The World Food Crisis Comes Home To Trinidad and Tobago

The upsurge in world food prices continues to be a worrying phenomenon, particularly for developing and emerging economies, in light of the possible socioeconomic impact on poverty, inequality, domestic inflation and the balance of trade.

In Trinidad and Tobago, the food import bill has doubled within recent years rising from a level of around TT$2 billion in 2006 to the current estimated value of TT$4 billion.  This trend is indicative of the country’s high dependence on foreign food supplies which include some of our basic staples such as cereals, rice and corn.  It is instructive that some of the key grains that have experienced steady global price increases, for example, corn and soya meal, are primary inputs into two (2) of our main domestic food groups – dairy products and poultry.  It is, therefore, not surprising that, in recent times, the price of eggs has once again risen on the local market.

According to our most recent official statistics (published in 2007), the poverty rate in Trinidad and Tobago is estimated at around 17%.  The escalation in global food prices has serious implications for income distribution and could also stymie our achievement of Millennium Development Goal #1, namely, “Eradication of extreme poverty and hunger”, by the year 2015.

Drivers of World Food Prices

In order to meaningfully address this issue of rising food prices and the measures that should be put in place to mitigate the effects, it would be useful to examine the factors that are triggering these price hikes in global commodity markets.  As in all markets, the underlying factors fall under the general rubric of demand and supply with there currently being a significant imbalance between them.  A study conducted by ECLAC on the implications of high food prices for the Caribbean has, in fact, confirmed that there has been a strong growth in demand combined with a low and declining level of stocks.

On the demand side, emerging economies, particularly China, India and to some extent Brazil are, for the most part, witnessing sustained economic growth along with a change in the consumption patterns. With the increase in per capita income has come an increase in per capita consumption of a wide range of both traditional and new products.  Paramount among them is the demand for meat, especially poultry, in China, and this has pushed up prices for all meat inputs.  This has, in turn, significantly impacted Caribbean economies, which are net importers of these inputs.

With respect to supply, the ECLAC study identified the increase in production costs as the main overriding factor.  This is attributable to the rise in oil prices which impacts not only production costs but transportation costs as well.  Another critical factor is the natural phenomenon of droughts in key grain-producing and exporting regions like Australia.  With a decline in wheat production, there is an adverse impact on international supplies and, of course, prices.

The recent spike in oil prices has also propelled the drive towards the production of biofuels from corn and, to a lesser extent, sugarcane, thereby reducing the amount available for consumption and impacting adversely on the price of these products.  The USA is the current leader in the production of ethanol from corn.  Due to U.S. ethanol subsidies, almost a third of all corn grown in the United States is now used for fuel.  This is putting a lot of stress on the international price for corn.

Bad weather and natural disasters have devastated agricultural production in many parts of the world, including the Caribbean.  Here in Trinidad and Tobago, agricultural production has been largely affected by flash flooding, drought, praedial larceny and pest diseases.

Future Prospects

Several reports in the electronic and print media reveal that food shortages and price escalation were expected to be overwhelming in 2011, a projection that has been realised.  In fact, the New York Times, quoting a recent United Nations Report says that “global food prices are moving ever higher, hitting record levels…as a jittery market reacted to unpredictable weather and tight supplies.”

The World Bank Group also issued a press release ahead of the G20 Meeting of Finance Ministers and Central Bank Governors held in Paris in February this year which revealed that rising food prices had driven an estimated 44 million people into poverty in developing countries since June 2010.  Between October 2010 and January 2011, the World Bank’s food price index rose by 15 percent, which is 29 percent above its level a year earlier.

Imperatives for Trinidad and Tobago

In Trinidad and Tobago, insufficient investment has been made in the agricultural sector over the years despite commitments from successive governments to make the sector a priority in the country’s development thrust.  The problem has been exacerbated by the achievements of the oil and gas sectors whose significant contribution to the GDP has virtually relegated agriculture to the “back-burner”.

However, the present administration has made clear its intentions to prioritise the development of the agricultural sector.  In December 2010, at the ceremony to distribute leases for 2-acre parcels of land to 610 former Caroni employees, Prime Minister Kamla Persad-Bissessar remarked that:

“… the neglect of the agriculture sector caused the alarming rise in food prices in our country that has contributed to the inflationary rates we are seeing and to other social and economic consequences….It is my hope that in delivering your long promised land, you will recognise our intention to partner with you to rebuilding this crucial sector so as to promote effective economic diversification.”

In a recent address, the Minister of Food Production, Land and Marine Affairs, Vasant Bharath, indicated that one of the pillars of development for agriculture is to ensure that there is affordable food on a “sustained” basis.  He noted that in order to achieve this objective and effectively reduce the food import bill, the formulation of a National Land Policy is an imperative.  The Minister has also advised that this thrust into producing more local food and encouraging its consumption by citizens, involves the deployment of workers from the URP to agriculture.

However, it is yet to be seen whether this initiative will make the desired impact and the recent bulldozing of State lands which were being used for agricultural purposes to make way for state housing projects further indicates the need for a National Land Policy so that all government departments work in tandem.

It is heartening to note that the Trinidad and Tobago Agribusiness Association (TTABA) is seeking to displace the importation of wheat, rice and potato – three (3) of the main contributors to the high import bill — with locally produced cassava, sweet potato and plantain.  This will be supported by a 12-month national campaign entitled “Put T&T on the Table”.  This drive has already begun to take root with the introduction of sweet potato fries at four (4) KFC outlets on July 21.  According to reports, the response so far has been encouraging.  The Government is hoping to have cassava fries served in hotels and restaurants, as well.

The Chamber is supportive of the diversification thrust of the Government and also looks forward to the resuscitation of the cocoa industry as part of its policy agenda for agriculture.