Africa-Press – Namibia. NAMIB Mills has announced increases in the prices of mahangu, sugar, rice, wheat flour, pasta, yeast and bread, attributing the rise partly to trade imbalances over the past few months.
This increase will put pressure on consumers who are already affected by the Covid-19 pandemic that resulted in many people losing their jobs.
The prices of rice, sugar, mahangu, Polana pasta and Pasta King are set to increase by 4%, 3%, 2%, 6%, and 2%, respectively.
Prices of pasta home brands, la vita pasta, wheat flour, complete mix, bread and yeast will increase by 2%, 2%, 3%, 3%, 3% and 2%, in that order.
The increases will come into effect on 1 September.
According to the company, there has been major disruptions to supply chains, as a result of the pandemic. The disruptions mainly affected the prices of wheat, pasta, bread and rice as a result of the shipping industry facing major shortages of shipping containers, thus leading to a massive spike in shipping rates.
In December 2020, spot freight rates from Asia to North Europe were 260% higher than those of 2019.
“The increase in ocean freight costs has resulted in significant price increases on commodities that are transported via ocean freight. Namib Mills imports the majority of its wheat, sugar and rice from abroad via ocean freight,” says the company’s financial manager, ST Ackermann late in July.
Another reason for freight increases is the uneven recovery rates, combined with increased demand among consumers mean that containers are now extremely valuable.
“China became the quickest country to recover from the pandemic, continuing to manufacture and export, when other countries were stepping up restrictions,” Ackermann explained.
The wheat prices (including pasta and bread) are also affected by the hot and dry weather conditions in large parts of wheat producing countries, which resulted in expected wheat yields falling 35% below prior year yields and 32% below the five-year average wheat yield.
Meanwhile, sugar prices were affected by the fact that the South African sugar industry continues to face serious challenges, leading to the South African Sugar Association announcing a price increase of 2,4%. This was in an effort to promote cane farming and business sustainability.
“A 19% increase in fuel prices over the last nine months has resulted in our direct distribution cost increasing by 8%. We have not to date recovered this increase in our selling prices. The cost of electricity has increased by 2,92%. Electricity charges comprise a significant portion of our total cost structure,” the financial manager added.
The annual inflation rate which increased to 4,1% in June this year, compared to 2,1% during the same period last year also impacted the price increases, Ackermann further noted.
