Although the price of some food commodities like wheat, rice and oil has gone down globally, in T&T there are other factors responsible for the food prices not declining, says President of the Supermarket Association of T&T (SATT) Rajiv Diptee.
Some of the reasons include inflation in developed countries from which T&T imports and the rising costs of inputs into the production and sale of food items.
Diptee referred to a list of basic food items found in ordinary shopping carts that the SATT prepared. This list compares the food basket prices from March 2022 to March 2023.
“In T&T over the last 12 months, the major price increases were cheese but not as significantly. Other items like curry went up. Flour was a major culprit, especially Ibis flour. The price increases are there. It’s not only a T&T problem. If you look at grocery inflation in the US and the UK, it is somewhere between 12 per cent to 20 per cent in some instances. We can see this in some instances like eggs, poultry, and cheeses,” Diptee told the Business Guardian.
The Food and Agriculture Organisation (FAO) of the United Nations last week indicated that its global benchmark index of key commodities had declined for the 12th consecutive month.
In an April 7 release, the FAO reported the decline in the benchmark index of international food commodity prices in March.
However, the FAO’s chief economist Máximo Torero said while prices dropped at the global level, they were still very high and continued to increase in domestic markets which posed additional challenges to food security.
“This is particularly so in net food-importing developing countries, with the situation aggravated by the depreciation of their currencies against the US dollar or the Euro and mounting debt burden,” he said.
Diptee said although some international commodity prices are coming down, there are a “plethora of issues” that have continued to cause local food prices to go up, which includes food imported from countries like the USS.
US exports of processed food products to T&T include food preparations, non-alcoholic beverages, processed/prepared dairy products, fats and oils, snack foods, prepared/preserved meats, chocolate and confectionery and pasta and processed cereals.
“The US is experiencing a lot of inflation and remember T&T primarily imports from North America. We have products from Europe but a lot of our foodstuff comes from the US. Some importers have said if I were to check the commodity and mercantile exchange and what some of the prices are right now, you will find it is a lot higher than the price increases that we are passing on. They are suggesting to me that they are absorbing some of the price increases. We have chosen between the value chain between stores and distributors to absorb these costs. We know we can’t carry it to the market at those prices.”
He also blamed the rising cost of packaging that impact the prices of some food items.
“Do you know that the prices of plastics and pallets have all gone up? When you look at the inputs for production, when you look at fertilisers, those prices have gone up. So, although the commodity market is getting softer, those items have not yet come down. You will also see a lag time, let’s say the National Flour Mills, can purchase the cheaper wheat to make the flour but they may have had prior contracts in place for a certain period to make sure that they were getting the wheat in the first place.
“Then it has to go through processing, manufacturing, and packaging. Everybody in the industry has told me those prices have gone up significantly.”
Despite the constant increases in food prices, Diptee is optimistic that there will be a “softening” of prices locally as the year progresses.
“It’s happening globally but it’s taking its time. It’s like removing a pressure valve, you need to remove all the steam that comes out and then we will see prices cooling. If that war wraps up in Europe, you will see prices cooling much faster. It would impact on fertilisers and packaging and those other inputs.”
According to data from the Central Statistical Office (CSO) all prices in T&T increased by an average of 7.51 per cent in February 2023 compared with prices a year earlier. That is a decline from the 8.32 per cent increase in the price of the all-items index in January.
Contributing to the moderation in the headline inflation rate was the reduction in the rate of increase of food and non-alcoholic prices in February 2023 compared to January 2023.
The average price of food and non-alcoholic beverages in T&T was higher by 13.77 per cent in February 2023 compared with February 2022. Prices of food and non-alcoholic beverages in January 2023 were higher by 17.33 than prices in January 2022.
Demand and Supply
Economist Dr Ronald Ramkissoon told the Sunday Business that it would be wrong to say that there is an increase in all food products.
“Look at prices in the market like tomatoes, cucumbers and so on. I go to the market and the grocery as well and I observe closely that some prices have come down and there are some that the increases are not as large as they used to be. There is not an across-the-board decline. There are several factors affecting prices. T&T is a major importer of food and if the price of a product in a country falls you must factor in shipping and insurance costs. There is also a lag in respect of when prices hit the local market. One would hope that importers would pass on any reduction in costs to the retailers and finally to consumers. It is something the Ministry of Trade is monitoring closely.”
He said basic supply and demand also determine prices and consumers must also consider locally produced goods over those that are imported.
“It is not only the producers and importers that affect prices but also the consumers as well. The prices are the outcome of what the consumer does and what the suppliers do. If the prices of imported items are expensive and there are domestic substitutes for some of these, and people choose not to eat more ground provisions but choose imported flour and rice, then there will be a problem.
“So the prices of these foreign products will not easily come down. So, consumers also have a responsibility to themselves in respect of what they eat. T&T also needs to do more for domestic food production.”
