Managing Inflation

The Central Bank’s release in March 2011 stated that headline inflation, measured by the 12-month increase in the Index of Retail Prices, declined to 10.7 percent from 12.5 percent in the previous month.  Food inflation, although it slowed, continued to be the major driver of this headline inflation.

Despite this decline, inflation still remains high and we cannot afford to become complacent.  Right now we are enjoying a relatively mild dry season which is favourable to farmers, but it is reasonable to assume that with the onset of the rainy season just two months away – and scientists predict it will be an active one for hurricanes – the annual floods will begin, with the concomitant increases in the cost of fresh produce, perhaps once more driving up inflation.

This is another reminder that due and urgent attention must be given to our local agricultural sector.  The consequences of inefficient and inadequate local food production affect the entire country, probably as much as the energy sector, albeit the impact is different.  At a time when the local business sector still experiences queues for purchasing foreign exchange to meet their commitments, importation of food in large quantities is not the answer.

The Ministry of Agriculture was renamed the Ministry of Food Production,  signaling the intention to convert primary crops into food, with the intention of either reducing the country’s food import bill or increasing its export of certain food products.

It would seem however that the agriculture sector needs to attract new talent and source new investment to fund modern techniques in farming that make crop management independent of climatic conditions and less susceptible to the vagaries of weather conditions.  These techniques and know-how are available around the world, and we must engage with the experts to get advice relevant to our conditions.  Although the Ministry of Food Production has begun work in earnest on reforming the agricultural sector, the Government’s promise to introduce incentives for investment to encourage sustainable development in the sector has not materialized to date.

The marketing of agricultural produce is also a critical factor to be considered since the off-take must be assured as spoilage and market gluts can only be avoided by proper planning and co-ordination and efficient marketing channels.

The last budget promised a comprehensive reform of the agencies and infrastructure which supports this sector, and a great deal has been covered in terms of developing a strategic plan, including several meetings with stakeholders, however, we are still awaiting the final draft of this Plan for the Sector, and the start of implementation.

Trinidad & Tobago is also home to many domestic products which have tremendous export market potential, and which are uniquely suited to production in T&T because of our local environmental conditions such as cocoa, tilapia, chadon beni and green pineapples.  Production and export of such items are critical to offset the foreign exchange to be used to import certain foods, as this is expected to continue for some time until the balance shifts between locally produced and imported food.

Government has an obligation to the people of T&T to ensure that food production and food importation are planned and balanced, and managed in a way that does not allow us to go down the slippery slope of high inflation once again.