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23.07.2004 Business & Finance

Increase In Newsprint Price Worrying

By Graphic
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Prices of newsprint, the plain coiled paper used in printing newspapers, exercise books and other periodicals, have gone up from ¢120,000 to almost ¢150,000 per ream due to price increases on the international market.

World market prices of the commodity have shot up from between $500 and $550 per tonne to between $600 and $650 since the beginning of the first quarter of the year, arising out of a general high world demand for newsprint.

Industry watchers have seen an imminent increase in prices of newspapers locally as a result. The commodity accounts for about 45 per cent of inputs in the newspaper industry.

The increase in demand follows upcoming electioneering across the world for this year, particularly in the United States of America, the biggest consumer of newsprint.

America consumes 30 per cent of the $23 billion world output of newsprint. Demand for newsprint in China also has more than doubled in the last three years due to the economic boom in that country.

The Iraqi crisis, which has soared oil prices, has also had its toll on freight charges, increasing freight more than 40 per cent.

In Ghana, the situation has led to a delay in the shipment of newsprint, which has resulted in a temporary shortage of the stuff.

“There was shortage of newsprint last Friday and some papers could not even come out,” confirmed Mrs Georgina Blay, President of the Private Newspaper Printers and Publishers Association of Ghana (PRINPPAG).

She said the situation was eroding the margins of the local newspaper industry with the potential of increasing cover prices of papers.

“If this goes on for the next two weeks, cover prices will have to be increased,” Mrs Blay, who is also the Managing Editor of the Daily Guide, said with an explanation that private newspapers, in particular, depended on cover prices rather than on advertisements for their income and if prices of a major input -newsprint- had gone up, they had no choice but to increase cover prices.

Ghana's industry is also to be hit by a fresh two-and-a-half per cent levy for the National Health Insurance Scheme as well as recent increases in utility bills.

“Utility bills and salaries are part of overheads that need to be factored in to determine the price of the newspaper,” said Mr J.N.A Tagoe, the Procurement Manager, Graphic Communications Group Ltd.

He said the ripples from the international market were negatively impacting on the local market since the second quarter of this year.

Some of the paper mills in the Americas, he pointed out, had shut down for rehabilitation and retooling, both of which have conspired with the other factors to increase the prices.

“The newspaper industry will suffer,” said Mr Tagoe, explaining that the industry faced competition from the electronic media, whose production cost remained relatively constant, thus rendering the print media unable to increase prices above a certain limit.

But major importers of newsprint said they were trying their best to source for reasonably priced newsprint to cushion the price hikes.

“The importing companies are trying to source from good markets to give reasonable prices to local buyers,” said Mr Sunil Varyani, the Managing Director of Vista 2000 Ltd, importers of newsprint.

He admitted the hikes in freight charges, which he said had led to an ephemeral delay in the company's consignment.

He was emphatic, however, that “when the international market situation changes we are helpless and have to adjust accordingly”.

Mr Olu Luther King, Managing Director of Toproad Company Limited, the biggest importer of newsprint, confirmed that prices have gone up but would not give details.

He said Ghana's situation had been worsened because this is the time exercise books and textbooks were printed for schools.

He also admitted that shipment was high and that there was a temporary shortage on the local market but said stock had since returned to their normal levels.

Mr Luther King also confirmed importers were trying their best to keep prices within affordable limits. He appealed to the government to deliberately support the business by waiving VAT on the importation of newsprint to relieve importers of such external price increases.

He said entrepreneurs wanting to establish paper mills in the country should also be allowed to import pulp without paying duties to offset the heavy capital investment.

Fonstat, a Ghanaian company that imports the product has, however, said it is not aware of any such shortage in the system.

Prices of newsprint in neighbouring Nigeria are reported to be up already by 100 per cent

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