National Flour Mills Limited (NFM) today announced that while it has been able to secure sufficient wheat stocks to guarantee that Trinidad and Tobago has an adequate supply of flour for the remainder of 2022, the cost of wheat to NFM has increased by a further 49 per cent in 2022, due to the ongoing war in Ukraine.
As a result, the company said that in order to reduce losses in its Flour Division, National Flour Mills has had to increase the wholesale price of flour by 33 per cent, with a suggested increase averaging 28 per cent on the retail price of flour to the consumer.
This decision the company said, follows continued initiatives to reduce operating costs to maintain the price of flour, in the face of increased supply chain challenges and soaring commodity prices.
Flour prices were increased in January 2022, NFM’s first increase since 2008, however the emerging crisis in eastern Europe and the decision by India and at least seven of the world’s wheat suppliers to curtail exports, saw a reduction in the quantities available to non-producing nations like Trinidad and Tobago and resulted in dramatic increases in the price of wheat globally.
"This geopolitical hurricane has caused Spring Wheat futures to jump from as low as US$8.55 per bushel in January 2022, to as high as US$14.06 per bushel in May 2022, an increase of 64% in four months. This also represents a 138% increase in Spring Wheat futures from US$5.90 per bushel at the beginning of 2021. Mindful of the impact of a full 49% increase in the price of flour on the population, NFM has taken the decision to limit the increase in the wholesale price of flour to 33% to reduce losses in its flour division and ensure overall profitability," NFM said.
Commenting on the decision, NFM CEO Ian Mitchell said, “This is the most turbulent period for wheat supply and food security in recent history. Flour is an important ingredient in our diets in Trinidad and Tobago and in response to the challenges that we are facing, we have been able to secure wheat to ensure a reliable supply of flour.
However, the next few wheat shipments have been purchased at record high prices due to the crisis in Ukraine coupled with decisions by many exporting nations to halt the export of wheat. We continue to explore ways to improve the efficiency of our operations and manage those costs that we can control. While we are acutely aware of the knock-on effect that an increase in the price of flour could have in the market, we must ensure that there is product available on the supermarket shelves. We must also ensure that we can generate enough positive cash flow and operating surplus to pay for these raw materials.”
The price increase will take effect on June 22, 2022.