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Caribbean Buffeted by Global Price Spikes
As the single parent of a five-year-old boy,
Sonita Balkaran can barely make ends meet these days. A clothing vendor
in one of this city's five municipal markets, Balkarran has watched in
horror the steady decline of her living standard, estimating that her
spending power has shrunk by about 50 percent in the last year.
"The
price of anything you can think about has gone up," she said one very
hot afternoon this week. "What hurts is that your salary is not going
up and prices are not moving up by a few points. They are jumping up.
Ask anyone," she added, touching on a subject that has brought
political discomfort to some governments and misery for ordinary
Caribbean people in the last year.
Early in March, Caribbean Community leaders flew to the
Bahamas for their annual mid-term summit, with the rising cost of
living as a main agenda item of the two-day session. The bloc
represents a combined population of some 15 million people.
When it was all over, they announced a plan to suspend the
common external tariff (CET) applied to some imported goods across the
12-nation trade bloc and to drastically reduce the rates on others for
a period of up to two years.
It has become increasingly clear that the era of cheap food
and raw materials is over. In the past year, global fuel prices have
doubled, in turn pushing up the cost of key commodities like wheat,
corn and barley. Food prices have also been squeezed by the expanding
use of grains for biofuels.
"As net importers, the Caribbean countries are particularly
vulnerable to these international price hikes," noted Antigua and
Barbuda's finance ministry this week. "While our countries may seek to
mitigate the impact... there are very few policy options available to
the governments of small developing countries that would eliminate or
significantly reduce the impact of external shocks on the domestic
economy."
Officials say the government will subsidise gas and diesel
prices to keep them unchanged, but concede that "with the price oil
climbing to over 100 dollars per barrel [of oil], this policy is hardly
sustainable."
"The days of cheap oil are gone," Trinidad's Patrick Manning
agreed at the Caricom summit. "We need hemispheric collaboration to
face this challenge, which increases with urgency with every passing
day."
Manning was one of the leaders who had attended a special
December summit in Guyana devoted to only two issues -- a new trade and
aid pact with the European Union, and rising living costs in the
Caribbean.
Since then, trade ministers have met at least three times in special
session to address the problem, passing their recommendations on to the
trade bloc's special ministerial council and then to leaders who signed
off on the waiver of import duties earlier this month.
Items now attracting zero import duties are cheese, cooking
oil, breakfast cereal, baby formula and milk powder. Infant juices get
a waiver for six months. Others like milk, chicken, beef, lamb, onions,
oatmeal, beans, potatoes and some household items like ceramic products
will also get special treatment. The CET on these items will be no more
than five percent, down from 30 percent.
"The CET is the only instrument available for intervention at
the regional level to address the issue of the rising cost of living,"
the leaders said in a statement after the Bahamas summit.
Countries like Barbados and Trinidad, net importers of many
food items, have found it harder to cope than others. Prices for some
items in Barbados have risen by at least 30 percent. The governing
Democratic Labor Party used the cost of living issue to great effect on
the campaign trail leading up to general elections in January, which it
won by a landslide.
In Grenada, a very nervous Prime Minister Keith Mitchell
sought a record fourth term this year, and pushed leaders into flying
to Guyana in December to discuss the issue, as the steep spikes in cost
of living became impossible to ignore.
Further north in Antigua, the finance and economy ministry
called a special public forum in the capital this week to explain that
there is little governments could do to address the issue.
The forum came in the midst of a raging debate involving
Antigua and other small Eastern Caribbean states about the price of
flour and what the increases have done to the food basket. Governments
have asked the trade bloc to relax rules governing the importation of
flour from outside the bloc even as traditional suppliers say they have
enough on hand to meet demands.
Some have suggested easing restrictions on trade with South
American countries like Brazil and Colombia, which offer lower prices
on food goods than the United States, one of the Caribbean's biggest
partners.
Governments in Barbados, Guyana and Trinidad say the most
sustainable answer to the crisis is to increase agricultural production
in the region.
Guyana, easily the largest Community member with more than
133,000 square kilometres and a population of only 730,000, has
virtually been begging farmers and investors in the region to come and
develop mega food farms. Trinidad has sent investors, and the previous
Barbados government had talked about accepting an offer of five dollars
per acre, per year to lease farmland in Guyana, the same price locals
pay.
Next month, Guyana will host an agricultural investors' forum
following up on a special leaders' summit on agriculture held in
Trinidad a few months back to tackle this very question, but for
ordinary folks like Balkarran, no relief is on the horizon.
"My son eats a big meal in the morning and after school but I
have to find snacks for him at school. That I can barely afford now. A
pint of kerosene has moved from 25 cents to about a dollar. How poor
people will be able to afford this I don't know," she said, keeping an
eye on her clothing as passers-by merely window shopped.
Source: IPS
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