Gov’t Moves to Ease Rising Food Prices


Government announced on (Jan. 8) that it will be subsidizing five basic food items as part of measures to ease the effects of rising food prices on the poor.
The move is part of a $500 million provision, which was announced by Prime Minister, Bruce Golding, in Parliament recently.
Industry, Commerce & Investment Minister, Karl Samuda, speaking at the weekly post-Cabinet press briefing at Jamaica House, said that the items are: counter and baking flour, bulk rice, cooking oil, and milk powder. These items, he advised, are to be subsidized until the end of the current fiscal year on March 31.
“The new budget (for 2008/09) will make provision for additional support as required, so this is really an immediate response to a really difficult problem that faces many of our people,” he explained.
Mr. Samuda said that following on the Prime Minister’s announcement, the Ministries of Industry, Commerce, & Investment; Finance & Planning; and Agriculture were mandated to “meet and discuss a strategy that would lead to the most effective utilization of these funds.”
“That was undertaken and, as a result, a package was presented to Cabinet on Monday (Jan. 7). We looked specifically at (the) five food items, and based on close examination and extensive surveys, it was brought to our attention that these items are consumed by 90 per cent of our people, and almost 100 per cent of the most vulnerable,” Mr. Samuda stated.
Outlining the allocations, Minister Samuda said counter flour will be subsidized at a cost of $110.8 million, which will facilitate the product being sold for $50 per kilogram, a $7 reduction on the current retail price.
Baking flour, he added, is to be subsidized at a cost of $36 million, which is expected to stabilize the price of bread in the wake of announcements of a 10 per cent increase in the price of the product and other baked items.
“As a result of discussions which I held with the Bakers Association (of Jamaica) and the Jamaica Flour Mill, the decision was taken to place support on this particular item, sufficient to enable the price of bread to remain stable over the next three months, thereby avoiding the need to increase it by 10 per cent,” the Minister stated.
In addition, an $85 million subsidy will be applied to bulk rice to stabilize the retail price at $50 per kilogram, representing a reduction in the current price of between $3 and $5. Cooking oil, which the Minister pointed out, would have moved from $158 (per litre) to $194 without government’s intervention, will be subsidized at a cost of $84 million, which will allow the item to be retailed for $170 per litre.
In the case of milk powder, Mr. Samuda said that the decline in the local dairy industry necessitates the importation of the product to satisfy demand. He noted that while milk powder is currently being retailed at a cost of $72 per 80 gram sachet, the price will be “maintained over the next three months at $65 per 60 gram sachet, a subsidy of $7 on each sachet at a cost of $18.9 million.”
According to the Minister, the subsidies will be applied through several mechanisms, including removal of or reduction in the level of custom duties on imports. “Where it is not at (the) source, it will be by agreement with the distributor, who will indicate their levels of sales and, against that, we allocate the support,” he pointed out.
The Minister indicated that measures will be put in place to ensure that consumers receive the benefits to accrue from the subsidies. These, he said, include monitoring of prices by the Consumer Affairs Commission as well collaboration with distributors.
Additionally, Mr. Samuda said the Fair Trade Act gives him “absolute awesome powers to investigate in the interest of consumers.”

JIS Social