Aug 2016 Financial News

NFM cautious on Venezuelan market

Aug 19, 2016

Venezuela is a potentially lucrative market for T&T manufacturers but CEO of National Flour Mills (NFM) Kelvin Mahabir has concerns about being paid on time for goods supplied to that country.

With T&T set to export its second shipment of goods to the struggling South American nation within the next few weeks, Mahabir told the T&T Guardian that large Venezuelan market of 30.5 million people could boost NFM’s capacity to earn foreign exchange.

However, even with officials from Corporación Venezolana de Comercio Exterior (Corpovex) expected in the country later this month to negotiate for another shipment of goods, he has concerns.

“The main problem in trading with Venezuela has always been the difficulty in getting paid. The manufacturers in Trinidad through the TTMA are awaiting the arrival of the officials from Corpovex to make arrangements for the next shipments. This is expected to happen next week,” he said.

In June, rice, frozen chicken, ketchup, powdered milk, mayonnaise and pasta totalling 68 tons was shipped to Venezuela . These products came from local manufacturers Arawak and Company Limited, Vemco Limited, and Trinidad Parboil Limited/Old Mac Agro Supplies Limited and was followed days later by a shipment of products from John Dickinson and Co (WI) Limited; National Canners Limited, NFM and Coconut Growers Association Limited.

This followed signing of an agreement between the manufacturers and Corpovex to supply the items to Venezuela through a US$50 million revolving fund. The agreement covers an initial three-month period and $26.9 million dollars worth of food and basic household items have already been shipped to eastern Venezuela.

Mahabir said there are no plans for NFM set up operations in Venezuela, although he acknowleges he potential of that market for the company.

“The potential of the market due to the current shortages is unknown but significant. However, this may change in the future as their production facilities improve and go back into full operation.”

NFM’s contribution to the first shipments to Venezuela was two container loads of goods.

Venezuela, T&T closest South American neighbour, has been devastated by declining oil prices. The country depends on oil revenues for more than 95 per cent of its foreign income and its reserves have dwindled to US$20 billion in recent months. Annual inflation is estimated at 141.5 percent— double the 2014 rate—and food costs rose 254.3 per ent last year, surpassing wage increases.

In another nearby market, Mahabir said NFM is awaiting licence approvals to move some of its products into Jamaica.

“We recently obtained approval for our tilapia feed and are awaiting approval for our pet food product,” he said.

Source:
Nadaleen Singh
Trinidad Guardian
Friday August 19, 2016

http://www.guardian.co.tt/business/2016-08-19/nfm-cautious-venezuelan-market