By Sue-Ann Wayow
THE National Flour Mills (NFM) has reduced its proposed price increase for the Hibiscus Flour from 19% to 10% following the Ministry of Trade and Industry intervention on Thursday.
The Ibis Flour, will have a reduced price increase from 19% to 17%. This reduction follows public statements from the Supermarkets Association of Trinidad and Tobago (SATT) and Opposition Member of Parliament Rushton Paray that Government should intervene to alleviate costs to the consumers.
The Trade Ministry in a press release on Thursday also gave further explanations as to why the increased cost was necessary. It stated that in September 2021, the Food and Agriculture Organization’s (FAO) Food Price Index revealed that since September 2020, global food prices shot up nearly 33% in September 2021 compared with the same period the year before (September 2020), reaching levels not seen since 2011.
The ministry stated, “While this price reduction will affect the company’s margins, the company has committed to exploring all possible avenues to see how and where it can eliminate other costs to maintain commercial viability. The MTI has also noted that the company has given a commitment that should the price of wheat fall, it will reduce prices to ensure that consumers benefit from the reduction and continue to get the best value for money.”
“While flour is the main ingredient in a range of food items, it is not the only one and it is expected that the increase in the wholesale price of flour should not concomitantly translate into a similar increase in the price of final products. In this regard, businesses utilizing flour as the main ingredient in their products as well as supermarkets are requested to constrain any increase in the mark-up of retail prices as far as possible,” the ministry also stated.
The Consumer Affairs Division of the Ministry of Trade and Industry which currently monitors the price of all-purpose flour will continue to closely monitor the increase in the retail price of this item. This information will be published on all of its social media platforms to provide consumers with guidance on purchasing options. Additionally, consumers are being urged to take note of the different prices attached to the various brands and packaging sizes of flour, the ministry stated.
The Government is also urging NFM to continue pursuing internal initiatives to improve operating efficiency and reduce processing costs in an attempt to further contain expenditure.
The ministry stated that NFM has noted that the price of Spring Wheat has moved from as low as US$5 per bushel in 2020 to as high as US$10.91 per bushel this year (more than 100%). The company has indicated that the landed cost of spring wheat in its silos as at November 2021 is 46% higher than the cost as at January 1, 2021, translating to an increase in cost of TT$47.5 million dollars using the cost of its last shipment and TT$64.7 million using today’s prices. NFM has also indicated to the ministry that the cost of enzymes, packaging and spare parts has also significantly increased during 2021. The cost of freight in this instance has also increased by more than 110% during 2021.
Apart from the global effect of the global Covid-19 pandemic, adverse weather conditions resulted in low crop yields and harvesting and there have been increased costs of agricultural inputs including fertilizers.
The ministry stated that the Common External Tarriff (CET) or import duty on wheat, enzymes and flour additives was already 0% and flour and several related products including bread, roti skins and crackers were currently zero-rated under the Value Added Tax Act.
“The Government, therefore, receives no direct revenue from the importation and sale of flour in Trinidad and Tobago. In addition, the Government is constrained by multilateral trading rules in not being able to provide subsidies to state trading enterprises,” the ministry stated.
The ministry also said that it should be noted that NFM was a publicly listed company on the Trinidad and Tobago Stock Exchange. While the majority of its shares (51%) was owned by the Government through National Enterprises Limited (NEL), the other 49% was publicly held and was required to balance the interests of all its shareholders.
The ministry stated, “The company commercially operates in the open market and is not subject to price controls. In addition, NFM operates in a competitive environment and is subject to significant local, regional and international pressures.”
The Government reminded the population of its measures to mitigate the impact of rising food prices including zero-rating of basic food items, the suspension of CET on basic food items, increased allocation of foreign exchange to the EXIMBANK, implementation of a $500 million Agriculture Stimulus Package, strengthening linkages between industry and agriculture to build sustainable food systems and implementing the import substitution of a selected list of items.
