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Saturday, July 5, 2025

Pay more to eat; Food prices on the rise

by

1275 days ago
20220105

If you think food prices are high now, ex­pect them to con­tin­ue to rise over the next year as the coun­try reels from im­port­ed food in­fla­tion.

Al­ready we re pay­ing high­er prices for flour, bread, cakes and even beer and there is more to come this year.

This from pres­i­dent of the Su­per­mar­ket As­so­ci­a­tion of T&T Ra­jiv Diptee who not­ed that the cost of im­port­ed as well as lo­cal­ly man­u­fac­tured goods will con­tin­ue to in­crease.

He ex­plained that do­mes­ti­cal­ly, man­u­fac­tur­ers are con­stant­ly faced with high­er costs of op­er­a­tion aris­ing from the fall out of the COVID-19 pan­dem­ic which even­tu­al­ly trick­les down to the con­sumer.

And as this coun­try re­mains im­port de­pen­dent, Diptee said very lit­tle can be done to ad­dress this.

“From all in­di­ca­tion food prices are go­ing to take us through this year be­cause there is no quick fix for the pan­dem­ic. Not on­ly the cost of op­er­a­tion but al­so the cost of every­thing in­clud­ing pack­ing, even wax pa­per has gone up,” Diptee added.

He not­ed there con­tin­ues to be alarm­ing in­creas­es in the cost to clear con­tain­ers, adding that sup­pli­ers could no longer ab­sorb these high­er rates.

“Freight in­sur­ance and the cost of ship­ping con­tin­ue to in­crease. Right now a con­tain­er can cost as much as up to US$22,000 which is up from US$4,000 in Oc­to­ber 2019. There has been an alarm­ing in­crease in the cost of ship­ping,” he added.

Last month, in its lat­est mon­e­tary pol­i­cy re­port, the Cen­tral Bank not­ed that food in­fla­tion surged to 7.6 per cent (from 5.8 per cent in Sep­tem­ber) and is like­ly to rise fur­ther giv­en the sit­u­a­tion in glob­al grain mar­kets.

Econ­o­mist Dr Vaalmik­ki Ar­joon ar­gued the pan­dem­ic has ex­posed in­her­ent weak­ness­es in glob­al food pro­duc­tion and dis­tri­b­u­tion, which con­tin­ue to threat­en glob­al food se­cu­ri­ty, by in­creas­ing the cost of feed­ing the world.

He cit­ed that the Unit­ed Na­tions Food and Agri­cul­ture Or­gan­i­sa­tion (UN­FAO) food price in­dex that showed prices in­creased by 27.3 per cent be­tween No­vem­ber 2020 and 2021.

Ar­joon point­ed out that glob­al prices for sev­er­al sta­ples surged in the last year, with in­creas­es in meat by 17.6 per cent, di­ary by 18.8 per cent, sug­ar by 37.9 per­cent, wheat by 18 per cent, soy­bean by 54 per cent, and veg­etable oil by 51.4 per cent, just to name a few.

Ac­cord­ing to Ar­joon, such price in­creas­es large­ly oc­curred due to the surge in glob­al spend­ing and con­sump­tion, as economies re­opened, de­mand lev­els quick­ly re­bound­ed since many peo­ple were able to ac­quire jobs and those who held back spend­ing dur­ing the lock­downs ac­cel­er­at­ed their con­sump­tion lev­els to make up for the loss in spend­ing in 2020.

How­ev­er, he said this hefty de­mand is out­weigh­ing the pace of pro­duc­tion, pro­mot­ing short­ages and is ex­pect­ed to con­tin­ue well in­to 2022, caus­ing fur­ther price in­creas­es.

No­tably, Ar­joon added, wheat prices in­creased glob­al­ly, giv­en de­clines in pro­duc­tion and in­ven­to­ries from key pro­duc­ers in­clud­ing the US, Cana­da and Rus­sia against a ris­ing glob­al de­mand.

“While there is like­ly to be some in­crease in pro­duc­tion from Aus­tralia, the EU and Ukraine, this over­all short­age may con­tin­ue well in­to 2022, with glob­al ex­port de­mand pro­ject­ed to grow by 1.8 per cent, while in­ven­to­ries es­ti­mat­ed to fall by 2.2 per cent.

“Sug­ar pro­duc­tion is like­ly to re­bound by over two per­cent af­ter a three-year con­sec­u­tive de­cline but will again fall short of glob­al de­mand, not on­ly due to the rise in con­sump­tion ac­tiv­i­ties but al­so since Brazil al­lo­cat­ed part of its out­put to ethanol pro­duc­tion,” Ar­joon said.

Last year, ad­verse weath­er con­di­tions al­so af­fect­ed sug­ar pro­duc­tion in Brazil while prices al­so in­creased giv­en the ap­pre­ci­a­tion of its cur­ren­cy rel­a­tive to the US dol­lar.

Fur­ther, Ar­joon said the African Swine Fever has re­duced the sup­ply of pork while the avail­abil­i­ty of land and feed­stock in­gre­di­ents for cat­tle has low­ered the sup­ply of di­ary world­wide.

“These are just some of the fac­tors that in­ten­si­fied food price in­creas­es over the last year, which is re­flect­ed in food prices lo­cal­ly in the su­per­mar­kets, giv­en the in­ten­si­ty of our im­port ap­petite for for­eign food items,” he not­ed.

Go­ing for­ward, Ar­joon said T&T can ex­pect these in­creas­es to be com­pound­ed fur­ther by short­ages caused by de­lays at ma­jor in­ter­na­tion­al ports; se­vere freight charges; high­er black mar­ket forex fees for im­porters who can­not ac­cess ad­e­quate forex from au­tho­rised deal­ers; high­er en­er­gy prices; fer­tilis­er costs; and cus­toms over­time and port rental charges.

The UWI lec­tur­er said this will ren­der it more ex­pen­sive for house­holds to put food on the ta­ble, pres­sure their bud­gets al­ready strained by the pan­dem­ic, and fur­ther ex­ac­er­bate pover­ty lev­els lo­cal­ly.

He not­ed that with glob­al short­ages and price hikes, many in T&T last year switched their de­mand to lo­cal al­ter­na­tives.

For in­stance, there was an uptick in the de­mand for lo­cal poul­try and dairy items caus­ing price in­creas­es, giv­en the de­cline in im­ports of these items, he cit­ed.

How­ev­er, Ar­joon said the hikes in the cost of pro­duc­tion, in­clud­ing fu­el costs and ad­verse weath­er con­di­tions which dis­rupt­ed the sup­ply of veg­eta­bles and fruits al­so con­tributed to price in­crease.

“Food proces­sors would have al­so seen an in­crease in the price of the in­puts used in the pro­duc­tion process, not on­ly food in­put used as in­gre­di­ents, but al­so ma­chin­ery and equip­ment, which would have com­pound­ed price in­creas­es lo­cal­ly,” he added.

And while VAT re­movals suc­cess­ful­ly lim­it­ed the ex­tent of price in­creas­es, the prices of many com­modi­ties pop­u­lar­ly con­sumed by the most house­holds were high­er in De­cem­ber 2021 rel­a­tive to De­cem­ber 2020, Ar­joon said.

For in­stance, the av­er­age su­per­mar­ket prices in cen­tral and north Trinidad in­creased for cer­tain brands of mar­garine and full cream milk by 12.12 per cent and 3.11 per cent re­spec­tive­ly, eggs by 5.39 per cent, mac­a­roni by 18.88 per cent, loose red beans by 9.45 per cent, chan­na by 12.31 per cent, and pota­toes by 11.61 per cent to name a few, Ar­joon point­ed out.

Ad­di­tion­al­ly, he said with wheat im­porters NFM and Nu­trim­ix in­tend­ing to in­crease flour prices, this will ex­ac­er­bate the al­ready high cost of liv­ing

“Every­one in­clud­ing busi­nes­sown­ers and their house­holds will be faced with this in­creased cost of liv­ing due to in­creased flour prices--they will again trans­fer this high­er cost on­to con­sumers, which will in­flate prices even more, not just for items for which flour is used to pro­duce but al­so oth­er con­sum­ables that are used dai­ly.

“This will prompt work­ers in the pub­lic and pri­vate sec­tor to call for high­er wages - which in turn, will com­pound busi­ness costs, lead­ing to even high­er prices,” Ar­joon ad­vised.

Go­ing for­ward, he rec­om­mend­ed that lo­cal man­u­fac­tur­ers, es­pe­cial­ly food proces­sors, should con­sid­er us­ing hedg­ing strate­gies, to lock-in spe­cif­ic prices from sup­pli­ers of raw ma­te­ri­als, such as agri­cul­tur­al com­modi­ties used in the food pro­cess­ing in­dus­try etc, there­by pro­tect­ing them­selves from hav­ing to pay high­er prices in fu­ture if there are fur­ther price in­creas­es on the glob­al mar­ket.

This, Ar­joon added, will in­hib­it price in­creas­es for lo­cal con­sumers.

Fur­ther, he not­ed the US is like­ly to in­crease in­ter­est rates in 2022 to curb some of their ex­cess spend­ing and their 6.8 per cent in­fla­tion – this should help to re­strain price in­creas­es of im­port­ed goods.

More­over, he said, lo­cal farm­ers have ben­e­fit­ed from some in­creased labour pro­duc­tiv­i­ty and a low­er wage bill, through hir­ing some Venezue­lan work­ers.

Oth­ers, he added, have em­braced green­house tech­nol­o­gy, so their pro­duc­tion would not be af­fect­ed by weath­er con­di­tions.

These fac­tors, Ar­joon said can as­sist in low­er­ing some costs and in­creas­ing some pro­duc­tion, but such ben­e­fits are still far out­weighed by the in­crease in costs caused by the glob­al price hikes, sup­ply short­ages and trans­porta­tion costs.

Lec­tur­er at the Fac­ul­ty of Agri­cul­ture at UWI Dr Ronald Roop­nar­ine added im­port­ed agri­cul­tur­al in­puts such as fer­tilis­ers and pes­ti­cides as con­trib­u­tors to in­creas­es in lo­cal pro­duce.

Among the mit­i­ga­tion mea­sures he sug­gest­ed are im­proved tech­nol­o­gy and mech­a­ni­sa­tion to­wards cli­mate re­silient pro­duc­tion, not­ing that dig­i­ti­za­tion of agri­cul­ture and greater in­te­gra­tion of tech­nol­o­gy in­to agri­cul­tur­al op­er­a­tions can op­ti­mise agri­cul­tur­al pro­duc­tion and out­put.

Roop­nar­ine ex­plained that one of the most im­por­tant is­sues in the agri-food in­dus­try and its sup­ply chain is by-prod­ucts, treat­ed as wastes and dis­card­ed im­me­di­ate­ly.

He sug­gest­ed that im­ple­men­ta­tion of a cir­cu­lar econ­o­my could pre­vent val­ue loss as such waste can be used for oth­er pur­pos­es.

Roop­nar­ine al­so ad­vised that there be a re­vised food/agri­cul­tur­al mod­el to not on­ly sup­port pri­ma­ry agri­cul­tur­al pro­duc­ers, but al­so fa­cil­i­tate the emer­gence of new, val­ue-added, agro-pro­cess­ing in­dus­tries, along the whole food sup­ply chain.


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