The rising cost of food imports industry
Stabroek News
May 18, 2007
Even before the lead story in last Wednesday's Stabroek News announced that consumers can anticipate a rise in food prices, three separate studies undertaken by universities in the United States earlier this year were predicting that countries that relied heavily on food imports - including the Caribbean - could face bigger food import bills as a result of rising prices in the United States. Those studies linked the price increases to the huge increase in the demand for corn in America's ethanol industry and the knock-on effect of rising corn prices on other foods, chiefly grains.
One of the studies specifically pointed out that American farmers had already begun to reduce their production of rice and wheat in order to convert farming areas to more corn production to take advantage of higher prices, a development which the study said could even threaten the United States' domestic food supplies.
The effects of increased food prices are already being felt in several Caribbean territories including Jamaica and Trinidad and Tobago where the governments have reportedly become sufficiently concerned about rising food import bills to pronounce on the need to boost domestic agricultural production and to encourage reduced consumption of imported foods.
Of course, decisions on import substitution in some Caribbean territories must take account of the need to cater for the tastes of tourists as well as the conspicuous consumption patterns of those sections of their respective populations whose circumstances and consumption habits have created an increasing demand for foods imported from outside the region. The problem is, however, that increased food prices are also impacting on basic food items that are commonly consumed by the vast majority of ordinary people. It is this that could pose a real problem for countries like Guyana.
Take chicken for example; One of the major poultry producers in Jamaica has already increased chicken prices on account of the higher prices that it has had to pay for corn-based feed imported from the United States. Here in Guyana rising prices for corn-based feed will inevitably - and sooner rather than later - result in an increase in the price of chicken. Add to that increased prices for milk, wheat and wheaten products, eggs and butter and a pretty disturbing picture emerges.
The news that local consumers can anticipate yet another bout of increases in food prices comes even as we seek to come to terms with price rises resulting from the January 1, 2007 implementation of Value Added Tax and its impact on food prices. Indeed, whatever the earlier official pronouncements on the positive effects of the VAT implementation on prices across the board the bottom line appears to be that more consumers are now required to spend more on the same amount of food. Indeed, the public grumbling over the cost of living and more particularly, the cost of food has become more audible since the introduction of VAT.
We have of course come a long way since the days of experiments with import substitution and the banning of food items and there can be no question of going back to the days of lengthy queues for scarce food commodities. On the other hand if the predictions about rising food prices are as serious as the studies suggest a case may well exist for reducing food imports where practicable and for seeking to increase production in both manufacturing, agricultural and agro-processing sectors in order to ensure greater domestic food security and to take advantage of what could turn out to be an increased intra-regional demand for foods manufactured and grown in Guyana to fill the gap in the regional food market that could be created by reduced food imports from the United States.
There is, of course, nothing new about the observation that the Caribbean provides a potentially lucrative market for Guyana's agricultural products and the argument has been made even stronger by the removal of the barriers to intra-regional trade resulting from the introduction of the Caricom Single Market in January 2006. The point is, however, that the idea is more than worth raising again in circumstances where we are being told by the Food and Agricultural Organization (FAO) that the Caribbean's extra-regional food bill is far too high and that our interests would be much better served by reducing the region's dependence on imported foods.