With the war raging between Ukraine and Russia, two of the world’s largest producers of wheat, the National Flour Mills has said its priority is securing enough of the grain to supply the country and admits it will have to make decisions if the price continues to rise.
In an interview the Guardian Media its CEO Ian Mitchell said, “So if there’s a supply shortage in Europe there will be a supply shortage internationally.
“So the wheat we purchase out of the North American area goes up and that is what has happened,” Mitchell added.
Regarding the NFM’s stocks he said the company is in a good position for the next two months as it has “quite a bit of storage.”
He added that therefore, it does not have to go back out to the market immediately.
“Fortunately for us, we are in a situation where we have a decent amount of storage. We can rally for a while and see how things change and improve over the short term,” Mitchell added
He also explained however, that the NFM does not wait until stocks are depleting to replenish.
“We may have to make a purchase decision before the two months. And it doesn’t just arrive at the snap of a finger.
“But we are still in the middle of analysing what is going on. We are crunching the numbers and trying to see what is the best decision to make.
“You don’t want to make a decision on this being somewhat transient right now,” Mitchell explained.
He said coming closer to the end of March the company will have a better idea as to where prices will be.
He reiterated that the company’s priority will be to secure wheat to ensure that if there’s an availability issue, the NFM is pretty much covered.
“We make wheat flour. And there are things we can do to make sure we protect ourselves to make sure can continue producing.
“It’s not as if we can switch to some other wheat to make flour. That’s not possible,” Mitchell added.
As the war rages between Russia and the Ukraine the price of wheat has, soared.
And if the situation worsens then the National Flour Mills (NFM) will have to do some evaluations,Mitchell said.
“If this situation worsens then I expect prices to stay higher or get even higher. And if that happens, we will have to look at what that would mean for the business
“And we will have to make decisions,” Mitchell said.
What will this mean for ordinary customers in terms of the price of flour and related products? Mitchell was asked.
“I cannot answer that question as yet. For all you know things settle down and we are able to hold things where they are
“ We don’t know but as soon as we have more information we will advise. We always communicate with our consumers should an adjustment be made,” Mitchell said.
According to the CEO wheat prices have gone up by over $10 a bushel, which included all strains of wheat.
He added that this has not “happened in a very long time, if ever.”
He said while the company does not buy European wheat all of the wheat produced worldwide supplies the international market.
But not just the price of wheat has risen but also soyabean meal which is used in animal feed.
This, Mitchell said is currently creating a challenge which the NFM is also trying to manage.
Another factor the company continues to monitor is the cost of freight and transportation which have already affected global suppliers due to the war.