The global cost of shipping and freight, and increased demands as countries come out of pandemic lockdowns, are the main factors driving the increase in food prices seen in local supermarkets over the last few months, president of the Food Distributors Association, Michael Seheult says.
Speaking on CNC3’s The Morning Brew yesterday, Sehuelt said the cost of shipping from China had increased by 500 per cent in the last year.
“To give you an example, a container that we used to import out of Korea for example, a 40-foot container, would cost $3,000 or $3,500, that is now costing $15,500 for a 40-foot container,” Seheult told Morning Brew host Jason Williams.
He said this increase was due to a glut in demand, as China has become the manufacturer to the world. Seheult said there are now not enough ships to service the high demand for goods from China.
“That has caused two things—a spike in the cost of freight and also a shortage of containers—where you have containers coming into an American port for example, right now in Long Beach, there are 67 container ships, each of these carry over 3,000 containers, just idling off the port because they can’t offload.”
He said these ships were forced to remain at the port without offloading because the ports were “totally congested.”
Seheult said in addition to lockdowns at the ports, there was also a shortage of trucks to remove the containers once they are offloaded.
Seheult said the cost of commodities also increased dramatically.
“Between September last year and July this year, wheat has gone up 30 per cent, I am talking about commodity prices here, corn is up 57 per cent, rice up 27 per cent, sugar up 50 per cent, soya bean oil 133 per cent and plastic, which is used in all packaging material, is up 45 per cent.”
He said this was caused by the reopening of countries like the US and Europe and a less than optimum harvest of basic items.
Supermarket Association: Food price increases being passed on
Supermarket Association president Rajiv Diptee said the increase in prices has been happening since the COVID-19 pandemic started and it was not just a local issue.
He said when supermarkets purchase from suppliers like Seheult, the increased prices have to be passed on.
“I really want to break this down for the laymen because I really want people to understand that we at the supermarkets are at the end of a value supply chain where we sell to the end consumer. What would happen is that myself, for example, I would be buying the goods off a supplier of goods such as one of Mike (Seheult) or his colleagues and then they would be buying that from a principle in a foreign territory,” Diptee told Williams.
But Diptee said the purchasing power lies with the consumers, who dictate whether items stay on the shelves.
“However, I believe we will see a flattening of what is happening in the coming months but it is certainly a situation that has created a lot of concern for everyone, because we’ve recognised that this is a situation that is going to be prolonged perhaps throughout the duration of COVID-19,” Diptee said.
Only in August, the Ministry of Trade and Industry noted the impact of COVID-19 on international and local food prices.
The Trade Ministry acknowledged that the price of several food items increased to varying degrees from January to July this year.
In its statement issued in August, the ministry also said the Government has been proactively monitoring and addressing rising food prices, as far as possible, through targeted interventions, including addressing the supply-side constraints of manufacturers and importers and effective price monitoring mechanisms for selected goods and services.