Since there is little domestic production of wheat the flour industry
fully depends on the imported raw materials from the different countries. Most of the flour mill concerns procured from
bulk importers of the domestic market which parties import bulk amount wheat
from the international market as a result wheat price depends on the price
movements in the International market; foreign currency fluctuations, as well
as order size, impact the prices. For this reason, flour mills and traders in Bangladesh are exposed to
foreign currency risk. Moderate entry and exit barriers
also create a highly competitive market scenario. All the flour mills in
Bangladesh have to pay the full amount in advance during wheat procurement but
the situation is different in the case of sales resulting in accounts receivables
which creates stress on working capital. The huge fund is also required to
maintain the minimum level of inventory to avoid the risk arising from import
as well as to mitigate the seasonal consequences of wheat production.
Many competitors compete with the company in the Feni region. Close competitors of the Company are Ahmadia Rice and flour mills, Saudia flour, and Dollar flour of Taher Food Industries in the Chittagong region. Other competitors are Star Line Flour, Mohammedia Flour, Hamidia Flour, Bilder Flour, Sakura Flour, Rajib Flour, Fresh Flour, City Group’s Teer, and Sena Kalyan Songstha’s Horse Flour, etc in the Feni region.
The price movement of wheat in the international market also a vital factor to impact industry growth and profitability. Wheat prices in the international market were showing a downtrend from 2014 to 2016. Wheat Production last year was 735.59 million tons. This year’s 748.24 estimated million tons could represent an increase of 12.65 million tons or 1.72% in wheat production around the world.
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