(Trinidad Guardian) Business consultant and agriculture lecturer Riyadh Mohammed believes that the struggle to keep food and grocery prices low is not just a problem that T&T faces but can be found in larger, more developed economies like the United States and other countries globally.
The Central Statistical Office (CSO) in a media release last week gave statistics which show that the Index for food and non-alcoholic beverages increased from 148.6 in June 2024 to 149.6 in July 2024, reflecting an increase of 0.7 percent.
Contributing significantly to this increase was the general upward movement in the prices of fresh whole chicken, Irish potatoes, soya bean oil, plantains, frozen whole chicken, table margarine, eggs, ochroes, carite and dasheen.
However, the full impact of these price increases was offset by the general decrease in the prices of pumpkin, tomatoes, melongene, white flour, celery, grapes, green sweet peppers, melon, mixed fresh seasoning and garlic.
The Ministry of Trade and Industry, in a media release last week, said its Consumer Affairs Division, in the average retail price bulletin for June 2024 revealed price decreases in 43 products including poultry, fish, cereals and soya bean oil.
This outcome is, in part, associated with the Government’s foreign exchange facility at the Exim Bank established in response to the COVID-19 pandemic to facilitate allocations to local importers for the purchase of basic food, pharmaceuticals and other related items.
The debate on rising food and grocery prices is also a big issue in the lead up to the US presidential elections.
US vice president and presidential candidate Kamala Harris acknowledged high grocery prices when she launched her economic plan a few weeks ago and she pointed out that grocery prices have risen 25 per cent since 2020 while food companies are enjoying record profits.
She has promised to target large corporations who are not playing by the rules to ensure fair market competition.
US presidential candidate Donald Trump also referred to surging food prices as in mid-August in New Jersey he stood before a table of grocery items like milk and meat and lamented that nothing is being done to protect consumers.
The UN Food and Agriculture Organi-zation’s Food Price Index has been slowly increasing over the past six months following declines over much of 2023.
Given the complex factors involved in the local as well as the international arena, Mohammed told the Business Guardian that he believes that high food prices are not endemic to T&T but all around the globe. He blames some private sector companies for monopolistic practices that are anti-free market.
“Education and information have empowered these mega corporations and partnerships to control the food supply chain. Large grocery stores, for instance, have the ability to implement cost-cutting strategies that prevent smaller retailers from competing. Small companies close. The large retailers can then raise prices further because they are the only ones in the area, and that is precisely what they do.”
He also said that corporations have more clout to reduce salaries as a result of growing market strength and consolidation, while the wealthiest shareholders keep all the profits for themselves.
“Furthermore, market dominance gives firms the ability to justify damaging cost-cutting measures, such as the improper handling of manure on factory farms, which contaminates surrounding towns with trash. These actions have a direct negative impact on the environment, public health, and climate.”
He also criticised large companies for using market dominance to get away with “unscrupulous practices” such as charging consumers the same for less product.
“The amount we pay on necessities like food, soap, and toilet paper is rising as a result of this ‘shrinkflation.’ A corporation can avoid responsibility for its acts and exert more influence over lawmakers by spending millions on lobbying to change legislation to their advantage if it is larger and more powerful.”
Next week is September and then it is a mere few months before Divali and the end-of-year Christmas season.
Mohammed is not optimistic that food prices will decrease over the next few months.
“Looking at the past published data, information and statistics, I can easily say that food prices will not be reduced, especially as it relates to livestock and livestock products. Food costs tend to rise during events like Divali, Thanksgiving and Christmas for a few reasons, and while products may even go on sale.”
He justified his position.
“There is increased demand. People typically purchase more fresh meats and vegetables for meals and get-togethers over the holidays. Prices rise as a result of the supply being constrained by the growing demand. It is not like farmers can suddenly grow more food to suit the demand, as this takes critical planning and high capital investment. Who even advises T&T farmers what to grow, or are they relying on their business acumen and observational skills?
He also spoke about seasonal availability, pointing out that not every food is available every month of the year.
“Some like sorrel and peas have recommended growing seasons. Holidays that coincide with the off-peak season of a vegetable may result in fewer alternatives and higher prices for those that are available. Fruits and vegetables are more prone to perish than other foods. Since they must be handled carefully and transported to keep them fresh, they can be more expensive, particularly if they are being imported from a far-off place.”
Economist Dr Anthony Gonzales told the Business Guardian that even in the post-pandemic world, food prices are continuing to rise.
“Rising food prices are a problem globally. Food prices rose sharply during the pandemic then dropped a bit in 2023 and started rising sharply again in 2024. The causes are the extreme weather events, the Ukraine war, and increasing demand. T&T imports a huge amount of its food probably over 70 percent, so the country would be affected by such high food prices.”
Gonzales also expects to see food prices continue to rise in the short term given factors like climate change and geo-politics.
“As the war between Russia and the Ukraine continues and the extreme weather does not abate, food prices will rise.”
Mohammed, who is also a farmer, spoke from that perspective and said while he sympathises with consumers, he noted that farmers do not have control over prices.
“As a consumer, I would like to see the prices reduced and to be more affordable, so that I can satisfy the other expenses of everyday life. As a farmer, I would like to say that we have no direct control on the market prices (resale to customers), as we are only producers, not middlemen/marketers/distributors.”
He also gave the view that customers and suppliers are mutually dependent.
“Not only would one not be possible without the other, but each’s acts also depend on the other’s actions. Their relationship is one of interdependence. Farmers generate the food, fiber (cotton for clothing, for example), and some fuel (ethanol and other biofuels) that we depend on. These raw materials are brought to market by a wholesaler/retailer, where supply and demand combine to set prices. The market price of agricultural commodities is determined by the willingness and ability of customers to purchase a commodity (demand) and the willingness and ability of sellers to create and sell the product (supply).”
He added that demand for agricultural items is also influenced by social factors.
“Some customers, for instance, would rather purchase food that has been labelled and produced in a particular manner, such as organic milk, grass-fed cattle, free-range eggs, etc. Demand is also influenced by a market’s buyer population. A market’s potential for demand increases with the number of purchasers present. Potential demand also depends on consumer income. A rise in consumer income can result in higher consumption of certain products. In a similar vein, a drop in consumer income may result in a reduction in the intake of non-essential foods. Demand is also influenced by connected commodities’ availability. There are similar alternatives for many agricultural crops. For instance, depending on price, availability, and personal desire, a customer may choose to drink soy, almond, or rice milk instead of cow’s milk.”
