Nadaleen Singh

As the de­bate rages on about food prices and the ex­tent to which the rate of in­fla­tion is ex­pect­ed to be in­flu­enced by the Gov­ern­ment's de­ci­sion to re­move the val­ue added tax (VAT) from some 7,000 food items, the Busi­ness Guardian con­tin­ues to mon­i­tor the price of ba­sic food items for the last 21 months - be­tween Feb­ru­ary 2011 and Oc­to­ber 2012.

Over­all, food prices in Feb­ru­ary 2011 to­talled $226.49 and this can be com­pared Oc­to­ber 2012 of $254.94. In the 22 months, there was an in­crease of food prices by $28.45. Ac­cord­ing to fig­ure 1, a pack of chick­en legs, brown sug­ar and Crix have all in­creased if cur­rent prices are com­pared to Feb­ru­ary 2011 prices. The price hike of a pack of chick­en legs rep­re­sents an in­crease of 23.82 per cent, while the hike in the price of brown sug­ar rep­re­sents a 61.63 per cent in­crease, and Crix bis­cuits have in­creased by 40 per cent.

While the price of some food items in­creased, there were oth­er food items which were priced at Feb­ru­ary 2011 prices. These in­clude a 2 kilo­gramme of flour, frozen whole chick­en and one kilo­gramme of potatos. Cheese re­mained at the Feb­ru­ary 2011 price of $42.99 per kg.

The prices on most food items have in­creased by 12.56 per cent when com­pared to 2011. What is con­tribut­ing to in­crease in food prices? With the Unit­ed States ex­pe­ri­enc­ing a drought like­ly to af­fect its live­stock and crops and the in­sta­bil­i­ty in the Eu­ro­zone, clear­ly, T&T is not unique to de­vel­op­ments in its ex­ter­nal en­vi­ron­ment.

Stake­hold­ers have their say

Dur­ing the Peo­ple's Part­ner­ship pre-bud­get ral­ly at Mid Cen­tre Mall, Ch­agua­nas, on Sep­tem­ber 29, Prime Min­is­ter Kam­la Per­sad-Bisses­sar an­nounced that ef­fec­tive No­vem­ber 15, the 15 per cent VAT on cer­tain food items will be re­moved.

Last Thurs­day, Wendy Lee Yuen, chair­per­son of the Prices Coun­cil, met with Trade and In­dus­try Min­is­ter, Vas­ant Bharath to clar­i­fy is­sues about the in­crease in food prices. In an in­ter­view, Lee Yuen said is­sues such as tar­iffs on im­port­ed food were dis­cussed.

"It is dif­fi­cult to dif­fer­en­ti­ate items with the Cus­toms tar­iff be­cause the tar­iff num­bers would cov­er a whole cat­e­go­ry of goods. For ex­am­ple, if you want ched­dar cheese to be VAT free, all the (dif­fer­ent types) of cheese fall in­to the sim­i­lar tar­iff.

"In the face of that ar­gu­ment, we couldn't very well put up ob­jec­tion be­cause the thing has to be work­able. The min­is­ter point­ed out that the in­tent of the Prime Min­is­ter's state­ment is to make food more af­ford­able," Lee Yuen said.

The Prices Coun­cil is ex­pect­ed to be­gin its mon­i­tor­ing of food prices in ear­ly No­vem­ber and af­ter No­vem­ber 15 so that prices can be com­pared. Asked if the coun­cil has the re­sources to fa­cil­i­tate such an ex­er­cise, she said Bharath has pledged his sup­port for the ex­er­cise and would as­sist in pro­vid­ing staff.

"The Con­sumer Af­fairs Di­vi­sion is do­ing a sur­vey of su­per­mar­ket prices pre-VAT re­moval and they will be go­ing back af­ter No­vem­ber 15 to check and re­port on those prices. What was sig­nif­i­cant is that the Su­per­mar­kets' As­so­ci­a­tion of T&T?al­so took a de­ci­sion that wher­ev­er there is an al­ter­na­tive sup­pli­er, if a dis­trib­u­tor rais­es the price of a prod­uct, they will not pur­chase, they would go to the al­ter­na­tive sup­pli­er to get it at a cheap­er price," she said.

Pressed fur­ther on the is­sue of staffing for the Prices Coun­cil, Lee Yuen said: "The On The Job Train­ing pro­gramme, where young mem­bers who have now en­tered the min­istry and they need to find jobs, it's not a prob­lem to em­ploy them to as­sist. They would be go­ing out in­to the su­per­mar­kets and col­lect­ing prices for the Con­sumer Af­fairs Di­vi­sion."

Mon­i­tor­ing food prices

Mem­bers of the pub­lic would get ac­cess to the in­for­ma­tion which the Prices Coun­cil col­lects as it would be avail­able on the Min­istry of Le­gal Af­fairs' Web site. While the Prices Coun­cil would be mon­i­tor­ing food prices, Lee Yuen said mem­bers of the pub­lic al­so have their role to play in mon­i­tor­ing by keep­ing and com­par­ing their gro­cery bills.

Ver­non Per­sad, pres­i­dent of the Su­per­mar­kets As­so­ci­a­tion of T&T said it is a "sig­nif­i­cant chal­lenge" to main­tain food prices as su­per­mar­ket own­ers op­er­ate in a mar­ket with "ex­treme volatil­i­ty." The volatil­i­ty, ac­cord­ing to Per­sad, orig­i­nates at the lo­cal and in­ter­na­tion­al mar­kets.

Per­sad sug­gest­ed there should be an in­de­pen­dent body mon­i­tor­ing the prices that im­porters, food man­u­fac­tur­ers and the lo­cal agri-sec­tor of­fer to the pub­lic. He said such an in­de­pen­dent body would pe­ri­od­i­cal­ly pub­lish prices so con­sumers can be aware of the chang­ing price of a prod­uct.

Re­gard­ing price goug­ing which su­per­mar­ket own­ers have been ac­cused of, Per­sad wants this to be in­ves­ti­gat­ed to see whether cit­i­zens' claims are le­git­i­mate. Food Pro­duc­tion Min­is­ter De­vant Ma­haraj said T&T is very vul­ner­a­ble to fluc­tu­a­tions in the in­ter­na­tion­al mar­ket in a va­ri­ety of ar­eas, in­clud­ing the prices of feed­stock. "There are a num­ber of ar­eas that make us vul­ner­a­ble and we are try­ing to ad­dress that by try­ing to have a much more or­gan­ised ap­proach to agri­cul­ture."

Bal­li­ram Ma­haraj, chief ex­ec­u­tive of­fi­cer, ADM Dis­trib­u­tors, said su­per­mar­ket own­ers and dis­trib­u­tors should not be blamed for the in­crease in food prices as they have to re­spond to fluc­tu­a­tions in pric­ing in­ter­na­tion­al­ly and there­fore need to set prices ac­cord­ing­ly.

Com­ment­ing on the an­nounce­ment by Per­sad-Bisses­sar that there would be no VAT on food items, Ma­haraj said re­moval of VAT should be done on a phased ba­sis so the con­sumer would have all the in­for­ma­tion need­ed. "The Gov­ern­ment should take its time and re­move VAT from food so that the pub­lic would more in­formed. The items must be clear­ly de­fined to pre­vent con­fu­sion," Ma­haraj said.

Econ­o­mist In­dera Sage­wan-Al­li said the drought in the US and in­sta­bil­i­ty in the Eu­ro­zone are like­ly to keep food prices high. She said fu­el prices ris­ing mean food prices would al­so go up. Re­gard­ing no VAT on food items, Sage­wan-Al­li said it is hard­ly like­ly this in­tia­tive would de­crease food prices since busi­ness­es could ar­gue their cost of op­er­a­tions have in­creased.

Price list (Fig­ure 1) Hi­Lo Food Stores

FOOD ITEMS FEB­RU­ARY 2011 DE­CEM­BER 2011 OC­TO­BER 2012

2 KG FLOUR 12.79 12.49 12.79

2 KG RICE 12.99 16.99 15.99

225 GRAM POW­DERED MILK 12.99 13.69 13.69

500 ML COOK­ING OIL 7.99 0.69 10.69

1 KG CHEESE 42.99 51.99 42.99

1 PK FROZEN CHICK­EN LEGS 16.79 17.99 20.79

1 PK FROZEN BREAST 16.49 17.29 19.99

1 PK FROZEN THIGHS 12.99 13.29 15.79

FROZEN WHOLE CHICK­EN 29.99 29.99 29.99

1 KG BROWN SUG­AR 6.49 6.49 0.49

1 KG ONIONS 5.49 5.49 5.99

227 GRAM TUB OF MAR­GARINE 8.59 10.69 7.99

1 PK OF CRIX 10.00 11.50 14.00

750 ML PK KETCHUP 4.19 3.99 4.69

400 GRAM MAC­A­RONI 3.99 3.99 4.59

1 KG POTA­TOES 5.99 4.99 5.99

1 LOAF BREAD 10.75 11.50 11.50

400 GRAM LENTIL PEAS 4.99 6.29 6.99

GRAND TO­TAL 226.49 249.34 254.94