Not just bread to rise

MINISTER of Finance Colm Imbert must be chief among the Cabinet members who should take careful note of the National Flour Mills (NFM)’s decision to raise prices by as much as 20 per cent in the next few days.

The NFM’s announcement on Wednesday – which represents an about-turn from repeated assurances in the past that it would shoulder the burden of global cost increases – came mere weeks after Mr Imbert’s much-heralded budget measure to remove VAT from certain food items took effect.

Critics then zoned in on errors in lists of which foods which were said to be zero-rated; argued many items had been zero-rated in the past but VAT had been reintroduced; and also queried whether retailers would actually pass on savings to consumers.

Whatever the nuances of all of this, it is clear the NFM price increases will wipe away much of what consumers stood to gain through Mr Imbert’s policy measure.

Bread and flour have long been zero-rated, but a few of the newly VAT-free items, like roti skins, are made of flour and could go up. General increases outside of these categories might also result in the overall food basket becoming pricier – defeating the objective of providing relief.

Consumers should brace for inflation, not just because of expected increases in food prices but also because of the symbolic impact of the NFM’s move.

The NFM, more so than many other entities, for almost two years resisted changes in its pricing scheme, even as its profits all but evaporated amid low global wheat yields and supply-chain disruptions. In fact, its last major price adjustment was said to have been in 2008.

Meanwhile, bakeries and manufacturers have long begun to adjust prices upwards – some by as much as $1.

This latest move is a signal that might embolden other sectors to follow, showing as it does that a threshold has been irreversibly crossed.

All of this now puts even more pressure on the State to provide more meaningful support for struggling families, not limited to hampers and food cards (the distribution and administration of which have raised a lot of questions in the past).

It also underlines the urgency of the need for the State to make good on its many promises in the past to boost local food production and the agriculture sector. It’s time for all the talk of growing more food to start literally bearing fruit.

If flour is going to be more expensive, the Government might do well to consider how best it can shift consumers away from imported commodities and towards sustainably produced local staples such as Moruga hill rice.

In addition to making conditions ripe for agribusiness, subsidies on often-pricier local produce should be considered to whet the collective appetite for what is ours.