By Javan Flowers
The high cost of producing flour "is unsustainable [for] any manufacturing entity and, therefore, must be ultimately passed on in some measure to the consumers," The Caribbean Millers' Association (CMA) announced this week.
Via a two-page release, the CMA—a Jamaican-based organization that functions to monitor the price, logistics, transportation, and associated costs relating to all wheat types used by flour millers within the Caribbean region—detailed that the industry faces “imminent and actual” increases in the cost of raw materials by more than 40%.
The CMA explained the projected production cost of the main classes of wheat used in the Caribbean. These include Soft Red Winter (SRW) wheat, Hard Red Winter (HRW) wheat, and Dark Northern Spring (DNS) wheat. The association also informed that the steep increase in the principal wheat production cost is attributable to droughts in the United States and Canada, and is compounded by the Russian incursion into Ukraine.
The global conflict will continue to affect the industry as Russian and Ukrainian wheat account for close to 30% of the world's exported wheat, which has affected the price of the commodity and the logistics and transportation. The Association further notes that due to Russian oil being prevalent within the global oil and gas market, there have been exponential increases in the cost of ocean freight.
As a consequence of the culmination of the aforementioned factors, the CMA stated that “ultimately” the costs must be “passed on in some measure to the consumers."
Last week, in an interview with The Reporter, one local bakery explained that they are anticipating that coupled with the rise in flour and LPG, the prices of most of their products will see some form of a price increase. Notably, they mentioned that due to the price increases, specific adjustments to deliveries and the overall cost-effectiveness of day-to-day operations would have to be scrutinized to ensure that their business remains profitable.
It is to be noted that the increase in wheat prices will have a domino effect on the cost of grain, feed, poultry, and dairy products.
According to the Statistical Institute of Belize (SIB)’s Consumer Price Index report for February 2022, flour prices have only increased in Belize, so far, by 3.5%, one percentage point below the all-items rate of 4.5%.
Indications are, however, that imported inflation will continue to push up local prices of food and other items in the coming months.