The current cost of living that citizens are being faced with is the highest this country has ever experienced and prices of the most essential commodity that we use on a daily basis – food – increased by over 19% from March 2016 to March 2022.
That’s according to Economist Dr Vaalmikki Arjoon. In an interview with Loop News, Dr Arjoon noted that while the Russia-Ukraine war is perhaps the key reason for current food shortages and price hikes, there are other issues compounding these shortages.
“Production levels dropped in the last two years and the pace of recovery is slow, especially given the soaring costs of fertilisers making it increasingly expensive to produce crop and livestock, weather conditions in Brazil that impacted corn and soybean production, and rising feed costs that limited meat and dairy production.”
He said that despite some easing, port congestion in China and the US still delays production, while shipping rates from Asia also remain significantly elevated together with a higher cost of international transportation due to increased fuel prices.
Dr Arjoon pointed out for example the current uptick in the price of flour, something he predicted earlier this year.
He said, “While flour manufacturers locally have a few months’ supply of wheat in storage, and orders placed at lower contractual prices that are yet to be delivered, consumers can expect to pay higher prices in the near future for flour-based food items locally.”
He said this is yet another reason to take advantage of the MOU with Guyana.
“Indeed, Guyana has also indicated intentions to engage in wheat farming. If our local farmers can invest in and partner with Guyana’s economy to grow their own wheat, then they, in turn, can not only supply to our local economy but also become exporters of wheat. We would also be guaranteed a supply at a lower cost, especially since the cost of production and shipping costs to T&T would be lower.”
He said further, that while sugar production is likely to increase this year, prices will remain elevated due to “expected increases in consumption from India, China and Africa, while Brazil is also expected to divert more sugarcane to ethanol production, which will reduce the amount of sugar exported.”
Meat prices are also likely to remain high given escalated production costs:
“Dairy production is also set to rise by 1% this year, primarily from Asian countries, but prices will continue to surge as global import demand will continue to exceed export supplies from leading exporting countries.”
As a policy response, Dr Arjoon predicted that the State could find itself having to temporarily increase its social safety net for vulnerable households:
“To prevent them from falling deeper into poverty, such as more coverage for the food card and school feeding program, temporary cash transfer programs, utility bill discounts etc. While they have previously removed VAT on several food items, they could consider broadening the zero-rated items list, and temporarily adjusting import duties paid, while taking care that it does not further disadvantage the fiscal space.”
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