International food prices have been rising over the past few years, but price increases have been particularly steep in the past 12 months. Most concerning is the growing cost of corn, wheat, rice and oilseeds, which in some cases has gone up over 100%.
In Guyana Namilco yesterday reported an additional 25% increase in flour prices up now around 45% since January, minibus drivers propose a 25% increase in fares, prices for corn dependent food; poultry, milk, eggs, any food using high fructose corn syrups like sodas, juices, almost any food product produced in the United States have all been impacted by the demand for corn-ethanol , rising gas prices and according to Brazilian’s President Lula, “the world was not ready to see millions of Chinese eat, millions of Indians, Brazilians and Latin Americans eat three times a day”. Leaders of both developed and developing countries are scurrying to alleviate the suffering of their people with plans and policies. Some common sense and long overdue like “Grow more food” in Guyana, the creation of mega farms in Trinidad, Dominican Republic’s quest to be the “other” breadbasket for the Caribbean, others clearly political, unsustainable and too little and too late.
In the US, one can scarcely watch a CNN broadcast without the non-stop reference to stories centred on the high cost of food. CNN shared the story of the farm in Texas who is now using 2 mules to plough his field, in Maine there’s a waiting list for a spot in the community garden as residents clamour to grow their own food, seed sales have risen more than 30% in the US and more than 60% in the UK as locals are digging up lawns to plant vegetables, sale of scooters in the US have risen more than 30% since January as riders tout 80 miles to the gallon stories. Major US food retailer Sams Club began limiting the sale of rice to two bags per customer, while current and future politicians in the US try to outdo each other to come up with relief programmes.
In Trinidad, a popular blogger reports that, “citizens now are faced up to the reality that life is about to get more tougher, at least for those of us who have to juggle our salaries at the end of the month to meet our increasing expenses. You must have realized by now that you’re spending way above what you used to in the supermarket and the vegetable market a year ago; that the value of your salary has suddenly depreciated, meaning that you peel out more dollars than you would in the recent past to make the same purchases you have been making.
Inflation, driven by food inflation is already impacting those of us in Trinidad and Tobago in a number of ways besides higher prices for foods. In the last six months, house mortgage payments have twice been adjusted upwards while the interest rates on loans for house and land and on cars have increased.
Apart from the foods that have increased, our main staples, flour and rice have shot up almost twice the price last week”.
The blogger continues to report that in Trinidad, “I’ve seen more and more people cultivating their kitchen gardens and those without any land space using buckets and flower pots to plant their tomatoes, ochroes, seasonings and whatever else can grow in them”.
The steep and persistent rise in international food prices is hitting particularly hard on the poorest in Latin America and the Caribbean, worsening income distribution, stated ECLAC Executive Secretary José Luis Machinea. Poverty and indigence will rise if urgent measures are not taken to reduce the effects of these hikes. As of early 2006 and especially as of 2007, food consumer price indexes have risen in the majority of the region’s economies at an annual rate between 6% and 20%, with an average of about 15%. Based on indigence projections for 2007, ECLAC estimates that a 15% rise in food prices will increase indigence by almost three points, from 12.7% to 15.9%. This means that elevating food prices will lead another 15.7 million Latin Americans to destitution. A similar number will also fall under the poverty line.
Caribbean countries are not sitting still however, The Dominican Republic is seeking some $1 billion USD in external financing to boost food production and increase exports to neighbouring Caribbean countries that are struggling with high prices of agricultural commodities, especially grains.
Meanwhile, Trinidad and Tobago has started plans for the increased production of food through the creation of seven thousand new farms on lands of the former Caroni 1975 Ltd sugar factory and the establishment of sixteen farms, each of at least one hundred acres, for the large scale production of food for both local consumption and export, and for the growth of the agro-industry.
Additionally, PCS Nitrogen, an Ammonia producing company will be establishing a large greenhouse demonstration farm on seventy five acres of land provided by the State. This will be a model farm utilizing the latest technology and government hopes this will inspire the replication of similar operations by farmers throughout the country. The farm is expected to be fifty percent operational by the end of this year.
According to the Eastern Caribbean Central Bank (ECCB), The vast majority of islands in the Eastern Caribbean are also reporting increases in inflation during the first nine months of 2007. The 2.5 percent increase in inflation in Antigua and Barbuda was driven by a 5.9 percent rise in the food sub index, reflecting higher prices for meat, milk and fruits. The fuel and light sub-index was up by 12.1 percent, attributable to an increase in the fuel surcharge on electricity consumption.
In Haiti, the poorest country in the Americas, where 80 per cent of its 9 million people are living on less than 2 dollars a day – the Senate sacked the prime minister last week, after riots over the rise in food prices claimed the lives of at least five people. In Honduras, a net importer of foodstuffs, scores of thousands of people – including workers, teachers, students and peasants – marched this week against rising prices, and several people were injured in the resulting clashes. In response, Honduras launched an ambitious 105-million-dollar plan for the reactivation of farming, seeking an increase in the local production of grain.
Dominica’s 3.2 percent price increase was primarily driven by a 4.1 percent increase in the food sub-index, again reflecting higher prices for dairy products, particularly milk and cheese, and fruits and vegetables. In Grenada, consumer prices rose by 5.0 percent on account of higher prices for all sub-indices, especially food and fuel and electricity. The average cost of food items increased by 7.1 percent.
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In St. Kitts and Nevis, the 1.6 percent increase in inflation was driven by higher prices for food, clothing and education. The food sub-index, the largest weighted in the basket of goods and services, rose by 3.9 percent, partly associated with price increases for meat products and vegetables.
The Mexican government has announced plans to try to keep the price of corn relatively constant. Corn is a staple of the Mexican diet. In the face of increases in the price of rice, beans and wheat, among others, Agriculture Minister Alberto Cardenas said the production of white corn has been increased since 2007. Experts, however, have noted that the government cannot stop price increases, and they have expressed fears that in Mexico these may lead to social turmoil.
St. Lucia’s 4.3 percent inflation for the first nine months of 2007 was led by an 8.3 percent rise in the food sub-index while St. Vincent and the Grenadines inflation went up 6.2 percent mainly because of increases in the prices of fish, meat and dairy products. While, In Jamaica, government at the beginning of the year was forced to subsidize a number of food items including flour, bulk rice, cooking oil, and milk powder because of the rising food prices.
Peruvian authorities have started handing out food in poor areas of Lima, and President Alan Garcia said the aim of the move is to ‘compensate’ the impact of global price movements that the government cannot act upon directly.
Argentina, a major exporter of foodstuffs, is having great trouble keeping domestic prices down and keeping the domestic market suitably supplied, as local producers seek greater benefits by selling their produce abroad. Argentine Finance Minister Martin Lousteau noted that the rise in commodity prices will have a greater impact on poorer countries, and based not just on their income but rather on the make-up of their diet.
According to World Bank President Robert Zoellick, “Whether or not biofuels are behind the relative scarcity of foodstuffs and pushing up prices on world markets, climbing food prices will set back efforts to reduce poverty by about seven years”. ‘The food problem can put an end to progress and stability,’ warned Hedi Annabi, head of the UN Stabilization Mission in Haiti (MINUSTAH).
In the face of current price increases, most people in the region agree that Latin America and the Caribbean will have to “surprise, surprise” produce more foodstuffs rather than import them. The cold hard fact is that the rise in food prices is not projected to be a temporary phenomenon. While government intervention programmes may provide immediate relief to some citizens, these programmes are just not sustainable for developing countries.
As many countries look to grow more food, here in Guyana, it is even more imperative that the slogan be clarified. “Citizens must grow more food in their kitchen gardens”.
The local media has been reporting on rising food costs for a year now and things will get worse. If you’re not taking steps to reduce gasoline consumption, make your family more food independent and looking for ways to balance your income risk, then you either know something the rest of the world doesn’t know or you’re sadly uninformed.
