Runaway increases in the price of key staples like corn, wheat, and soyabean are expected to carry over into next year, fuelling further food price inflation for Jamaicans struggling to cope with the most significant increase in prices in almost eight years.
Derrick Nembhard, managing director of Jamaica Flour Mills (JFM) — the country's largest producer of wheat-based flour — told the Jamaica Observer, “I believe we have overcome the worst, but it's not finished. We still expect to have difficulties in the new year.”
Nembhard was referencing supply chain issues, which have dealt global trade a serious blow while stoking inflation in dozens of countries through higher prices for shipment.
“The world has been experiencing increased pricing of grains in general. Wheat is not unique, it's grains generally. The [animal] feed people, everyone that imports grains, whether its corn or wheat, it doesn't matter, grain prices have gone up, fuel prices have gone up, therefore ocean freight has gone up, theres's been a number of issues. There's been a hurricane that hit the Gulf, that affected a number of the loading stations there, which again affected the transportation of grains for some time,” he outlined.
Richard Pandohie, CEO at the Seprod Group, said it is the same story for everything – commodity prices have gone up and shipping prices have gone up.
“When we speak to traders, the people who trade in these goods, they tell us there's no good news for next year. They don't see the supply chain challenges easing, they don't see prices easing for the grain business,” he said, sighing heavily.
“It's what the world is going through. I didn't expect things to be back [to normal] before the pandemic ends, but certainly the high uncertainty that exists now, especially with the new variant [of the novel coronavirus] and how people reacting...it feels like part two of COVID again,” Pandohie said before adding, “Emotionally and mentally, we are just worn down...you have to do your best, but it seems like you just can't catch a break.”
The impact is already being felt in the price of goods ranging from meat to breakfast items, and it appears there is no end in sight to the continuous increases at the moment.
Corn and soybean futures are holding strong despite the US Department of Agriculture's (USDA's) recent forecasts that both 2021 crops will be the second largest in history, and there are several additional bearish indicators that suggest prices should be lower.
In the past year, a number of facilities in the Caribbean ran out of grains and importers have had to be sharing grains among themselves to ensure everyone had supplies until their vessels, which were delayed, turned up. The region gets almost all its grains from the US and Canada. Nembhard says when issues are present in those markets, the impact on the region is immediate.
“You had Barbados, Grenada sharing with St Lucia. We've had instances in Jamaica where companies have run short of grains or their vessels have been late and we've helped them with grains. Other entities have helped each other. You had the feed companies helping each other because one corn vessel had been late and one company would help the other. There has been a lot of that since January and its not settling down because we're still having supply chain issues and there are longer line-ups at the loading stations,” Nembhard continued.
He said while the JFM increased prices three times this year by a cumulative “nine to ten per cent”, forecasting further increases depends on a number of factors. “The good news is that we are now out of the hurricane season and we don't have to worry about that as another influence on what has been a very difficult year,” he stated.
Hurricanes in the past summer caused severe damage to loading stations at ports on the US Gulf, which further exacerbated the movement of the grains and was chiefly behind several islands and companies sharing supplies.
The JFM boss, who was previously head of the rice mills, said while he is no longer into importing and distributing that grain, “rice as a grain has gone up substantially, soy beans and oil prices...affecting animal feeds as well”.
“The biggest issue has been spring wheat, which is used to make bread. There's been a shortage of that, the crop has not been good and therefore there was a shortage of wheat in and of itself and that is one of the causes of the dramatic price increase for spring wheat.” He said the crop for August is in and the JFM has booked supplies.
“Even though we are through the worst of it as far as transportation is concerned, there may still be supply chain issues as far as spring wheat is concerned, and therefore we may have to look to other categories of wheat to replace spring wheat.”
“If you call any of the other big grain importers besides us — Jamaica Broilers, Caribbean Broilers, and Seprod — they will tell you that they've had problems with grains with timing of vessels and the like, and its not just that, it goes down to finished products as well, like sugar. You can order sugar, but the biggest problem is that they will tell you [that], while they can supply, they don't know when they will get a container to ship it,” he continued.
Pandohie added, “While we are talking about prices, its important from a food security and food availability standpoint that we also ensure that we are doing things to ensure we don't have consumers panicking.”
“Something must happen at some point to take us into another direction with regards to grain prices, but from where we sit right now, 2022 looks like more of the same. It's a dynamic environment and things can change quickly. We must catch a break one day, but it rough,” he pointed out.