Flour from Serendib Flour Mills in May/ June

Serendib Flour Mills (Pvt) Ltd will be entering the local wheat flour market as the country’s second player by May or June this year as the construction work of the state- of-the –art flour mill in the Colombo Port and the installation of machinery has been completed.

The new company would be importing raw material via the Colombo Port for processing. This would give a price advantage for the consumers as it would save transport charges. Marketing analysts point out that a second player to the market – after Prima - would create better competition and help give a better deal to the consumers. While flour prices are likely to fall after June, by how much is the question.

Chief Marketing Officer of Serendib Flour Mills Suren R.A. Abeywickrema told The Sunday Times FT that they are importing wheat flour from the United States of America, Argentina and Australia. Testing of flour for the local market too has commenced and samples have been distributed to buyers but this process is still under way and it has not been completed as yet, he said. Abeywickrema said that the plant will have an initial milling capacity of 1000 metric tones per day with a provision to increase production to 2000 metric tones per day, with plans to further expand the factory. The current demand for flour in Sri Lanka overtakes the supply. The company plans to capture a major share in the local wheat flour market breaking the monopoly control enjoyed by Prima.

The price of wheat has more than doubled since the beginning of this year, as adverse weather reduced output in the major exporting countries of Australia, Argentina, Canada and the US. There is a high demand for wheat mainly due to demand from the bio fuel industry. The supply will remain fixed until new crops are harvested in US and Europe in July and August 2008. The joint venture involves members of the Al Ghurair Group of Companies of Dubai, National Flour Mills (NFM) and Emirates Trading Agency (ETA), which have invested US$53 million (Rs. 6 billion).

The two companies will be providing their assistance for flour milling, ocean transport, commodity trading, logistics and local marketing in Sri Lanka. Sri Lanka will be able to save valuable foreign exchange from importing wheat for milling flour locally rather than importing flour for consumption. The cost of importation of wheat is 20 US$ per ton and a sum of 30 US$ needs to be spent to import a ton of flour. The Serendib Flour Mill has an initial milling capacity of 300,000 tonnes and it would help save US$6 million to US$9 million in valuable foreign exchange annually. A senior official of the company said that they hoped to export both bran and flour if there are excess stocks. Al Ghurair currently exports flour to Sri Lanka, Bangladesh, Male, Indonesia and Africa, an opportunity available to Serendib Flour Mill in the future if more production capacity is installed.