Dear Editor,
Flour is a basic food item used by almost 100% of the families in Guyana. For some, it is an important part of their daily diet. Any threat to the regular supply of this item will have a profound effect on the nation. As much as the previous government will never be able to live down its history with the banning of this food item, who in the present government would like to be responsible for a flour shortage?
The issue of price pales in comparison to the issue of availability. The stakes are high indeed. This is no time for half measures or the blame game.
In the face of rising world prices for wheat, the government has done the right thing to open the market to imports. This has been further enhanced by the temporary removal of the need for import licences for wheat or flour. In such a free market environment, the price of flour will settle at the most competitive level and consumers should be able to benefit from the lowest prices possible.
Rising world prices for commodities are as a result of scarcity. We are already seeing countries restricting exports of basic commodities to make sure their own citizens do not go hungry. Very soon, Guyana may have to do the same with rice and sugar.
The world situation for competition in basic commodities will no longer follow the traditional pattern. The price you are willing to pay will no longer have the same effect on guaranteeing supply. Governments’ interventions in their own national interest will affect supply relationships. And this is as it should be; Governments taking care of their own.
The government should therefore consider that while opening up the flour market for importation should result in the lowest price the flour, the existing situation with scarcity of commodities worldwide may serve to defeat such a strategy. There are two scenarios to consider:
If prices for wheat are going up worldwide, you may not be able to get cheaper flour anywhere. Cheaper imported flour may just be wishful thinking.
With Governments focusing their efforts on their existing supply contracts, it may be worth noting that at some point in time, our importers may run out of suppliers.
Guyana does not present such a large market opportunity that we can influence what the international industry will do. In the face of crisis in their home country, it should be reasonable to expect that Guyana will be left on its own.
There is therefore no guarantee that our importers will be able to garner a regular supply of flour, much less be able to import flour at lower prices. The situation is too fluid to predict what will happen. Most recently National Flour Mills of Trinidad and Tobago has been exporting flour to Guyana and has had an influence on price; at the same time it has been accused of dumping. Whatever the case may be, right now flour is being rationed in Trinidad and Tobago.
Barbados and Jamaica have already announced a subsidy of local flour production. The Minister of Trade and Industry of Trinidad and Tobago announced that they will subsidise the cost of wheat so as to limit the price increase of flour to about thirty five (35%).
The important thing right now is to guarantee security of supply of flour for Guyanese. This can only be achieved by keeping our local mill in production.
Guyana has competitive disadvantages in transportation and energy costs. To level the trading field, I would recommend that the government apply a surcharge (equivalent to the difference in transportation and energy costs) on flour entering the country. Those funds can then be directed to defray the cost of wheat entering the country and save the consumer the full brunt of world price increases for wheat.
Yours faithfully,
Sase Shewnarain
