PORT OF SPAIN, REPUBLIC OF TRINIDAD AND TOBAGO — National Flour Mills said it plans to increase the wholesale price of flour in Trinidad and Tobago by between 15% and 22%, effective Jan. 3, 2022. The suggested increase will average 19% on the retail price of flour to the consumer.
The decision follows several internal initiatives to improve operating efficiency and reduce processing costs in an attempt to contain expenditure and maintain the price of flour, the company said. Flour prices have not been adjusted since 2008.
“This was by no means an easy decision, as we did everything within our control to try to hold our prices; but with the staggering increases in raw material and shipping costs, we were left with no choice but to make the adjustment,” said Ian Mitchell, chief executive officer of NFM. “We are acutely aware of the knock-on effect that an increase in the price of flour could have in the market, but we cannot sell a product for less than it costs to produce.”
The price of spring wheat moved from a low as $5 per bushel in 2020 to as high as $10.91 per bushel this year. The cost of freight has increased more than 110%, NFM said.
If the cost of inputs continues to increase, NFM said it will have no choice but to adjust prices again to reflect those increases.
In the last 18 months, NFM has worked to offset increasing external costs by focusing on productivity measures to optimize the levels of efficiency throughout its operations. Some of the measures resulted in the company being to reduce indirect manufacturing cost per tonne by 4%, NFM said.
The increased prices of grain and the rise in supply chain costs are affecting markets worldwide.
Generally adverse weather conditions have affected crop yields, supply chain issues have increased the cost of agricultural inputs, like fertilizers; and the overall impact of COVID-19 has caused shipping costs to skyrocket.
“It’s an unfortunate analogy, especially given the realities of climate change, but we have been confronted by the perfect storm — 2020 witnessed the lowest wheat yields since 2007, and the supply chain disruptions caused by the pandemic have increased freight costs significantly, further impacting the landed cost of all grain and other material inputs,” said Nigel Romano, chairman of NFM. “NFM is a price taker. We have no control over the landed costs of our imported raw materials, which now account for 64% of our production costs. I think the team is doing a good job improving our internal processing and driving other costs down, especially during these trying times, and we will continue to find ways to continually improve.”
NFM is a leader in flour milling, rice packaging, feed milling and dry mix operations in Trinidad and Tobago.