Supply shortage, Ukraine conflict push flour price up

Angie Tan

Ukraine and Russia are the world’s largest exporters of wheat. While the two countries are at war, Russia has blocked exports, leading to supply shortages worldwide. – EPA pic, March 26, 2022.

THE price of flour is expected to increase in April due to the war in Ukraine, which will see food items costing more, further burdening consumers, industry players said.

Ukraine and Russia are the world’s largest exporters of wheat. With the two countries at war, Russia has blocked exports, leading to supply shortages worldwide.

Russia has also blocked shipments of wheat from Ukrainian ports on the Black Sea that borders Crimea.

Johor bakery, biscuit, confectionary and mee merchants association president Chink Poh Cheng said the price hike will be highest in history as it is exacerbated by the supply chain problem brought about by the Covid-19 pandemic.

“The cost of sea freight is high and finding containers (to transport goods) is difficult,” Chink told The Malaysian Insight.

“While the pandemic is now under control, the war between Ukraine and Russia is causing a wheat crisis as they are major exporters.”

Chink said flour mills have informed businesses that prices will increase starting next month.

It will be more than the 20% increase previously, he said.

“Some mills have not disclosed how much it will cost, but they have started to limit supply to avoid shortages.”

Besides flour, the war also has a knock on effect on global fuel prices, which in turn increases the prices of everything else, Chink said.

“All the raw materials used in the food industry including plastic are going up in price.

“The government’s move to suddenly increase the minimum wage to RM1,500 is adding to our problems.

“No doubt come April, food prices will see another wave of price increase. How much they will go up will depend on each manufacturer.”

Chaang Tuck Cheong, a producer of chee cheong fun (rice noodle roll) said another round of price hike has put pressure on the industry.

While raw materials have gone up in the last two years due to the pandemic, manufacturers have absorbed the cost to ease the burden of consumers, he said.

“Everyone has reached a point where they cannot stand to absorb it anymore. It is no longer just about the price of flour, other raw materials are also going up in price.

“To make chee cheong fun, we use sago powder, wheat starch, corn flour, potato flour, all of which have doubled in price.

“Sago flour and wheat starch have increased by 200% in a year. It used to cost RM50 for 25kg, but now it costs RM100.”

Chaang said flour mills have yet to decide on the new price, so the prices of chee cheong fun will be adjusted next month accordingly.

Lai Yee Kin, president of the Malaysian bakery, biscuit, confectionary and mee association said manufacturers will also look at the cost of other raw materials before adjusting prices.

“How much it will increase depends on the individual manufacturers,” he said.

“Those who use automation, the cost will be lower. If they use more manpower, then the cost is higher.”

While manufacturers adjust their prices according to global trends, they are still unable to make any profit, Lee said.

“If we used to earn 10 sen before, now we only earn 8 sen, we cannot earn more.

“This is because we have to absorb some of the cost, otherwise the price hike will be too significant and will burden consumers.”

According to the Federation of Malaysian Grocers, flour prices will increase between 7% and 11%.

That means a 25kg bag of flour will go up by RM7 while wholesale prices will go up around RM2.50 for 10 bags of 1kg flour. – March 26, 2022.

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