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As we address the price of grains and their impact on food prices in 2011, it is important to look at what transpired from 2010 to date.

From January to July 2010, the price of wheat traded relatively flat on the world wheat market. However, prices began an upward climb from August 2010 as a direct result of drought conditions in Russia (see FOB Gulf price chart). With a reduction in their wheat crop by 34%, all exports out of Russia were banned.

This was followed by damaging frost in the Canadian wheat growing Prairies, resulting in poor yields and low wheat protein levels. Only 33% of the wheat harvested in Canada for 2010 was of milling quality.

The situation was compounded when Australia, one of the largest exporters of wheat, had their share of weather
issues. Massive flooding in the eastern regions and drought in the west served to further reduce the quantity and quality of exportable wheat stocks.

Other grain growing countries around the world have had similar weather challenges that affected production, export and ending stocks. The forecast is that worldwide wheat production will be reduced by more than
35 million metric tones.

Wheat prices are linked to corn and Soya beans. With corn stocks at their lowest since 1995, ending stocks sharply lower than 2009, an increase in world demand for corn along with increased ethanol production;
corn prices have risen considerably. Soya, rice and actually all grains have also experienced drastic increases.

The foregoing has translated in a price increase in wheat of over 50% since July 2010. The projection is for more of the same for the remainder of this crop year, with some price breaks for new crop wheat, if worldwide weather permits.

The mills in the region, as standard practice, employ prudent procurement of their grain requirements which includes forward purchasing. This along with consistent emphasis on cost containment, plant and technology upgrades and best practices ensure quality products to our customers at reasonable prices.

Other inputs cost related to oil prices, plus the duration and extent of these grain prices are now beyond our
capability to absorb. As a result, the Caribbean mills in an effort to remain viable businesses and ensure the highest quality products and services must increase flour and flour related product prices immediately.

We are cognizant of the effects this increase will cause on the consuming public and wish to assure all that
increases will be kept to a minimum and any future decrease will be similarly passed on to consumers.

We thank you for your understanding and cooperation.

THE CARIBBEAN MILLERS’ ASSOCIATION