The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s principal is optimistic that soaring global food prices could peak “in six months’ time” as it relies on high warehouse inventories and “forward bookings” to mitigate the impact on Bahamian consumers.

Speaking after the United Nations Food and Agriculture Organisation (FAO) revealed that global food prices hit an all-time high in March due to the fall-out from Russia’s war with Ukraine, Rupert Roberts told Tribune Business that the 13-store chain could likely “hold back” some of these increases for several months yet due to stocking up on inventories and advanced purchases.

Both Ukraine and Russia are major wheat producers and exporters, and he estimated that the price of stapled such as cooking oil and flour could have jumped by 50 percent compared to 2019 levels whenever the conflict in eastern Europe ends. Prices for fresh fish, such as grouper and snapper, had increased by 23 percent, he added, as fishermen hiked their demands due to the rise in gas prices.

With soaring inflation continuing to impact Bahamians’ living standards and disposable incomes, Mr Roberts said of food prices: “The buyers feel we will hit the plateau with high food prices in six months and stay there for the new normal until the world gets back to normal, scales the production volumes and brings them back down. Russia and Ukraine are out of the business, but the US and Canada are going to try and ramp up their exports and replace those two....

“We think that in six months we will be at the new normal, and will work back the cost of living from there. We feel the buyers have certainly done an excellent job. We’re seeing food shipments that are either in or have been booked in advance. If they are booked ahead three months, that’s effectively six months for the country.

“We feel proud that we are holding back so strongly and don’t have to pass on for a long time because of high inventory and forward bookings. We have enough booked in on corn beef to take us through next summer.” Such advanced purchases, and high inventory levels, cannot be maintained for perishable produce and items such as cornflakes and flour that have short shelf lives. The price for a 50-pound bag of grits, for example, has risen 26 percent to $24.

Debra Symonette, Super Value’s president, in a note said the supermarket chain’s six-month supply of “hard goods” was enabling it to somewhat offset the post-COVID supply chain crisis and producer woes amid rising global inflation.

“Supply chain issues still exist and shipments are running a month behind schedule,” she wrote. “However, we are well stocked with merchandise. We have up to six months’ supply of hard goods such as corned beef, spaghetti and meatballs, sardines, mackerel, pigeon peas, ketchup, cooking oil and canned soups.

“Unfortunately, we are unable to stock up on items such as flour, rice and cereals due to the possibility of bug infestation in the summer months. Freight costs remain high and will increase further due to the fuel increase brought on by the war in Ukraine.... We are able to beat the price increases and continue to offer lower prices to our consumers.

“Now that China is locked down and not using fresh beef, Brazil has come back and offered us a special on corned beef. Hence our ability to offer it to our customers at a special price until next summer.” However, the impact of Russia’s invasion of Ukraine will feed into all bakery products and others that employ flour and wheat. “The two commodities, oil and flour, affect most products, so of course we can expect a chain reaction of price increases,” Ms Symonette said.

“Eggs have seen a significant increase due to the loss of millions of chickens which were struck by the bird flu early this month.” Turning to other concerns, the Super Value president added: “We should also mention that, during the height of the fuel crisis years ago, our power bill would increase to almost $1m per month. We are hoping that it does not get to this level again.

“Last year we installed solar at our warehouse and got an 80 percent savings. We have ordered solar for all of our stores to install this summer to keep expenses down. Suppliers assure us that they have the merchandise but suffer from a shortage of workers in the workforce.”

Cooking oils, cereals and meats hit all-time highs in March, and meant food commodities cost a third more than the same time last year, according to the FAO. The Russia-Ukraine war was said to have helped push cereal prices up 17 percent over that month with the closure of Ukraine’s ports halting wheat and maize exports.

Russian exports were also slowed by financial and shipping problems, resulting in world wheat prices soaring by 19.7 percent during March. Maize prices posted a 19.1 percent month-on-month increase, hitting a record high along with those of barley and sorghum.