The speech recently given by Vice President Jagdeo was both timely and appropriate. To add an additional perspective to the discussion on how to practically achieve the goal of reducing our food and agricultural costs, the following should be considered:
1. Monetary Policy
2. Energy costs
3. Focused regional suppliers
Currently, the inflation rate in the USA is above 8%, with a forecasted rate of 5.5% for 2022. The strengthening Guyanese economy should target a 2% inflation rate, to achieve an improvement in our buying power. The management of our monetary policy is essential in achieving this.
Energy independence plays directly into the achievement of such a goal, and our investments in renewable energy would help drive us to this goal. This leads to the consideration of our energy costs. The largest food retailer in the world incurred a reduction in profit greater than 20% for the last quarter, which was primarily driven by increased energy costs.
Energy independence and the leveraging of renewables would significantly reduce the cost of local production and positively impact the import bill for food products. Eating locally-produced high-quality food is achievable once the needed solar and wind farms are established. This should be considered an achievable goal in the near term.
The current Administration, in conjunction with Caricom, should use the 80/20 rule to review the regional food and agricultural import bill, and answer the following questions:
1. Where is 80% of the money being spent?
2. Which countries have the know-how and capacity to leverage an existing advantageous regional low-cost position to meet our regional needs? The terms should include a long-term agreement that shows an annual cost reduction reflecting a percentage of the improved cost position gained due to volume increases.
3. What regional barriers to entry need to be in place to ensure that the focused regional players do not loose demand to external suppliers?
4. In lieu of a regional solution, is there a high-ticket item that our combined volume and increased buying power can positively impact? Keep in mind that the world’s largest retailer is 7 times larger than Caricom and has more buying power, yet increased energy costs have driven down profits.
Therefore, I submit to my learned friends that regional low-cost energy via renewable sources should be the highest priority within any plan to reduce the food and agricultural bill of the region.