As the worst US drought in fifty years drives up the price of staples such as corn, soybean and wheat, and changing weather patterns affect cereal production in Russia, the Ukraine and Kazakhstan, the world is about to experience another surge in food prices. By the spring of 2013 it is expected that the cost of food will have risen globally on average by around eight per cent.
In some regions of the world where transport costs are high, the increase may be greater.
What this suggests is that Caribbean nations, heavily indebted and having so far failed to implement a regional food security programme, will face tough new decisions on subsidies and tariffs if they are not to experience social problems as prices rise.
Global awareness that the era of cheap food first emerged in 2006. Then, prices first began to escalate beyond the reach of many of the worlds poorest. While this initially reflected increased global demand as a result of changing tastes in emerging economies, food prices were driven higher in early 2008 as equity values collapsed and food became an ‘asset class’ to be bought and sold, irrespective of its nutritional purpose.
Traditionally, such increases in the price of cereals brought benefit to small farmers in developing countries, resulting, after a time lag, in the increased cultivation of indigenous foodstuffs. This has happened in Africa and other parts of the world but unfortunately, most of the Caribbean has continued to rely on imports.
Almost all Caribbean nations, having failed to increase large scale investment in domestic food production since 2007 are therefore now likely to find themselves in a difficult place as the world heads for another food price crisis. The region had a food import bill of around US$3B in 2010, but figures that have emerged recently in some Caribbean nations indicate that this number may have increased significantly over the last two years.
Recent reports suggest that Barbados may now be paying as much as 18 per cent more for imports of corn from the US than at this time last year, implying that as global food prices escalate further, government will face in the immediate future food import bills significantly higher than the US$225m recorded in 2011.
In Jamaica too, despite successive government programmes to encourage domestic agriculture, the 2011 food import bill rose to US$930M compared with US$800M in 2011, with government forecasting that the figure may rise beyond US$1B this year. Partial figures for other Caribbean net importers of food show a similar trend.
Clearly numbers of this kind are unsustainable in heavily indebted nations.
Although the price levels recorded in 2007-8 and 2010 have eased, the coincidence of high food prices with the global economic recession has dramatically reduced the ability of developing countries to manage domestic prices through subsidies to meet the nutritional needs of the poorest.
While it is possible in mitigation of higher prices to remove or reduce duties, for example on imported animal feedstuffs, or to increase duties and taxes on imported luxury foods, this is no substitute for increased domestic food production or the implementation of a long-term national or regional food security programme.
In 2011 Caribbean heads of government agreed a joint approach to enhancing the region’s food security after years of inter-regional discussion. Amid fears about the rising cost of food internationally, a Caricom action plan, that had been years in the making, was adopted.
It envisages a rapid increase in domestic agricultural production, greater co-operation between countries in the region, encouraging regional and international investment in agriculture, and a more significant role for nations like Guyana and Belize that have the potential, with investment, to become major regional food producers.
However, when Caricom heads met in St Lucia this July it was clear from remarks by Guyana’s President, Donald Ramotar, that little had happened.
While some first steps have been taken in Trinidad, Jamaica and Barbados – Cuba separately has initiated a programme to increase production through self-employment – it is apparent that it may be years before the region is able to significantly reduce its food import bill.
Tellingly public-private sector seminars continue to make clear to Caricom governments that before this can happen significant changes are required in relation to insurance, the investment climate and other issues of concern to investors.
The only positive news when it comes to the latest increases in global food prices is that this time there are some mitigating factors.
The price of rice remains stable, governments and farmers in Africa and other developing nations have boosted their food security by increasing the production of local staples over the past five years, and global demand is also less strong as a consequence of the continuing economic crisis. Moreover, the G20, which groups the world’s major economies, has recognised the need for early action to try to mitigate some of the factors that previously drove up food prices.
Throughout all of this the Caribbean has been moving at a pace that bears no relation to the nature of the problem or the need to find ways to address in practical terms how to encourage farmers and investors to open up idle land and to grow more for domestic consumption by both resident and visitor.
Worryingly some ministers seem not to have got beyond the obvious, suggesting that young people should be involved in agriculture; farmers need to operate as businesses; investments and commercial credits are required to stimulate farming. If food security is what is required and prices are not to pass beyond what ordinary people can afford, action quite literally on the ground is required.
Previous columns can be found at www.caribbean-council.org
