Prices will not fall

Local consumers should not expect to see commodity prices going down any time soon, according to CEO of National Flour Mills (NFM), Michael Potella, who recently addressed a seminar on the essentials of feed milling and manufacturing. It was Potella’s belief that high commodity prices, along with the threat of trade liberalisation, will make life increasingly difficult for food manufacturers, possibly even leading to their demise. Additionally, he continued, the option of sourcing cheaper raw materials to reduce costs of production was becoming less feasible.

It had, therefore, become necessary to seek alternative strategies of reducing the cost of food to consumers, with more emphasis being placed on optimising conversion costs, specifically those incurred in converting grain and other input costs into feeds, and on improved operating efficiencies. In recognition of the need for enhanced competitiveness in the face of increased liberalisation, Potella revealed that NFM had embarked on a number of initiatives in pursuit of its vision to become one of the region’s leading feed manufacturers. These initiatives included the installation of an automatic ship on/off-loading system with a capacity of 300 tonnes per hour which would help to reduce the cost of handling the import and export of grain, as well as the construction of a modern feed mill with a maximum capacity of 23 tonnes per hour for poultry feeds.

Additionally, the company has attempted to forge closer ties with key stakeholders in the livestock industry, namely the University of the West Indies through feed formulation and other research, Nestle and the Caribbean Poultry Association among others. “These are some of the major initiatives, which we have undertaken to ensure our competitiveness in a liberalised world,” Potella stated, noting that the new infrastructure required major capital investments. He said however that given the uncertain environment in which the industry was operating, certain questions still needed to be addressed, specifically whether or not all other feed millers should make similar types of investments and whether it was wise to undertake such investments given the threat of more intense competition for the manufacturing sector.

Potella called for greater collaboration among the feed milling sector to take advantage of what he called “the synergies” which currently exist. This would avoid the duplication of resources, while improving both the cost profile and the competitiveness of locally produced feeds, he noted. “We at NFM,” he said, “have repeatedly made the case for the rationalisation of the local feed milling industry. “Greater collaboration is therefore necessary among the various feed milling fraternities so that we can benefit from each other’s strengths.”