The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s principal yesterday said it had sought to “protect the country” from further harm caused by Russia’s invasion of Ukraine through ordering extra supplies of flour.

Rupert Roberts told Tribune Business that the supermarket chain had acted amid fears that the conflict, and sanctions imposed on Russia, could result in a “worldwide shortage” of flour due to the disruption in wheat supplies.

Flour is derived from wheat, a commodity in which Russia is the world’s third-largest producer and Ukraine is the ninth largest, based on 2017 data. Between the two, they produced 112.1m tonnes of wheat that year, but a combination of fighting, sanctions and the substantial damage inflicted on Ukraine’s infrastructure could disrupt or prevent such supply for some time to come.

Russia and Ukraine together are responsible for almost one-seventh of the world’s wheat supply, based on that 2017 data, but recent estimates have pegged their contribution as high as 25 percent. As a vital commodity and food staple, wheat prices as measured by the Chicago Board of Trade jumped 5.43 percent last Thursday on the day Russia invaded.

This was after wheat prices had already risen by 80 percent between April 2020 and December 2021, the period covered by the COVID-19 pandemic. Mr Roberts told this newspaper: “That was the only concern we have because we have adequate supplies of everything else.

“We put in some more orders for flour because I feel that [the conflict] could have an impact. We could have a worldwide shortage, so we tried to protect the country yesterday until we see what happens. We hope this is a ten-day war and Putin has to back off, and that it doesn’t spiral up into an ongoing conflict.

“We have stocks and orders coming in. I had the buyers put in extra orders to protect ourselves because we know Russia and Ukraine are among the world’s largest wheat producers, so we figured there could be problems.”

Wheat is typically milled into flour, which is then used to make a wide range of products including bread, cereals, crumpets, muffins, noodles, pasta, biscuits, cakes, pastries, cereal bars, sweet and savoury snack foods, crackers, crisp-breads, sauces and confectionery items. Thus any wheat/flour supply shortages and price increases will raise the cost of these items.

Mr Roberts, though, warned that flour and wheat-based foods can only be ordered a “maximum” three months ahead to ensure they remain healthy and do not go off. As a result, the ordering cycle was broken into three to four 16-week periods.

“We have about a year’s supply of corn beef, but we cannot order a year’s supply of flour,” he added. “Surprisingly flour was one of the items that had not gone up with the inflation. I don’t know why. Maybe Canada and the US can supply wheat for the western world.

“I’ve had buyers ask me if they can put more orders in before inflation goes up again, and I’ve said: ‘No’. We have to hold where we are. We cannot keep protecting, protecting, protecting. We’re going to run out of warehouse space.

“We promised the former government during the pandemic that we would increase our warehouse to four months’ supply, and we never got it up to four months’. Since then, we got it up to six months’ supply of hard goods that are long-dated. Cereals, flour and perishables are short-dated. It’s (the Russia-Ukraine conflict) out of our control. We pray and hope for the best.”

Vasco Bastian, the Bahamas Petroleum Dealers Association’s (BPDA) vice-president, warned local consumers earlier this week to brace for $6 per gallon gasoline prices by March as the markets bid up global oil prices on fears of Russian supply disruptions due to the imposition of sanctions in retaliation for the Ukraine invasion.

World oil prices surged again last week, with the Brent crude index rising more than 8 percent on Thursday to hit $105 per barrel for the first time since August 2014 - almost eight years ago. That means oil prices have increased by more than $20 per barrel in less than two months since the start of 2022, and Brent crude futures spiked by 7 percent earlier today.

Airline ticket prices will likely be increased in response to rising fuel prices, which will increase the cost for tourists in accessing The Bahamas. And the hotel industry, as Bahamas Power & Light’s (BPL) largest electricity consumer, will see its cost base and margins squeezed from greater energy prices unless the electricity monopoly is able to continue to hedge its fuel prices.