Mauritius | Agro & Food

July 22, 2013

Flour: Lower Prices, Shortage on the Horizon

Tails, flour prices will decline in August. Side face, suppliers threaten not deliver this product in stores. Before coming into force, the pricing of flour causes a stir.

From August 1, the price of white flour and wheat in bags, will be fixed. It will take Rs 6.75 per pound, for Rs 13 per kg, 2.5 kg to Rs 31.50 and Rs 62.15 for 5 kg. But now, at Winners' white flour is sold in bulk to Rs 11.70 per kg while the bag 2.5 kg amounts to Rs 36. In terms of wheat flour, it takes Rs 15 for 500 grams, Rs 39 and Rs 55 a kilo to 2 kilos. Side London Way, flour packed in 2.5 kg is sold at Rs 34.50.

"This is a good decision that the price of wheat flour is aligned to the price of white flour especially with the high rate of diabetes recorded in the country," says Suttyhudeo Tengur, president of the Association for the Protection of the Environment and Consumers (APEC).

"This price drop will be a 'feel good factor' for the consumer," suggests, for its part, Raj Atchiamith, Sales and Marketing Executive at Winners'. The latter also expects a "slight increase" in sales from August. This optimism is not shared by Nicolas Wah Kan, Manager London Way. "The consumer is winning side because the product is cheaper, but it may end up losing if the chain no longer pound flour," he says.

The risk of a possible shortage of flour is indeed real. And because the baggers and suppliers of flour - it has 200 across the island and they employ 4,000 people - talk about their fears of not being able to sell flour if the measure comes into force. "With this decision, our production costs amount to more than the selling price. A 2.5 kg bag of flour cost us Rs 31.50 while the new wholesale prices will be Rs 30.25. If the government maintains this measure, we can no longer supply the market, "suggests Ajoodha Anand, director of Yanni Rice Specialist Limited, also known as Funny Traders.

Hence their claim for a 5% margin. "We must not forget that we need to get the flour to the State Trading Corporation, take our packaging unit where you take the cost of labor into consideration and plastic for packaging. Once the flour is packed, we will deliver it to various outlets. This also involves transportation costs. The new prices are impossible to follow, "says Anand Ajoodha.

"Some suppliers have already informed the shops they can not deliver the flour. They sell at a loss if they deliver flour at this price. They will not survive and will put the key under the mat. It is the survival of our businesses and jobs of our employees who are involved, "adds Riza Backus, director FSRBs Co Ltd. The ball is now in the camp of the authorities!

Les nouveaux prix qui seront en vigueur en août

Farine blanche et farine de blé

½ kg

1 kg

2.5 kg

5 kg

Prix en gros  (Rs)

6.50

12.50

30.25

59.65

Prix au détail (Rs)

6.75

13.00

31.50

62.15

 

15% drop in sales

From January to June, sales of flour fell 15% compared to the same period last year. A decline that Raj Atchiamith attributed to two factors: the fact that people are more 'health conscious' by not consuming the daily meal and competition. The shops are indeed engaged in a battle of product promotions commonly used to attract customer.

In figures

100,000 tons of flour are consumed per year in Mauritius.

88,000 metric tons. This is the amount of flour that Moulins de la Concorde provide the local market for the period from February 2013 to January 2014 against 87,000 metric tons between February 2012 and January 2013.

90% of the flour sold in supermarkets is white flour. "We sell more white flour in villages than in cities," says Raj Atchiamith. Nicolas Wah Kan said, for its part, the flour is less consumed as rice is mainly used to make 'faratas', cakes and pastries.

5.85 rupees per pound. This is the bulk price currently paid bakers and other operators who supply flour to the STC. In January 2008, the price was Rs 6.90 before being lowered December 22, 2008 to Rs 5.85. "Over the past five years, the price has remained unchanged despite the increase in the world price of wheat. Thanks to grants approved by the government. The price is artificially low. Without subsidy, the real price of flour was Rs 9.22 per pound, "said Megh Pillay, CEO of the State Trading Corporation.

4-5 rupees. This is an operator could earn as margin on a bag of flour. With pricing, it will only have 75 in profits, says Santosh Ramnauth, president of Shop Owners Association

Farata, dholl puri ... No price drop

Consumers should not expect that the bakers, merchants 'faratas' or even 'dholl puri' revise their prices downwards. And because they are not involved in the pricing of flour. These operators are supplied directly by the State Trading Corporation under contract when they buy flour in bulk, in bags of 50 kg.

Subsidy of about Rs 600 million this year

"For years, consumers have been protected from fluctuations in wheat prices on the world market thanks to subsidies," said Megh Pillay, CEO of the State Trading Corporation. This year alone, subsidies on flour should turn around Rs 600 million against Rs 308 million in 2012. "This increase is due to the fact that when we launched our tender in November 2012, the price of wheat was at its highest level since 2008," said Megh Pillay.

Wheat prices on the market Chigaco indeed turned around $ 360 in late 2012 against 306 dollars on Thursday. "If we have a good harvest in producing countries - the United States, Europe, Russia, .. -, we can expect to lower costs for the State Trading Corporation. Which will reduce the amount of subsidy of Rs 600 million to Rs 500 million, "advance Defi Media interlocutor.

 Subsidies granted by the State

2013 (Estimate): Rs 600 million

2012: Rs 308 million

2011: Rs 425 million

2008-2009: Rs 614 million

2007-2008: Rs 582 million

2006/2007: Rs 194 million 

 

 

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