In the last six months, there have been steep in­creas­es in the prices of im­port­ed food items.

The price of pig­tails, ac­cord­ing to im­porters, sky­rock­et­ed by 74 per cent, canned corned beef went up by 36 per cent, yel­low split peas and lentils rose by 34 per cent, brown sug­ar climbed by 25 per cent, and canned tu­na in­creased by 15 per cent.

Oth­er food items are set to in­crease by up to 50 per cent in some cas­es when com­pared to last year’s prices. The con­sen­sus among in­dus­try stake­hold­ers is that prices will not stop ris­ing any­time soon. Con­sumers will now have to dig deep­er in­to their pock­ets to pur­chase even the ba­sic food items from whole­salers and re­tail­ers.

A short­age of ship­ping con­tain­ers in­ter­na­tion­al­ly and a steep in­crease in freight cost to ship these items lo­cal­ly since the COVID-19 pan­dem­ic start­ed are the key fac­tors in ris­ing food prices, im­porters said. This is com­pound­ed by the peren­ni­al prob­lem of a lack of for­eign ex­change.

for­mer pres­i­dent of the Su­per­mar­ket As­so­ci­a­tion of T&T (SATT) and CEO of Ari­ma Dis­count Mart Bal­li­ram Ma­haraj in a let­ter to Min­is­ter of Trade Paula Gopee-Scoon dat­ed Ju­ly 21 list­ed the per­cent­age hike in food items and warned about a loom­ing cri­sis in T&T if noth­ing is done to fix the prob­lem.

He told the Sun­day Guardian that T&T is in "deep trou­ble" and could face a "fright­en­ing sit­u­a­tion" like Haiti and Venezuela in terms of food in­se­cu­ri­ty if ur­gent mea­sures are not tak­en.

On crit­i­cal is­sues in­volv­ing ship­ping, Ma­haraj said, "With­in re­cent times ship­ping agents have re­quest­ed pay­ment for freight and Ter­mi­nal Han­dling Charges at the des­ti­na­tion to be paid in US cur­ren­cy. Some agents were ac­cept­ing TT dol­lars at an in­flat­ed ex­change rate. How­ev­er, with­in the last week, they are all re­quest­ing that pay­ments be made in US cur­ren­cy. Any fail­ure to com­ply with this man­date re­sults in ship­ments not be­ing re­leased and in­cur­ring de­mur­rage charges."

This, he said, has re­sult­ed in an al­most 300 per cent in­crease in freight rates since last year and it is con­tin­u­ous­ly ris­ing. They have al­so been in­formed by sup­pli­ers that to get the full con­tain­ers on­to the ships on time, a pri­or­i­ty fee must be paid.

Ma­haraj said emp­ty con­tain­ers are al­so in­creas­ing­ly dif­fi­cult to lo­cate, "caus­ing fur­ther de­lays in get­ting sup­plies shipped around the world."

IMPORTED FOODS PRICE INCREASE

More than 60 per cent of the world's white sug­ar is shipped in con­tain­ers and it has be­come in­creas­ing­ly dif­fi­cult to source con­tain­ers for sug­ar ship­ments, Ma­haraj said.

"Sug­ar is not a pri­or­i­ty prod­uct for ship­ping lines as it is heavy but low val­ue, which means it can on­ly be shipped in 20ft con­tain­ers, not 40ft. Ship­pers pre­fer larg­er con­tain­ers as they of­fer more ca­pac­i­ty for the same han­dling cost," he added.

Sug­ar, how­ev­er, he said was an es­sen­tial item for our lo­cal man­u­fac­tur­ers pro­duc­ing ketchup, soft drinks, juices, etc. "There is no white sug­ar avail­able lo­cal­ly and sup­pli­ers can­not guar­an­tee or­der ar­rivals as it high­ly de­pends on the avail­abil­i­ty of ves­sels and emp­ty con­tain­ers."

Should this trend con­tin­ue, the small cot­tage in­dus­try man­u­fac­tur­ers will be jeop­ar­dised, he said in the let­ter. This could crip­ple lo­cal SMEs.

World pro­duc­tion lev­els on food sup­plies have de­clined due to the pan­dem­ic as coun­tries went in­to shut­down. Fac­to­ries and pro­duc­tion plants are ei­ther closed or op­er­at­ed with min­i­mum staff. The rip­ple ef­fect: fur­ther in­creas­es in prices.

"There is al­so a short­age of dairy prod­ucts in Aus­tralia and New Zealand. Milk pro­duc­ers are sell­ing milk pow­der high­er than the added val­ue prod­ucts such as cheese, but­ter and ghee for the months of Au­gust to Oc­to­ber. Sup­plies have been re­duced by over 75 per cent," Ma­haraj added.

From Be­lize, where Ma­haraj gets sup­plies of red beans and black eye peas, the Gov­ern­ment has in­struct­ed its peo­ple to hold all ex­ports on peas and beans as stocks are re­quired for do­mes­tic use due to the pan­dem­ic.

Ma­haraj be­lieves it is crit­i­cal for the Gov­ern­ment and food im­porters to hold mean­ing­ful dis­cus­sions on the im­pact of the pan­dem­ic on food that is now hang­ing over­head.

In the let­ter to the Trade Min­is­ter, Ma­haraj pro­posed an in­crease in lo­cal food pro­duc­tion as the on­ly so­lu­tion to high food prices and lim­it­ed sup­plies.

"We must de­vise a sys­tem for Trin­bag­o­ni­ans to start to get a taste in our pal­lets for the food we grow. Maybe, if per­mit­ted by the Cari­com Trade Agree­ment, we can start with a sur­charge on all fan­cy items and the funds can then be fil­tered in­to the Min­istry of Agri­cul­ture for sub­si­dies on food pro­duc­tion through our farm­ers," he said in the let­ter.

Kumar Maharaj, CEO, Westside Supermarket

'Dis­trib­u­tors cut mar­gins, may have to dis­con­tin­ue some brands'

Ari­ma busi­ness­man Ku­mar Ma­haraj, whose com­pa­ny im­ports food items, ex­pects food prices to con­tin­ue "ris­ing rapid­ly" as in­ter­na­tion­al trade is ham­pered by the COVID-19 pan­dem­ic.

"We used to pay US $2,500 for a 20 ft con­tain­er from Aus­tralia, but it has now gone to US$12,000 and it is ex­pect­ed to go up again. It’s all about sup­ply and de­mand. There is a se­ri­ous de­mand and there is no sup­ply glob­al­ly. The car­go ships are more mov­ing to North Amer­i­ca and Cana­da," he said over a week ago.

Ma­haraj (Ku­mar), the agent for ched­dar cheese and ghee, and co-own­er of the Rain­bow brand of food prod­ucts such as tu­na, peas and pas­ta, said once in­ter­na­tion­al trade con­tin­ues to be af­fect­ed by the pan­dem­ic, the cost of all the prod­ucts that his com­pa­ny and oth­ers im­port would in­crease.

Pres­i­dent of the As­so­ci­a­tion of Food Dis­trib­u­tors of T&T Michael Se­heult, mean­while, agrees that price in­creas­es are not sim­ply re­strict­ed to T&T, but is a glob­al phe­nom­e­non and he does not ex­pect prices to fall any­time soon.

"Ris­ing prices are now a world­wide phe­nom­e­non caused by sev­er­al fac­tors re­lat­ed to COVID, first is a sharp in­crease in freight rates on all ship­ments orig­i­nat­ing in Chi­na and the Far East, in some cas­es as much as 400 per cent. In­ter­est­ing­ly a se­vere short­age of con­tain­ers is caus­ing this," Se­heult.

"Con­tain­ers are stuck at fac­to­ries where they can­not be of­floaded be­cause of lock­downs at the des­ti­na­tion. The same is hap­pen­ing at the ports world­wide for the same rea­sons. As a re­sult, ship­pers are forced to ‘bid’ for con­tain­ers, forc­ing up the price. This, in turn, is lead­ing to de­lays and short­ages of many in­puts to man­u­fac­tur­ing."

Speak­ing specif­i­cal­ly about T&T, he said be­cause of the short­age of US dol­lars in T&T’s bank­ing sys­tem, many dis­trib­u­tors are forced to pur­chase cur­ren­cy at high­er than bank rates or go out of busi­ness. This puts fur­ther up­ward pres­sure on prices.

"Dis­trib­u­tors have had to cut mar­gins, but as prices con­tin­ue to in­crease they now have to de­cide whether to in­crease prices or if in their opin­ion the mar­ket can­not bear an in­crease, dis­con­tin­ue those brands."

While he ex­pects the sit­u­a­tion to im­prove at some point, he does not see prices falling to pre-COVID lev­els in T&T.

Will things im­prove?

Se­heult said, As coun­tries open up and peo­ple be­gin to work again, the sit­u­a­tion should be­gin to sta­bilise as far as freight is con­cerned. Com­pe­ti­tion be­tween man­u­fac­tur­ers world­wide will have the ef­fect of slow­ing the rate of in­crease in prices and prices will again sta­bilise. Un­for­tu­nate­ly, in my ex­pe­ri­ence, prices may stop ris­ing at the present rate but I doubt they will drop to pre-COVID lev­els for some time to come.

"In the short term, prices will con­tin­ue to rise al­though at a slow­er rate, with the con­sumer ben­e­fit­ing from spe­cials and dis­counts as they (the con­sumers) sig­nal to the dis­trib­u­tors and su­per­mar­kets own­ers how much they are pre­pared to spend and on what.

"In the medi­um-to-long term prices should hold but the va­ri­ety now avail­able will be re­duced. Un­for­tu­nate­ly, I do not see prices on im­port­ed prod­ucts be­ing re­duced to pre-COVID lev­els un­less the con­sumer is pre­pared to ac­cept low­er qual­i­ty."

President of the Association of Food Distributors of T&T Michael Seheult

Peo­ple's sav­ings and dis­pos­able in­comes shrink­ing

Lo­cal­ly, the COVID-19 pan­dem­ic has forced thou­sands of busi­ness­es to close their doors leav­ing thou­sands of peo­ple un­em­ployed, with oth­ers work­ing re­duced hours and tak­ing home less pay. Ris­ing food prices are now adding to the ex­plo­sive cock­tail.

Com­pli­cat­ing the sit­u­a­tion, Pres­i­dent of SATT Ra­jiv Diptee said, is the fact that con­sumers are "out of sav­ings" af­ter a year of the pan­dem­ic which means they have lit­tle dis­pos­able in­come to spend on ba­sic food items. He said this has re­sult­ed in grow­ing theft in su­per­mar­kets as some are forced to turn to crime to sur­vive.

Diptee told the Sun­day Guardian that be­cause con­sumers’ sav­ings have evap­o­rat­ed and they are spend­ing less, it has im­pact­ed su­per­mar­kets’ bot­tom line.

He said be­cause con­sumers do not have much dis­pos­able in­come, su­per­mar­ket own­ers are be­ing "cau­tious" in how they pur­chase stock for the re­open­ing of schools, re­li­gious hol­i­days, and oth­er cal­en­dar events.

"We no­ticed that on the Mon­day when restau­rants re­opened there was no rush. That great­ly con­cerns us. From the op­er­a­tional point of view for busi­ness own­ers in­clud­ing su­per­mar­ket own­ers the con­cern is that you have to plan. Year on year, we have seen a 20 per cent to 25 per cent de­crease in rev­enue in su­per­mar­kets."

Diptee al­so said the de­cline in liv­ing stan­dards and less mon­ey in con­sumers’ pock­ets was cre­at­ing a new cul­ture among shop­pers where brand loy­al­ty is a thing of the past and most peo­ple now gen­er­al­ly pur­chase what they can af­ford.

"In some cas­es, peo­ple do not have the dis­pos­able in­come, oth­ers are not earn­ing at all, in some cas­es earn­ing less and trad­ing down where brand loy­al­ty is con­cerned. That’s a thing of the past as peo­ple are now look­ing for deals. So for high­er-end soap pow­der, cof­fee, for ex­am­ple, they are go­ing to trade down to ac­cess the cheap­er price points. I know a lot of su­per­mar­kets have loy­al­ty pro­grammes and deals for ded­i­cat­ed cus­tomers."

Supermarket Association President Rajiv Diptee.

ANISTO ALVES

An­oth­er symp­tom of a pop­u­la­tion with dwin­dling in­comes is theft in su­per­mar­kets which he said has ex­plod­ed over the last year as there is grow­ing pover­ty in the coun­try.

"They tar­get cof­fee, oil, ba­by milk, cheese, and oth­er high-val­ue items."

While he could not say what ex­act­ly mid­dle-in­come earn­ers were pur­chas­ing, he added that the trend among su­per­mar­kets now is "pan­dem­ic re­lief packs" which of­fer bar­gains to shop­pers who have less to spend.

He said "pan­dem­ic re­lief packs" come in dif­fer­ent price ranges such as $150, $250 and $500 and these in­clude items such as mac­a­roni which can cost up to $10 de­pend­ing on the size, two-litre soft drinks which cost be­tween $8 to $10, Chick­en Vi­en­na Sausages which cost $5 and more, peas and beans which costs less than $10, toma­to ketchup which can cost up to $10, 2 kg four which can cost be­tween $11 to $14 and sug­ar which cost be­tween $15 to $20. The most ex­pen­sive item is the oil and it is a two-litre keg which costs $38.

He said many of the items that mid­dle and low­er-in­come peo­ple buy tend to be sim­i­lar, but what sep­a­rates this are the "lux­u­ry items" which peo­ple with more mon­ey tend to buy no mat­ter what is go­ing on in the econ­o­my. He gave the ex­am­ple of jams, beef, and for­eign beer as some ex­am­ples of prod­ucts that peo­ple with mon­ey are con­tin­u­ing to buy.

"For the more ex­pen­sive meat cuts, this can go from $50 to $100 eas­i­ly. The for­eign beer can cost a few dol­lars more than the lo­cal. The items with the biggest price in­creas­es are oil, cheese, and dairy prod­ucts. The cheese we buy, the cost to buy them are ridicu­lous­ly ex­pen­sive and the rea­sons for that may be freight, ship­ping, and of course the COVID pan­dem­ic which has dri­ven glob­al food in­fla­tion. Food in­fla­tion is not just a lo­cal is­sue but a glob­al one."

SATT, he said, is aware of the grow­ing pover­ty and hunger in the coun­try and they have dis­trib­uted al­most 500 food ham­pers to the needy in the last month and they will con­tin­ue to play their part in feed­ing the poor.

Price loy­al­ty, not brand loy­al­ty

Ma­haraj (Ku­mar) told the Sun­day Guardian that as a su­per­mar­ket own­er he was able to ob­serve how shop­ping trends have changed.

"Peo­ple are on­ly buy­ing se­lect­ed items. They are not buy­ing whole­sale. If they used to buy four, they will now buy two. Brand loy­al­ty no longer ex­ists, on­ly price loy­al­ty ex­ists now. Peo­ple with fixed in­comes are look­ing for the best deals. It al­so de­pends on the mar­ket­ing strat­e­gy of the sup­pli­er."

He con­clud­ed that the pan­dem­ic is cre­at­ing "a new breed of con­sumers."

"These new con­sumers are very se­lec­tive about what they buy. They are con­trol­ling their spend­ing. They are mak­ing sure that they at least have food in their hous­es."

Com­par­i­son of some re­tail prices—Jan­u­ary 2021 com­pared to Ju­ly 2021

Pay­less Su­per­mar­ket, Port-of-Spain

Jan­u­ary Ju­ly

2kg pack of rice $19 $21 (based on brand)

9kg soap pow­der $60 $70

900 grammes bot­tle of oil $15 $18

Small tin of peas and beans $6 $8

Ma­haraj West­side, Ari­ma

Naisa Foil 75ft                               $25.25        $29.95

Mag­gi Co­conut Milk Pow­der 50g       $5.50      $5.95

Miss An­na Ar­row­root Flour 115g       $10.65       $11.25

Gul­lon Ce­reale Fruit Fiber 300g     $12.30      $13

Al­ways Ul­tra Thin Reg Wings 18s  $23.75      $26.95

Swiss Mayo 375ml                            $14.30      $15.30