Chairman of the National Flour Mills (NFM) Nigel Romano says the company has secured supplies for the rest of the year and do not expect change prices in the near future.
However, he notes that the situation still remains volatile regarding the wheat market.
In a statement of NFM’s unaudited financial results for June 30, 2022 Romano explained, “We have secured supplies for the rest of the year and do not expect to change prices in the near future.
“However, future contracts work by allowing buyers and sellers to agree on a price for wheat that will be delivered in the future, typically three months’ time. And a lot can change in three months.”
Romano also assured shareholders and customers, that NFM is “acutely aware” of the importance of flour to the living standards of customers, adding that the board continues to work with management to monitor global markets and ensure availability of wheat supplies, while improving the efficiency of the production process.
He also noted that ongoing attempts internationally to broker an agreement, establishing an export corridor for grain shipments from Ukraine, to increase global supplies was “a breath of fresh air.” Unfortunately, according to the NFM chairman this was quickly dampened by the attack on Odessa, Ukraine’s biggest port, highlighting the current unpredictability and volatility of the grain market.
However, he emphasised, “We wish to advise our stakeholders that notwithstanding these current challenges, our objective is to secure supplies at the best prices available.”
Additionally, Romano referenced his first quarter report, noting that the Russian invasion of the Ukraine impacted supplies of wheat, fuel and fertilizer, disrupting global markets causing food and fuel prices to soar, and raising fundamental concerns about global food security.
“In addition, the June publication by the Food and Agriculture Organisation highlighted climate change and market uncertainties as also contributing to record high food prices globally,” he added.
According to the company’s financials NFM earned revenue of $228.2 million for the first six months of 2022, an increase of 8.7 per cent year-on-year.
However, uncontrollable factors referred caused a 12.3 per cent increase in cost of sales year-on-year, up from $168.9 million in 2021 to $189.7 million in 2022.
The net effect was a 6.3 per cent decrease in gross profit, an 85 per cent decrease in operating profit, down from $3.4M to $0.5M and an after tax loss of $2.3M compared to an after tax profit of $2.1M for the first six months of 2021.
This was the context for the 33 per cent increase in the price of flour in June 2022.