"If we overcome the mental barrier of commoditization, identifying and communicating those added values going beyond our basic proposal, we will have the opportunity to take our profitability to another level."
Ariel Banos, founder of Fijaciondeprecios.com explains that when a proposal is a commodity, in other words, it lacks differentiation with respect to others offered in the market, the only alternative is to align itself with the prices charged by competitors. There are no magic solutions.
Explained by the uncertainty reported in the markets due to covid-19 disease, in June 2020 the global food price index registered a 2% variation from the previous month.
The Food and Agriculture Organization of the United Nations (FAO) reported that due to market uncertainty caused by covid-19 disease, prices of vegetable oils, sugar and dairy products rebounded to their highest level in several months after sharp declines in May, while in the cereals and meat markets most prices came under downward pressure.
Discounts and offers, increase in the price level generally and the rise in operating costs due to new health and safety protocols are the main threats to the profitability of companies in this new commercial reality.
Given this context of economic and health crisis, which derives from the outbreak of covid-19 at the global level, Ariel Baños, a specialist in price management and founder of Fijaciondeprecios.com, explains what are the main threats that could affect the profitability levels of companies, and details some strategies that could be applied to mitigate the adverse effects.
Price per gallon of regular gasoline: Costa Rica $3.87, Nicaragua $3.28, Honduras $3.27, Guatemala $2.93, El Salvador $2.54 and Panama, $2.81
From the Ministry of Economy report of El Salvador:
The current reference prices present significant declines for gasoline and diesel, these declines respond directly to the events of the break of the pact between OPEC, led by Saudi Arabia, and the countries that had made an alliance with the organization, represented by Russia.
During the second month of the year in the country, the price of the sand yard grew 4% compared to the same month in 2018, and the No. 4 stroller foot fell by 12%.
From the General Comptroller of the Republic's report:
During February in the country the CPI reported -0.3% year-on-year variation, which is partly explained by the behavior of the prices of the transport category.
The groups that showed decreases in the National Urban CPI for February compared to January 2020 were: Transportation with 1.3%, Food and non-alcoholic beverages with 0.8%, Recreation and culture with 0.4%, Communications with 0.3%, Alcoholic beverages and tobacco, clothing and footwear, and Health all with 0.1%, reported the General Comptroller of the Republic.
Price per gallon of regular gasoline: Costa Rica $3.82, Nicaragua $3.61, Honduras $3.39, Guatemala $2.99, El Salvador $2.98 and Panama $2.81.
From the Ministry of Economy of El Salvador report:
The current reference prices for gasoline and diesel maintain a mixed trend (ups and downs), these variations are because of the continuous fall in the reserves of these products.
In the second month of this year, the FAO food price index rose by 8 percent compared to the same month in 2019, explained by rising prices of meat, dairy products, vegetable oils and sugar.
From FAO's monthly report:
-The FAO Food Price Index* (FFPI) averaged 180.5 points in February 2020, down 1.9 points (1.0 percent) from January but still 13.5 points (8.1 percent) higher than in February 2019. The decline marked the first month-on-month drop in the value of the FFPI following four months of successive increases. It was driven by a sharp fall in the export prices of vegetable oils and, to a lesser extent, meat and grains, more than offsetting a continued rise in dairy and sugar prices.
Price per gallon of regular gasoline: Costa Rica $4.10, Nicaragua $3.51, Honduras $3.39, El Salvador $2.95, Guatemala $2.92 and Panama $2.81.
From the report of the Ministry of Economy of El Salvador:
The current reference prices for gasoline and diesel show a mixed trend (ups and downs), these variations are due to the continuous fall in the reserves of these products, according to reports provided by the IEA in February 2020.
At the beginning of 2020 in Panama, a positive variation in the Consumer Price Index was reported, a behavior that was determined partly by the prices of Transportation and Alcoholic Beverages and Tobacco.
From the report of the General Comptroller of the Republic:
Price per gallon of regular gasoline: Costa Rica $4.08, Nicaragua $3.52, Honduras $3.51, El Salvador $2.96, Guatemala $2.96 and Panama $2.81.
From a statement by the Ministry of Economy of El Salvador:
The current reference prices for gasoline and diesel show a marked decline at the national level, which reflects the emergency experienced by China because of the coronavirus.
Up to January this year, the FAO food price index rose by 11% compared to the same month in 2019, explained by the increase in the prices of meat, dairy products, vegetable oils and sugar.
From FAO's monthly report:
» The FAO Food Price Index* (FFPI) averaged 182.5 points in January 2020, up 1.3 points (0.7 percent) from December 2019 and 11.3 percent higher than the same month last year.
At the end of 2019, Panama reported a negative variation in the Consumer Price Index, a behavior that was determined partly by the prices of air passenger transport.
From the report of the General Comptroller of the Republic:
Price per gallon of regular gasoline: Costa Rica $4.07, Nicaragua $3.52, Honduras $3.45, El Salvador $3.04, Guatemala $3.02 and Panama, $2.83
From a statement by the Ministry of Economy of El Salvador:
The current reference prices for gasoline and diesel, show low prices at national level, due to the outcome of the conflict between the United States and Iran, where the Arab country attacked two military bases located in Iraqi territory.
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