Rising production costs : businesses in the market gardening sector in Reunion are affected as in mainland France. If they did not wish to express themselves on the subject, others have done it, because the problem concerns all sectors.
Direct consequence or aggravation factor of already existing tensions : at any rate, the health crisis has caused sometimes considerable increases in the prices of raw materials and intermediate goods by disrupting production and transport of supplies across the world. What consequence for an island economy largely dependent on its external supplies like Reunion? ? The alarm bell sounded in June at the national level by the Confederation of Small and Medium Enterprises (CPME), was relayed the same day to Reunion by the local CPME, while the Réunion Import and Trade Union (SURE) testified to the difficulties in absorbing the additional transport and storage costs of its members. How long can we last without increasing our prices? ? This was in essence the question posed by both parties.. Because uncertainty prevails : Are these increases temporary?, expected to be reduced with the relaunch of activity, or on the contrary will they be durable ?
Businesses under pressure
The CPME cited the following figures : over one year, between April 2020 and April 2021, prices of imported raw materials increased on average by 25,2 %. With sometimes much greater differences. Plastics, wood : + 25 % ; steel : + 30% in six months ! Insularity complicates things, forcing importers as well as companies to build up stocks to continuously have raw materials available. Stocks that have a high cost. First presentations, construction and construction, but also food manufacturers affected by rising packaging costs. All types of packaging are concerned : glass jars, Tetra Pak, carton, etc. “We are very worried about the cash flow of our companies” declared Jean-Philippe Payet, general delegate of the CPME Meeting.
Fret : + 30% from Europe
Importers side, “this global disruption leads to additional costs of around 30% for maritime transport from Europe. For Asia, it is noted that these costs have been multiplied by 2,5” announced Fabrice Hanni, president of the SICR. Some importers assumed additional costs of over-storage to guarantee supplies on the island as much as possible. The blockage of the Suez Canal for several weeks and the malfunctions of certain gantries having made matters worse, Fabrice Hanni warned of “possible repercussions on businesses and consumers”. Conclusion : local businesses felt caught between sharply increasing costs of raw materials and packaging and the difficulty in getting their customers to accept price increases.
Soaring costs : where are we ?
Two and a half months after the June 14 press conference, Fabrice Hanni, president of the SICR, takes stock : “At the global level, the maritime transport situation is still not stabilizing. There is still strong tension on freight due to the shortage of containers, to the congestion of many ports, as well as a strong saturation of transport capacity. This situation leads to increases in freight costs, recurrently. Despite these difficulties and additional costs, SICR importers adapt and manage their supplies as best as possible to ensure permanent availability of their stock. »
