Imported inflation

The two crucial factors with respect to this week’s six percent increase in the price of flour by National Flour Mills (NFM) have been imported inflation and the determination of NFM, a State owned company, to be profitable. National Flour Mills has pointed out that it has already absorbed part of the added costs which had arisen both because of low inventory levels of wheat worldwide and significant increases in freight costs. The low inventory levels would have triggered an increase in prices by wheat producers and exporters to take advantage of demand in relation to production, in much the same way that petroleum exporting countries adjust their crude prices either upward or downward depending on whether there is a sharp rise or fall in production. In turn, the high demand during winter by Northern countries is also factored into the perceived need for a further cost increase.

The reality is that Trinidad and Tobago is importing inflation re many of the goods and services it either does not provide for itself, or provides in insufficient quantities. But while it can not do much about its imports of wheat, largely because flour is a staple of our diet, it is in a position to cut down on its ridiculously high levels of agricultural imports generally through a meaningful development of domestic agriculture. Why should it be necessary, for example, for this country to import in relatively large quantities of canned corn; beets, peas, rice, refined sugar, carrots, cauliflower, cabbage, coconut milk and cornflakes, among others from developed nations while these can be readily grown and/or produced here or at least within the Caribbean Community of Nations in sufficient quantities? We continue to subsidise the economies of developed countries, seemingly without even pausing to consider the negative impact this has on Trinidad and Tobago’s balance of trade and the consequent depletion of our needed foreign exchange earnings. Importers continue to bring in large shipments of these and other items because there is an induced demand brought about by excellent marketing strategies, or the very often mistaken assumption that what is foreign is better!

Trinidad and Tobago can and needs to substantially reduce its high agricultural imports bill. To achieve this new methods of agricultural production will have to be introduced, embracing where this is feasible, mechanisation. Mechanisation of farms, where this is practicable, will not only take the drudgery out of agriculture, but will reduce labour costs, sickness, casual leave and holiday benefits, but retirement and severance payments as well and so keep down operating costs. This week’s six percent increase in the price of flour by National Flour Mills (NFM), however, because it is a minimal factor in the cost of production of bread can readily be absorbed by bakers. Unfortunately, this has not been the case in the past as bakers have tended to literally apply the percentage increase in the flour price to the cost of bread claiming overall increases in operating costs. In the final analysis it is always those in the lower income bracket that are hurt.