Business News

NFM engaging forex imbalance

Mar 10, 2016

The National Flour Mills’ (NFM) search for new markets will help ease the problem of insufficient supply of foreign exchange, says Michael Bazie, the chairman of the majority state-owned company.

“At the NFM, we have historically generated a model in which most of our raw materials and grain purchases are paid for in US dollars, but our sales are in TT dollars. Given the present situation where there is this tight foreign exchange earnings situation, we feel that we must engage in this thrust of market penetration regionally to begin to address this imbalance,” he said.

Bazie was speaking at a media conference last week Thursday at NFM’s head office, Wrightson Road, Port-of-Spain.

Bazie, who speaks fluent Spanish, has been NFM chairman since 2013 and is a former director at eTeck.

According to a media release from NFM after the tour of NFM’s plant on Wrightson Road on Thursday, the company has had strong financial results over the last few years and the search for new markets in Cuba and Latin America will only strengthen the company’s results.

“For the past three years, NFM focused significant efforts and resources on accelerating its growth strategies. The results of this is well reflected in improved financial results over the previous three successive financial periods, including last year where the September 2015 financial results show significant improvement over the same period in 2014. Based on our 2016 corporate strategic plan, it is expected that our financial results will improve even further in 2016.”

NFM’s statement also said over the last year the “worsening foreign exchange situation” characterised by extreme difficulty in obtaining US dollars for purchasing raw materials caused the company to accelerate its export drive to include new market penetration simultaneously with development of new products to satisfy regional demand.

“New products developed recently include – Good’nNatural Cracked Wheat and Lion Roti and Doubles flour for the commercial market while extruded fish foods for tilapia and similar varieties of farmed fishes are being produced for the growing aquaculture industry.”

The safe quality food (SQF) system is one of the highest and most recognised global systems for food quality. At NFM, this is being implemented in 2016 with full certification expected in March 2017. This will allow NFM’s products entry into the most stringent and competitive markets like the USA.

According to NFM, the need to earn foreign exchange is one of their major thrusts in 2016.

“The need to earn foreign exchange with competitive products which provide value for money continues to be our thrust in 2016. By 2017, we intend to increase export sales as a percentage of total sales to 20 per cent from the 2015 position of 12 per cent, to earn increasing amounts of the foreign exchange that we utilise. We will grow our existing markets in Jamaica, Barbados, Guyana, Antigua, Suriname, Grenada, St Vincent, St Kitts and St Lucia while entering new markets in Cuba, Dominican Republic, Panama and Haiti in 2016.

Latin market

Kelvin Mahabir, CEO of the NFM, who also spoke at the press briefing, said this year NFM will be making a strong effort to go not only to Cuba but other Spanish-speaking markets.

“We do not only sell flour but seeds as well as a number of other products. We have been increasing those markets and, in 2016, we have targeted to grow our markets because we need to increase revenues. Also, because we need to raise foreign-exchange earnings. The Cuban market has been of interest to us for some time. The ease of doing business with Cuba will be significantly improved,” he said.

The release also said that specific branding will allow them to make entry at appropriate price points into Spanish-speaking countries like Cuba where there appears to be many opportunities for their products such as flour, fish feed and pets.

Business ties

Guillermo Vazquez, Cuban Ambassador who was part of the NFM plant tour, said Cuba needs the products that NFM has to offer and the north Caribbean country is interested in doing business with NFM.

After the tour he had a closed-door meeting with NFM’s chairman and CEO.

Vazquez, who also spoke during the media briefing, said Cuba has to identify what products are needed from NFM. 

“I am not sure how many quantities we may need and what are the products but we have known the NFM since the 1980s,” he said.

When asked by the media about doing business in US dollars, he replied by saying that Cuba accepts all other major currencies including the euro and Canadian.

“At this moment because of the US embargo it is not possible to use the US dollar. It is important that we build relationships with other countries in the region. We have relations with Republic Bank and EximBank,” he said.

He also said the TTMA would take six companies this week to Cuba while NFM will visit Cuba in April.

There is the T&T Trade Facilitation office in Cuba that helps businesses.

Mahabir added that when NFM exports, it prices in US dollars.

“In recent times our suppliers and bankers have been able to use multiple currencies in terms of making and settling payments. So we now have options for euros, Canadian dollars and, of course, the US dollars. Unfortunately, they do not take TT dollars,” he said.

The Cuban envoy, after the tour of the NFM plant, praised it for being “modern and efficient.”

Mahabir also said that Cuba’s tourism sector is growing by leaps and bounds and it offers even greater opportunities for a company like NFM.

“The tourism sector in Cuba is opening up. Traditionally, it would have been Europeans and Canadians. Now the US when they do visit would go through Jamaica or one of those countries. That also offers opportunities to sell directly to those companies in the tourism sector apart from the Government owned companies that import food,” he said.

Results of meeting

According to the NFM, these were some of the major points to come out of the meeting with the Cuban Ambassador.

1. The Cuban ambassador highlighted his desire for the doors to communication to be kept open between Cuba and T&T so as to develop and maintain cordial communications between both countries and to foster mutual business opportunities. He has already initiated discussions with EximBank to facilitate general business partnering opportunities between T&T and Cuba.

2. NFM will explore partnership opportunities with Cuban companies in the tourism industry such as hotels as well as with government agencies and tilapia farms.

3. NFM will explore opportunities to import raw materials from Cuba such as rice bran.