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Five questions with Kelvin Mahabir, CEO, National Flour Mills
1. The company operates across three main divisions: flour and dry mix, animal feed and pet food and trading. Given the current economic environment in both T&T and the region, which lines of business are the most challenging and which the most rewarding for the company?
National Flour Mills Ltd produces and distributes a range of food and feed products under various brands—Ibis, Hibiscus, Lion Brand, Lotus, Good n Natural, National, Command Performance and Perromax.
Our brands have significant equity as we are market leaders in the key categories of flour, baking powder, icing sugar, and chicken and ruminant feeds.
Animal feeds has been the most challenging, as most farmers have reported some decline in animals being reared for meat production. The recent floods have also affected this sector.
In terms of growth potential, our Lion brand line up of products, roti and doubles flour, baking powder, pholourie mix and split peas powder, and our dog food brands, Perromax and Command Performance, continue to hold steady and show an upward trend.
Flour, while maintaining overall stable volumes, continues to be impacted by little change in local per capita consumption with some growth opportunities in export markets.
2. A significant input for NFM is wheat. Historically, wheat has been susceptible to strong price volatility. How has this affected the company and how does NFM manage this volatility?
The volatility in wheat prices has become more pronounced in recent years due to somewhat erratic weather conditions. The quantity and quality of wheat production are directly correlated to seed quality and weather conditions impacting the fields.
Over the years the NFM basket of wheat prices has been climbing mainly due to higher costs associated with high-protein spring wheat.
NFM monitors market trends daily and purchases wheat futures after careful consideration of all the support conditions which may impact pricing over the appropriate time horizon.
In this way the noise created by short-term and one-off conditions can be eliminated thereby providing us with a better price structure.
Additionally, NFM has also attempted to diversify its product portfolio utilising non-wheat inputs by growing its pet food business.
NFM is also engaged in a continuous improvement programme and has just completed the third wave of projects—a total of 34 projects—all geared towards making our operations more efficient and continuously reducing and eliminating waste from all aspects of our business.
However, inflation has trended around six per cent per annum on average over the last nine years while NFM has not increased flour prices since 2008.
These rising conversion costs, plus the trend of price increases in our basket of wheat inputs, have together eroded all the gains made through our efficiency and product diversification programmes.
3. Much of the thrust around food in recent times, particularly flour, has revolved around healthier alternatives.
How has the company adapted its operations and product portfolio—if at all—in light of these trends?
Flour is a product which continues to be strongly correlated with growth in population. NFM produces white, whole wheat and cracked wheat flours which provide consumers with good alternatives for healthy lifestyles.
The flour used in T&T is made from 99.9 per cent wheat blends specifically made to satisfy our unique cultural cuisine preferences popular in foods such as bread, pizza, coconut bake, roti and doubles.
NFM’s wheat flour products contain gluten, which in essence refers to the natural protein found in the wheat grains.
While some health enthusiasts and nutritional specialists advise that gluten-free options are preferred, only an extremely small percentage of people suffer with celiac disease (sensitivity to gluten) and therefore need to avoid all foods with gluten, so there is a lot of misinformation about gluten being unhealthy.
Another misconception is that wheat-free diets automatically lead to weight loss.
In fact, low calorie intake is the key to weight loss.
Therefore, the consumption of smaller quantities of flour-based products are generally more successful for long-term weight loss. NFM weighs all these factors, filters out fads and pursues product portfolio expansion options as justified by significant changes in demand in the markets it serves.
4. Earlier this year, the company put its rice mill in Carlsen Field up for sale.
Any updates on the state of progress with the sale?
The company, with the assistance of an external consultant, has completed the evaluation of proposals received and made its submission to the divestment secretariat of the Ministry of Finance for further consideration. NFM will continue to operate the rice mill facility until a decision is made.
5. As a majority-owned state enterprise, what does corporate social responsibility mean to NFM?
NFM is committed to being a responsible corporate citizen in line with its vision of being the most trusted food and feed manufacturer in the region.
Our core business allows us to provide quality food to T&T and the region at affordable prices.
These initiative include:
• Youth-related projects
• Sporting activities and the Global Young Leaders programme.
• Sponsorship of a cultural exchange between Success Laventille Secondary School and El Conjunto Folklorico Nacional de Cuba. (Cuba is a significant potential market for T&T manufacturers).
Initiatives associated with culture and food:
• Product and financial donations to NGOs, inclusive of the Blind Welfare Association and charitable organisations such as United Way.
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