Government’s move to subsidize the increase in the price of locally produced flour announced by the National Milling Company (NAMILCO) earlier this week may not be sufficient to forestall some attempts to increase the price of flour-based products according to a well-placed business sector source.
“One of the unfortunate effects of rising food prices is that some businesses are bound to utilize the mechanism of price-gouging to increase their profits and the problem that now arises is that of policing prices,” the source said.
Stabroek Business has learnt of some cases in which some local retail outlets had moved to increase the prices of flour and flour-based products following last week’s media reports of an imminent increase in the price of flour. And last Thursday vendors in the city’s municipal markets told Stabroek Business that they anticipate some increases – particularly in bread prices – despite the subsidy announced by President Bharrat Jagdeo on Wednesday.
Last Tuesday’s price increase announcement by NAMILCO came just days after the company’s Managing Director Bert Sukhai had told Stabroek Business that escalating wheat costs had made the price increase inevitable and business sector sources told this newspaper that while “some form of intervention by the government could have been anticipated,” the “character” of the local market was such that some retailers are likely to pay more attention to the fact that an increase in the price of flour had been announced by NAMILCO rather than the announcement that the price increase would be absorbed by the government.
During an interview with Sukhai last week Stabroek Business was told that the company had been engaging government on its proposed increase in the price of flour. However, this newspaper learnt subsequently that an understanding had been reached that government would respond to the increase after it had been announced.
The business sector source told Stabroek Business that it would perhaps have been advisable to announce the government’s subsidy “simultaneously with the price increase announcement” since this may well have avoided initial consumer anxiety and forestalled any thoughts of increasing the prices of flour and flour-based products to local consumers.
When Stabroek Business visited Stabroek and Bourda markets last Wednesday some vendors were predicting an almost immediate increase in the cost of chowmein and biscuits, among other flour-based items. When we returned to the market early yesterday morning some vendors declined to provide assurances that government’s subsidy announcement would prevent price increases.
Meanwhile, some producers of flour-based products in Georgetown have told Stabroek Business that while they are currently using flour produced by NAMILCO they are likely to revert to using flour imported from Trinidad and Tobago as soon as supplies coming from that country are normalized.
Flour imported from the Twin-island Republic is marketed here cheaper than flour produced by NAMILCO and while the recent price increase is likely to trigger a price hike for imported flour, any new price is likely to remain below NAMILCO’s new prices.
Last week Sukhai launched a withering attack on the practice of what he described as the dumping of flour produced in Trinidad and Tobago on the local market, accusing the Port of Spain mills of seeking to crush NAMILCO.
