”

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.

It said it tried over the past 18 months to offset the increases through by focusing on productivity and efficiency throughout its operations. It said it was able to reduce indirect manufacturing cost per tonne by four per cent during reduced working hours necessitated by the covid19 pandemic curfew.

However, the global impact of adverse weather affected crop yields and continued supply-chain challenges increased the cost of agricultural inputs, like fertilisers, and the overall impact of the pandemic caused shipping costs to skyrocket.

Also commenting in the statement, NFM chairman Nigel Romano said the company as a price-taker had little control over the external costs that drove up prices.

“It’s an unfortunate analogy, especially given the realities of climate change, but we have been confronted by the perfect storm –– 2020 witnessed the lowest wheat yields since 2007, and the supply-chain disruptions caused by the pandemic have increased freight costs significantly, further impacting the landed cost of all grain and other material inputs. NFM is a price-taker.

“We have no control over the landed costs of our imported raw materials, which now account for 64 per cent of our production costs.

“I think the team is doing a good job improving our internal processing and driving other costs down, especially during these trying times, and we will continue to find ways to continually improve.”