Majority-owned National Flour Mills (NFM) said if the price of wheat in the international market continued to rise, the company would have no choice but to increase the price of flour .
In ten questions and answers that were part of its press release yesterday, NFM also said that if wheat prices decline over the next few months, it will lower its flour prices:
Q: What sort of ripple effect can we expect with the cost of other food items like breads, rotis and doubles, which use flour as the main input?
A: Although flour is the main ingredient in a range of food products, it is not the only one, so an average increase of 19% in the price of flour should not necessarily translate into an increase of 19%. % of the price of flour. anything that contains flour.
Q: If the price of wheat were to return to its previous levels, would NFM be prepared to lower the prices?
A: Yes! NFM operates in a competitive environment and we are constantly exploring ways to improve our efficiency levels and ensure that the consumer receives the best value for money.
Q: Has the government imposed price controls on NFM?
A: No. NFM is a publicly traded company on the Trinidad and Tobago Stock Exchange. The majority of its shares (51 percent) are held by the Government of Trinidad and Tobago through National Enterprises Limited (NEL), and the remaining 49 percent are held by the public. The company operates in the free market and is not subject to price controls.
Q: The price of wheat has increased by over 100%, but NFM has only increased the prices by about 19%. Is this price increase sufficient to cover the cost increase?
A: Over the past 18 months, NFM has launched a number of initiatives to improve efficiency levels and streamline internal processes, with the goal of reducing processing costs. We are well aware of the ripple effect that any increase in the price of flour, a staple ingredient of many products, could have in the market, so we have set the price at the lowest practical level to maintain commercial viability. .
Q: Has NFM contacted other flour manufacturers / distributors to determine what the new price should be?
A: No. To do so would violate the fundamental principles of operating in an open and competitive market.
The price increase was based on business factors – the increase in the price of wheat, higher shipping costs, etc., coupled with the costs of processing, packaging, distribution and other components needed to bring the finished product on the market. The commercial challenge is to keep this price as low as possible while ensuring operational profitability.
Q: What can we expect from the financial performance of NFM, given the increase in prices?
A: Compared to the greater than 100% increase in the price of wheat and shipping, it would be fair to say that a 19% increase in the price of flour is marginal and is intended to ensure that the business continues. to operate with reasonable commercial margins. We expect to obtain attractive returns for the market in the future.
Q: Will there be further increases in products by NFM, where wheat or flour is also a raw material input?
A: This will be determined by factors beyond the control of NFM i.e. the price of raw materials and shipping. However, we will continue to focus on the items under our control and do everything possible to run an efficient operation and to keep our crushing and processing costs as low as possible.
Q: If the cost of grain continues its upward trend, is there an expectation that there will be another price increase per NFM?
A: We cannot sell a product for a price lower than our production cost, especially when the raw materials and packaging are 64% of that cost. Therefore, if the cost of these inputs continues to increase, we will have no choice but to adjust the prices of our products to reflect these increases.
Q: What impact will this increase have on the cost of a basket of goods for the consumer?
A: The direct impact, assuming the use of four 2 kg bags of flour per month, is estimated to be an increase of $ 10 for the typical family, for example, an increase of $ 12.50 to $ 15 on a 2 kg bag of Ibis.
Q: Has the price of flour been increased in other Caricom countries?
A: Barbados, Jamaica, and Guyana have all increased their prices so far this year. Jamaica increased its prices in May and then again in October. Barbados increased in February and Guyana in November.