NFM CEO: Ease in flour prices coming

CONSUMERS are expected to get an ease from this month, with the two major flour producers – National Flour Mills and Nutrimix – reducing the prices of their products to both retail consumers and commercial consumers.

The announcement of the reduction in the price of flour for retail consumers came on July 3, with NFM reducing its prices by ten per cent and Nutrimix by 13 per cent.

However, NFM CEO Ian Mitchell said with geopolitical shocks still affecting the costs of raw materials and transport for flour producers around the world, NFM, like many other companies, has to remain vigilant to ensure stability in the price.

In June last year, NFM announced an increase in wholesale prices by 33 per cent and retail prices by 28 per cent.

Customers who were at the time paying $14.77 for a two kg bag of flour would pay $18.93 after last year’s increase. The rise came amid geopolitical shocks coming out of the Ukraine/Russian war.

Ukraine is one of the top five producers of wheat in the world, with exports reaching 13.5 million metric tonnes in the 2022/2023 marketing year, according to Statista. Ukraine and Russia combined account for a quarter of the world’s grain exports.

But those exports nearly came to a halt with the war. In its early days, Russia blocked Ukrainian's ports with its navy.

Russia also halted its own exports temporarily. As a result of the war and the restrictions, wheat futures jumped from US$8.55 a bushel in January 2022 to US$14.06 per bushel in May 2022.

But an agreement among Russia, Turkey and Ukraine in July last year created policies for the safe export of grain in an attempt to address last year’s food crisis. The deal was expected to expire in November, but was extended several times.

Since July last year, more than 1,000 ships carrying millions of tonnes of agricultural products, including 725,000 metric tonnes of wheat,were shipped worldwide from the secured ports.

After monitoring grain prices over the past few weeks and seeing stabilised cost reductions in the price of wheat, along with freight, domestic transport and other factors, Mitchell said NFM decided to reduce its retail prices.

Responding to questions from Newsday this week, Mitchell said it passed on savings to its commercial customers as well, although he didn’t say how much.

“As market leaders we provide a basket of goods to our commercial customers, not just flour products,” he said. “So it's not a case of one price fits all.”

He added that some commercial customers have begun asking for products designed specifically for their needs.

Mitchell said the cost of manufacturing these specific products and the volume of the products each customer buys from NFM are among the deciding factors that may affect the price for commercial customers.

“Ultimately NFM seeks to offer our customers the best value from an SQF-certified flour producer available in the region,” Mitchell said. “While we may not always be the cheapest, we offer the best value. Our customers depend on us for quality, consistency, service and performance.”

Wheat prices still volatile

Despite the reduction in prices, the Russia/Ukraine war is still going on, which means the wheat and grain market will continue to be extremely volatile.

While Mitchell was speaking on the reduction of wheat amid stabilised costs, Russia backed out of the Black Sea Deal on Monday.

Hours after, a Russian missile attack on Ukraine’s Black Sea coast destroyed 60,000 tonnes of grain and damaged storage infrastructure. A BBC report on Wednesday said Russia struck the southern port cities of Odesa and Mykolaiv early on Tuesday. and from Tuesday night into Wednesday it hit further down the coast in Chornomorsk.

Two of the targets were included in the export deal.

“This is just another example of how volatile the situation is regarding wheat supply and by extension the cost of flour worldwide,” Mitchell said.

Other grains are experiencing the same volatility as wheat. Ukraine, during the Black Sea Deal, was able to transport 2.1 million metric tonnes of corn, along with several other grains, such as sunflower meal, rapeseed, barley, soy beans, peas and sugar beet pellets.

Mitchell added that these grains, which contribute to the manufacture of animal feed, were also reduced, which contributed to a reduction in its price.

Notwithstanding, he said NFM is always careful and responsible in ensuring it is able to fulfil its purpose of feeding families in the Caribbean.

“We are working to ensure the stability in supply and price, at least in the medium term,” he said. “We will continue to monitor events as they unfold and make the best decisions in the interest of our customers throughout Caricom.”

NFM on the rise

Mitchell said NFM is now on a growth path, despite the volatility and uncertainty that come with the current climate. He told Business Day it is working on expanding and diversifying its export portfolio, with new products in development.

Thus far, it has launched a blended product – Lotus cassava and wheat flour. Mitchell said the brand is seeing massive success.

“We are working hard to keep up with demand, as customers have truly embraced the new cassava and wheat flour,” he said. “We will continue to work on other products that meet the needs of our valued customers.”

A 1.8kg package of NFM’s cassava and wheat flour retails for around $28-$29.

Mitchell said the company will continue to ensure the best value for its customers.

“NFM will continue to operate as a responsible corporate citizen and do what it can to relieve the burden on the consumer,” Mitchell said. “Flour ultimately constitutes an important part of the diet of our people and so we will continue to do our part to pass on savings, once there is an opportunity to do so.”