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Soaring food prices


Recently, there has been a dramatic increase in the price of wheat, maize, oil seeds, rice, poultry, eggs and other commodities. Particularly striking has been the spurt in wheat prices which have quadrupled over the last year. Several factors have been responsible for these increases.{{more}} The most obvious has been the rise in the price of oil, which impacts severely on the cost of production and transportation of the items under reference. A second reason is the increase in demand for these items in the very big developing countries, China and India. China’s 1_ billion people have, over the last ten years, increased their consumption of meat and soybeans by almost half. Thirdly, the use of many crops as bio fuels, as well as crop failures in some producing countries, has lead to a decrease in the availability of these items for food consumption. Twenty (20) per cent of the maize produced in the USA and sixty (60) percent of the vegetable oils produced in Europe are now used as bio fuels. Finally, the crisis in the sub-prime housing market has not been without its impact. That crisis has caused investors to lose faith in bonds and shares and to put their money instead into commodities. Such speculative plays also help to drive up prices.

The price increases are likely to hit food importing developing countries like St Vincent fairly hard. Firstly, in a poor country, a greater portion of people’s earnings goes on food than in a rich one. Secondly, many big developed countries can find a silver lining in the crisis. While the price rises will hit their consumers, their farmers will benefit from them. In SVG, we do not produce these foods so our farmers will not be benefiting from the increase .Our people however, import and consume these basic foods and so will have to bear the increases. The main crop we produce, bananas, is not an essential food .In any case, the supply far exceeds demand, and high cost producers, such as ourselves, find it difficult to maintain a foothold in the market.

How then does a small country like ours cope in a situation of this kind? One suggestion is to join with other Caricom members to reduce the Common External Tariff on food. One suspects, however, that this would not have very much impact because the tariffs on food items are already very low. Countries like Russia and Venezuela have decided to subsidise food prices. These countries, however, have resources such as oil, which can provide funds for the subsidies. In St Vincent, we are in no position to do this sort of thing. Yet another approach has been to introduce price controls. The problem with this is if you try to keep the price down when you are faced with increases in international prices then you will quickly get shortages, as merchants will not keep importing items on which they can make no money.

An alternative way to tackle the problem is to try producing some of these basic food items ourselves. I have recently been making the case for coconut oil (cooking oil) production. But we may already have shot ourselves in the foot on this one. The standard advice usually given when establishing such factories is that a plantation should be attached to them. The plantation becomes the bedrock for supplying the raw material with additional supplies bought in from small farmers. Depending solely on small farmers for supplies makes it doubly difficult for a factory to operate profitably. Unfortunately, we have already got rid of our plantations.

The size of plantations involved in some oil seed factories is mind boggling. In Malaysia, I visited two palm oil plantations. The first, described as small, was 90,000 hectares. The second was 200,000 hectares and planning to merge with another which was also 200,000 hectares. We in SVG, with a total area of 38,900 hectares, are forever talking of land reform and property owning democracy, meaning continuously subdividing the land as if you can base an agricultural economy on a set of house plots.

The soundest advice we ever received on land tenure was given nearly a century ago when the Imperial College of Tropical Agriculture was set up in Trinidad. It was the premier institution of its kind in the world with some of the finest minds in the business. SVG became its godchild. They noted that the land reform carried out in St Vincent around 1901 had resulted in the land being subdivided into too many small plots. They advised that the Government should in fact run the plantations, sharing the benefits with the workers. In other words, get rid of the planters but keep the plantations. We did this for a while on what were known as the Land Settlement Estates; however, we resumed the old policy of subdividing in the late eighties and nineties. Obviously, we could not have kept all the plantations as land settlement estates, for as the island’s population grew people would need land. But we should at least have kept Richmond and Orange Hill as land settlement estates. Can anyone really say that what is now happening on these lands constitutes a boost in agricultural production? I believe a lot of the land is not even cultivated.

Many of us like to think that in advocating land reform we are following Fidel Castro. But Castro never broke up the plantations, and in Cuba plantations are generally 30,000 acres and upwards compared with Richmond Vale or Orange Hill which used to be about 4,000 acres each.

Perhaps the way we are going to cope with the rise in food prices is for as many of us as possible to grow some food on our house plots. Else where I have referred to this as backyard gardening.