Worldwide rise in the cost of living

It was with great interest that I attended the launch of the National Agricultural and Agro-based industrial exhibition 2008, the reason being that one of the world’s burning topics for discussion today has to do with the increase in cost of living, and the resultant implications that it is having, and can possibly have on human existence and relations globally. The current trends experienced must by no stretch of the imagination be seen to be solely applicable to St Vincent and the Grenadines.{{more}} Instead, the reality is that our neigbours in the region and our friends internationally are speaking of a similar experience.

Mike Jarvis definitely got it right when he noted in a BBC Caribbean special report on 20th December, 2007, as follows: “Skyrocketing food prices and the general rise in cost of living have become the hot topics of discussion throughout the Caribbean. The year-end ‘shopping spree’ is expected to take a pounding, with people resorting to simply shopping, without too much ‘spreeing’.” The recent rise in energy and food prices on the global market in significant ways would have, therefore, compounded the problem forseen in 2007.

In understanding the issue at hand, it is interesting to note three important points which must not be misinterpreted. Firstly, the current rise in prices is tied closely to globalisation. Secondly, innovative means of spending and life style changes must be advocated to properly manage the price changes experienced and, lastly, food security must be a central concern of policy makers in order to ensure that food, which is a basic and most essential commodity, receives protection of the highest order.

After careful statistical analysis, Jose María Sumpsi, the Food and Agriculture Organisation (FAO) assistant director-general, in a recent report, noted that with the exception of corn and rice, food inflation appeared to be “reaching its peak”, although he did not expect prices to start falling. His comments, which are supported by other senior UN officials, indicated that in the month of April of 2008 we have experienced the most encouraging signs since the global food ‘crisis’ in the summer of 2007. However, he furthered that this does not mean the problems are over.

The last time the FAO food index posted a monthly drop was in January 2007. This time, however, officials are more confident that some prices will stop rising or even fall as farmers plant more crops to take advantage of record prices and better weather generally than last year in numerous countries.

Agriculture experts on the international scene, however, are warning that prices could continue to rise because of the growing appetite for crops for the bio-fuels industry and intermittent bad weather, such as the cyclone in Burma. The reality exists, however, that although wholesale food inflation may stabilize, that retail prices could continue to climb, since companies may want to maintain previous increases to consumers. Here resides a deep seated problem.

As policy makers make adjustments, focus must be placed on correcting past oversights, which entail addressing appropriately declining agricultural research budgets, and a failure to adequately educate farmers on changing weather patterns. There appears to be insufficient investment in research, and farmers are not getting access to new technology and techniques to increase yields and reduce costs across the agricultural supply chain. This may prove to be the main brake needed to curtail output problems.

CARICOM initiative

At home and in the region generally, our policy makers have maintained that they fully express the will and the commitment to transform all the sectors which will assist in reducing the rise in cost of living. Already, several measures have been proposed by CARICOM leaders for certain implementations to address mounting food prices which are being fuelled by a number of factors, including rising oil prices, adverse weather conditions and natural disasters, and the shift in agricultural production from food to bio fuels.

Measures that were outlined to mitigate the effects of price increases at the 12th Special Meeting of CARICOM Heads of Government in Guyana include a pledge to proceed urgently with the transformation of agriculture, particularly the Jagdeo Initiative.

It was suggested that The CARICOM Secretariat should immediately establish a Technical Team which will review a basket of food and non-food items, common to the baskets in all Member States, and which attract a Common External Tariff (CET).

The Council for Trade and Economic Development (COTED) is to then make a decision on the reduction or removal of the CET from this regional basket. It was also suggested that an Expert CARICOM Team on Sanitary and Phyto-sanitary Measures (SPS) will be set up immediately to undertake a rapid assessment of the readiness of Member States to export selected food items and the preparedness of Member States to import those items from within the Region.

It is further advised that Member States will also institute social interventions targeting the most vulnerable groups, including children, as a feasible short-term measure; take advantage of the offer by the Government of Guyana to nationals of Member States, of access to land for the pursuit of agricultural production, including agro-processing and carry out further research and analysis on the issue of rising cost of living and poverty in Member States on which to base further decisions and implementation of recommendations.

This will be accompanied by a major consumer public education campaign to be undertaken in order to equip the population to ‘shop smart, buy regional and eat healthy.’

With respect to energy, Heads of Government recognised that the rising cost of energy impacts on all aspects of the cost of living and production, and noted that its cost is significantly influenced both by the world price and by national fiscal measures. Work which is already being undertaken in the Region in the area of renewable energy must, therefore, be intensified.

At the Launch of the National Agricultural and Agro-based Industrial Exhibition, the Minister of Agriculture was clear on the point that agricultural development remains a fundamental pillar upon which the future of our country depends. This appears to be unquestionable when one analyses the importance of the agriculture sector, particularly to rural life, social infrastructural development and all other aspects which impact on our existence generally in St. Vincent and the Grenadines.

Saboto Caesar is a lawyer and Unity Labour Party Senator.