Flour price hike likely next week
- NAMILCO, bakers, Jagdeo meet on implications
Amidst escalating costs for wheat on the world market, Guyana is mulling an increase in flour prices. An announcement could be made as early as next week.
According to the National Milling Company of Guyana Inc. (NAMILCO), it met with President Bharrat Jagdeo on Thursday on the situation with company eyeing a 15 per cent increase on its products but this is likely to be reduced.
This will translate to about $10 more per pound for flour products.
A meeting between Jagdeo and several of the country’s bakers is set for next week to gauge the impact.
“So we are in discussion with the government to mutually agree on the extent of the increase,” NAMILCO’s Managing Director, Bert Sukhai, said yesterday.
The company pointed out that when wheat prices spiked in 2008, Government intervened to keep flour prices affordable. That same year, when the prices declined on the world market, prices were reduced to the original levels.
NAMILCO noted that wheat prices then remained relatively stable for over two years with flour prices remaining unchanged right up to October of last year when a small increase of $4.40 per pound was added.
“We, in Guyana, are once again faced with the unsavory thought of increased prices. The Jamaica Flour Mills have warned that customers could be forced to absorb up to 50 per cent of the impending increase in the price of flour. NFM in Trinidad is in discussion with the Government about increasing prices.
“All over the world prices have been increasing and in some countries creating food shortages and economic issues,” NAMILCO explained.
It was pointed out that Guyana remained fortunate because of its agricultural-based economy and was able to cushion the effects of rising prices.
Wheat cannot be grown in Guyana so all the wheat needed to produce flour is imported, NAMILCO said.
“We have in the past tried to keep prices steady by buying a few shipments at a time at locked in prices. However prices have been rising since 2010 so at some point it had to impact in Guyana.”
“Many countries in the Caribbean look towards Guyana for food security. We know flour is dear to Guyanese and telling us to use substitutes would not be acceptable. So we are in discussion with the Government to mutually agree on the extent of the increase. We have indicated that, based on the movement of wheat, which has increased by over 30 per cent since last October, we were proposing an increase of 15 per cent on flour.”
NAMILCO assured that despite the fact that increases are taking place worldwide in the consumer market, NAMILCO is trying to keep increases of related flour products to a minimum. “I am meeting with you, the media, at this time to explain what is happening to the grain market. Indeed you may have seen the increase in the price of split peas in the market.
“Corn, barley, soybean, oil etc are all affected. We hope you will report on this in a factual but not frightening manner. The public needs to be informed so that when the increases are announced, they will be prepared and would have adjusted their budget accordingly.”
Wheat prices had been affected with a crippling drought last year in Russia and later in Argentina – two major exporting regions that grow a large quantity of wheat. Russia imposed a ban on exports which triggered price increases. That ban is still in effect.
Torrential rains and flooding in Australia wreaked havoc in the wheat growing regions
Torrential rains also fell in Saskatchewan, the largest wheat growing area in Canada, where farmers were unable to plant 10 million acres of wheat.
Also a tremendous amount of wheat had to be classified as feed wheat for animals.
A drought in China has threatened the world’s largest producer of wheat.
This is presently the most dangerous threat, NAMILCO said yesterday.
As supply shortages are created in these countries, the pressure increases on not so affected countries such as the US to fill the gap thus sending prices higher.
Further, market speculations on wheat have been driving prices higher.