A reduction in wheat export by some key source markets is not likely to result in a shortage of the commodity locally, but producers are warning that rising prices could trigger unfavourable ripple effects.
Last week, India, the world’s second-largest wheat producer, said it would reduce export of the commodity, citing concerns over rising food security issues and as it moves to control rising domestic prices. However, in a revision of its position, the country which normally produces wheat for local consumption adjusted its announcement, noting that it would keep a window open to export the commodity to less developed and needy states despite the ban.
Owing to the ongoing war between Russia and Ukraine, two countries which are large exporters of wheat, India has had to step up in filling shortfalls, exporting some one million tonnes of wheat last month.
The price of the grain, which has risen globally by more than 40 per cent since the start of this year, is further expected to climb as the war between the European states continue to impact supply chain systems worldwide.
Locally, a rise in wheat prices is also likely to affect the cost of breads, cakes, noodles and other by-products. This, producers believe, could further put pressure on the pockets of consumers who are already burdened by the impacts of high inflation.
Speaking to the Jamaica Observer on Monday, Derrick Nembhard, managing director of the Jamaica Flour Mills, said that while the country does not purchase directly from India and the likely impacts were expected to be less for local producers, sharp increases in price for wheat as seen globally is fastly becoming of great concern.
“We are likely to be impacted indirectly as there is less supply going to the countries that would have depended on wheat from India, especially as they try to fill the gaps left by Russia and Ukraine. This will put pressure on supplies from the rest of world and will in turn put pressure on prices as we begin to see movements in the different types of wheat,” he told the Business Observer.
“Through our ADM grain division, locally we have managed to secure certain supplies for a period of time up until August, so we are so far good with supplies for the summer. I can’t, however, speak for prices as these overtime have become very volatile, especially following India’s announcement. The outlook therefore is that we are good with supplies but watching prices,” he said.
Chief executive officer (CEO) of National Baking Company Gary ‘’Butch” Hendrickson, in his assessment of the situation, agreed that global shortage compounded by the war is sure to drive up prices for the commodity and by extention its by-products. He said that while his company has for the last few months tried to contain pass through cost, he is now unaware of how much longer they will be able to continue doing so.
“I’ve never seen wheat at this price ever, certainly not from my recollection. We’ve already had increases but the market has not felt it because as bakers we have decided to retain these costs and not pass it on to our consumers,” he noted.
Jamaica Manufacturers and Exporters Association (JMEA) President John Mahfood, expressing concern for what is likely to happen regarding the supply and price of wheat over the longer term, said that producers were looking with uncertainty at the next six months to a year on the possible impacts.
“In the short term we are, however, more concerned with the big increases in prices and its impact on the spending power of consumers. At the moment, though, I am not getting a sense that there is any immediate shortage,” he also said to the Business Observer.