Fri | Apr 28, 2017

Flour price hike could be massive

Published:Wednesday | March 2, 2011 | 3:00 AM
Bakeries will have to become very creative to meet the needs of their customers.

Edmond Campbell and Monique Grange, Gleaner Reporters

CONSUMERS MAY have to absorb what could be a massive 50 per cent jump in the price of flour. A cut in the supply of wheat on the world market, and rising oil prices, have started to influence the cost of the basic consumer item in Jamaica.

"It really depends on the mark-ups along the way, a price from us (Jamaica Flour Mills) will increase by about 50 per cent by the time the consumer sees it. If we sell a product for $100, by the time the consumers sees it, it's probably $150 in the supermarket," Derrick Nembhard, managing director of Jamaica Flour Mills (JFM) told Power 106 Independent Talk on Monday.

Significant increase

Nembhard said the increase in the price of grain was expected to be significant and would be a factor in a double-digit hike in the price of flour.

The JFM executive refused to give a date for the impending increase, saying this could result in possible hoarding of the product. "Once persons know when the increase will be, they will just buy in large quantities two, three days before, and that is why we don't make specific announcement as to the date," he said.

And, as consumers brace for a possible sharp increase in the price of flour, the local baking industry could suffer a serious setback.

President of the Bakers' Association of Jamaica, Audrey Lecky, told The Gleaner on Monday that there was a strong possibility that some bakeries might have to shut down their businesses due to mounting costs.

"There are some bakeries that only operate three days per week. They are on the fringe," Lecky pointed out.

She conceded that production of baked products had plunged in the last year, with many bakeries significantly reducing the quantity of items produced.

Lecky said the imposition of additional taxes on wine late last year had also negatively impacted the industry. According to the Bakers' Association president, some bakeries that used to make wine slices had to cut back or cease the production of those products.

Cheese price gone up

The price of cheese, another item used by bakers, is expected to increase by the end of the month, according to Lecky.

She said this would deal another blow to the sector as "there are bakeries that make cheese bread. So, if you are going to have an increase in flour and an increase in cheese, again, you are going to see the problem for bakeries that make cheese bread".

Lecky told The Gleaner that the sector would have to increase efficiency and diversify to survive.

She said bakeries would have to become very creative to meet the needs of their customers.

Lecky said some bakeries had started to make six-ounce bread instead of the regular two pounds.

"Instead of finding money to buy the regular two-pound bread, they (consumers) are buying a six-ounce one for a lower price."