By NEIL HARTNELL
Editor-in-chief of the Tribune
Super Value director optimistic surge in global food prices could peak ‘six months from now’ as he relies on high warehouse stocks and ‘forward bookings’ to mitigate impact on Bahamian consumers.
Speaking after the Food and Agriculture Organization of the United Nations (FAO) revealed that global food prices hit a record high in March due to fallout from the war between Russia and the In Ukraine, Rupert Roberts told Tribune Business that the 13-store chain could likely “hold back” some of those increases for several more months due to stockpiling and advance purchases.
Both Ukraine and Russia are major wheat producers and exporters, and he estimated the price of staples such as cooking oil and flour could have jumped 50% from 2019 levels. at the end of the conflict in Eastern Europe. Prices for fresh fish, such as grouper and snapper, rose 23%, he added, as fishermen increased their demands due to higher gasoline prices.
With soaring inflation continuing to impact the standard of living and disposable incomes of Bahamians, Mr Roberts said of food prices: “Buyers think we will plateau with food prices high in six months and will stay there for the new normal until the world returns to normal, scales production volumes and brings them down. Russia and Ukraine are out of the market, but the United States and Canada will try to increase their exports and replace these two…
“We believe that in six months we will be at the new normal and lower the cost of living from there. We believe the buyers have certainly done a great job. We see food shipments that have either arrived or been pre-booked. If they are booked three months in advance, it is effectively six months for the country.
“We’re proud to be holding back so strongly and not having to hold on for a long time due to high inventory and term bookings. We have reserved enough corn beef to get us through next summer. Such advance purchases and high inventory levels cannot be maintained for perishable products and items such as cornflakes and flour that have a short shelf life. The price of a 50-pound bag of oatmeal, for example, rose 26% to $24.
Debra Symonette, president of Super Value, said in a note that the supermarket chain’s six-month supply of “durable goods” allowed it to somewhat offset the post-COVID supply chain crisis and woes producers in a context of rising global inflation.
“Supply chain issues still exist and shipments are a month late,” she wrote. “However, we are well supplied with goods. We have up to six months supply of sustainable products such as corned beef, spaghetti and meatballs, sardines, mackerel, pigeon peas, ketchup, cooking oil and soups in canned.
“Unfortunately, we are unable to source items such as flour, rice and cereals due to the possibility of insect infestation during the summer months. Transport costs remain high and will continue to increase due to the increase in fuel caused by the war in Ukraine… We are able to beat the price increases and continue to offer lower prices to our consumers.
“Now that China is in lockdown and no longer using fresh beef, Brazil has come back and offered us a special offer on corned beef. Hence our ability to offer it to our customers at a special price up to next summer. However, the impact of Russia’s invasion of Ukraine will ripple through all bakery and other products that use flour and wheat.” The two raw materials, oil and flour, affect most products, so of course we can expect a chain reaction of price increases,” Ms Symonette said.
“Eggs have seen a significant increase due to the loss of millions of chickens that were struck down by bird flu earlier this month.” Moving on to other concerns, the chairman of Super Value added, “We also have to mention that at the height of the fuel crisis years ago, our electricity bill would increase to nearly $1 million per month. We hope it does not reach this level again.
“Last year, we installed solar energy in our warehouse and achieved a saving of 80%. We have ordered solar power for all of our stores to be installed this summer to reduce expenses. Suppliers assure us that they have the goods but are suffering from a labor shortage.
According to the FAO, cooking oils, grains and meats hit historic highs in March, and foodstuffs cost a third more than at the same time last year. The Russian-Ukrainian war is believed to have helped push grain prices up 17% that month as the closure of Ukrainian ports halted wheat and corn exports.
Russian exports were also hampered by financial and maritime problems, which caused world wheat prices to soar 19.7% in March. Maize prices posted a 19.1% month-on-month increase, reaching a record high along with those of barley and sorghum.