The cost of living is rising, here in The Bahamas, much as everywhere around the world.
International trade supply routes disrupted by COVID-19 are being further interrupted by the war in Ukraine.
Instead of just delays in delivery of goods queued for entry into ports because of COVID-19 port closures, scarcity of supplies are now connected to national quotas and rations limiting or banning the export of certain goods.
The New York Times reported this past weekend that Russia’s invasion of Ukraine has resulted in a new surge of protectionism as governments, desperate to secure food and other commodities for their citizens amid shortages and rising prices, erect new barriers to stop exports at their borders.
One international study claims that countries have imposed a total of 47 export curbs on food and fertilizers alone since February of this year – 43 of which were introduced since the beginning of the war in Ukraine in late February.
Among affected items are limitations on exports of sunflower oil, wheat, oats and cattle from Ukraine; banned sales of fertilizer, sugar and grains from Russia; the prohibition of exports of palm oil from Indonesia, the producer of a half of the world’s palm oil; and the ban of exports of butter, beef, lamb, goats, maize and vegetable oils from Turkey. And China has removed its fertilizers from world markets.
Brazil, a major exporter of foods, reports that its production is already contracted for the next year and beyond and that its own limited ability to source imported fertilizers will impact its next season of food production.
The Bahamas, dependent on imports for the overwhelming majority of all its consumer goods including food, fuel, apparel, household and business goods, will be increasingly powerless to stop the surge in prices.
Nowhere is this more evident than in food stores where increases in prices are already driving up the amount, hence the percentage of household income spent on food.
Last week, a heated exchange in the House of Assembly between the member of Parliament for Englerston, Minister of Education Glenys Hanna-Martin and the representative for St. Barnabas, Deputy Leader of the Free National Movement Shanendon Cartwright brought the problem of rising food prices into stark focus.
Each of the parliamentarians represent constituencies with significant numbers of low-income families who are being especially challenged by the high and rising cost of food and fuel.
Both Hanna-Martin and Cartwright sought to protect their standings among their constituents as sensitive to the needs of the poor.
Cartwright challenged Hanna-Martin to support the call for the removal of the 10 percent value-added tax (VAT) on breadbasket foods imposed by her party’s government in January, while Hanna-Martin blamed Cartwright’s party for the increase of VAT from 7.5 percent to 12 percent in pre-pandemic 2018, an increase that allowed the removal of VAT on certain breadbasket items, medicines and powdered detergents.
The reality is that it is urgent for the government to adopt policies to assist low-income families navigate the inflationary forces that are reducing their buying power, increasing poverty insecurity and threatening food security particularly for a growing number of children, most especially those in low-income families.
We find it noteworthy that the largest food retailer in the capital recently indicated his support for the removal of VAT from breadbasket food items, a position that he claims is the view of his stores’ customers.
Notwithstanding the need for revenue derived from VAT on breadbasket items, it is not sustainable for VAT to continue to be applied to these items which is translating into a killer of the poor.
A replacement source of revenue needs to be identified.