Caribbean Food and Drink Report Q3 2008 - companiesandmarkets.com adds new report.

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As discussed in BMI´s newly-published Q308 Caribbean Food & Drink Report the Caribbean region has been very heavily affected by the spiralling costs of agricultural commodities and the issue continues to dominate the local political agenda. As a region that imports around US$3bn of food a year the Caribbean is particularly exposed to global price movements and

 

the rising commodity prices witnessed in the last two years have led to protests and even erupted into violence in some countries. However, with many political leaders recognising that the answer to this issue may lie in reducing import tariffs and encouraging investment in local food production the situation may have some positive implications for food producers. The most violent and high profile protests have erupted in Haiti, which is particularly vulnerable because of the country’s very high levels of poverty. Here demonstrations have left six people dead and many more injured and led to the dismissing of the Prime Minister after a no confidence vote. Protests in the rest of the Caribbean have so far been less explosive but have been taken equally seriously by Caribbean governments. In January 2008 ministers and official from the Caribbean Community (Caricom) met to discuss the issue and agreed to lower the common external tariff which places a set tax on goods entering the region. This is likely to have an affect on prices in the short term, and is good news for firms that export to the Caribbean, but will not provide viable long term solution to the main issue which is a low level of domestic production. Most Caribbean governments have recognised the need to boost domestic food production yet not many have implemented policies that would aid local farmers and food processors. For example rather than subsidising food, governments should be thinking about subsidising agricultural inputs and providing tax breaks for firms wishing to invest in the food industry. However, finally these kinds of policies are finding an audience among Caribbean officials and in a promising development investors are currently being sought for a number of regional megafarms situated in sparsely population countries with large swathes of uncultivated land, such as Guyana, Suriname and Jamaica. These kinds of policies are the regions best hope of encouraging self sufficiency however some governments are still pursuing policies that are likely to exacerbate the problem of dwindling local production. In St Lucia and St Kitts and Nevis a number of foods are now subject to price controls and in Barbados retailers’ mark ups have been limited on certain products. Although perhaps making intuitive sense when the electorate is clamouring for the government to act to stem rising prices, these policies are only likely to discourage investment in the food industry and make little long term sense if governments wish to encourage local production.

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