Champagne tastes, mauby pockets
HIGH FOOD PRICES have been discussed without acknowledging that prices for any traded good are arrived at through a complex combination of processes that not only include costs of production but other considerations related to the particular set of social and policy dynamics in a society.
First, the social dynamics have a clear influence on the policy tools that are used to address economic issues seeking certain outcomes that will benefit the society.
Too high increases in food prices undermine living standards and also the competitiveness of the country.
However, where products are produced in Barbados and the raw materials and inputs are sourced locally, there is an opportunity to mitigate high food prices. The fact that every product produced in the country has some imported content therefore means that prices cannot, in many instances, be kept at the same level butcan be moderated by developing a greater reliance on food items produced locally.
One of the major determinants of the impact of such an approach is the consumption patterns of households in the country, which determine the commodities that are bought by consumers.
A cursory examination of the basket of goods of most consumers in Barbados indicates a significant number of items we do not produce in Barbados.
Hence, there is the challenge of changing consumer tastes that seem not to prefer products produced wholly or partially in Barbados. In fact, the selection of commodities has not been done with local food manufacturers [in mind] but with the misguided view that a price cap on a food item will solve the problem of price increases.
This approach has scant regard for the economics of production.
In an environment where costs are increasing externally and internally, something has to give or the bottle will pop. Hence, trying to control price increases in this manner will be easily frustrated by both external and internal realities because basic costs such as energy represents a critical cost of production, labour is another factor in addition to the costs of raw materials. Therefore, the answer would be to concentrate on producing food items with a high proportion of inputs from local sources and a significant multiplier effect on activities in the economy.
The importance of a carefully crafted programme to influence consumer tastes cannot be underestimated because the production of commodities is [determined by] demand. [Sadly,] we have always been an economy plagued with champagne tastes and mauby pockets, reflected in the various items on supermarket shelves.
An examination of many imported items revealed that their benefits can seriously be questioned, Many of the processed items being imported present challenges for Government in terms of health issues and raw agricultural products can [introduce] foreign pests and diseases.
Consequently, a programme that aggressively promotes locally produced food items would not only create a larger domestic market for locally produced food items but would also spur investment in the agriculture and manufacturing sectors.
The greater investment would see more locally produced agricultural products and in the immediate term should produce staple commodities, including yams, breadfruit, cassava and sweet potatoes.
Enterprises that further process local agricultural commodities should have a better policy environment to compete against foreign producers.
This strategy will not keep prices down as referred to in the question because that is not practical in the current environment, but would stimulate production of locally produced goods.
This is a plus because it has been shown that locally produced agricultural products have maintained more stable prices than imported commodities.