The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas is among the Western Hemisphere countries most vulnerable to global food price rises because it imports more than 40 per cent of its rice and wheat, with a leading food retailer warning Bahamians to brace for cost increases of at least “a couple of percentage points”.

Gavin Watchorn, chief executive of BISX-listed AML Foods, the Solomon’s SuperCentre and Cost Right operator, told Tribune Business in a recent interview that the food retail group had seen

price increases “over the last three-four months”.

Acknowledging that it was difficult to predict what would happen, as the Bahamas was at the mercy of external factors beyond its control, Mr Watchorn agreed with the Inter-American Institute for Cooperation on Agriculture (IICA) that this nation’s dependency on food imports left it vulnerable.

A recent IICA paper placed the Bahamas among the most “vulnerable” nations in the Latin American and Caribbean region, due to its high “dependence on imports to meet the domestic demand”.

The Bahamas, the IICA said, depended on rice and wheat imports to meet more than 40 per cent of domestic demand - these being key food staples for many.

While this is likely to strengthen arguments for an intensified focus on agriculture and Bahamian food security, Mr Watchorn told Tribune Business that the foods in question in the current global crisis could not be produced here, especially in sufficient quantities.

And, while AML Foods had done its best to mitigate the food price increase impact on Bahamian consumers via forward buying, Mr Watchorn said retailers’ ability to absorb themselves was limited compared to years past due to the rise in electricity costs.

“We are seeing some increases,” Mr Watchorn told Tribune Business. “The unfortunate reality for consumers here is prices are going up, and they have been slowly creeping up for some time. We’ve seen price increases over the last three-four months.”

Among the most impacted foods have been grain/wheat, plus corn and soybeans, which the IICA said had surpassed the price increases seen in 2007-2008.

Most of these are key livestock feeds and food chain inputs, so price increases here will impact the cost of other products.

Noting that the United Nations’ Food Price Index for July 2012 was up by 6 per cent, driven by a 23 per cent hike in corn prices, Mr Watchorn said the rises were being driven by the worst US drought for 25 years, coupled with poor harvests in key grain producing areas such as Russia and the Balkans.

Noting that this situation could last until next year’s harvest, the AML Foods chief told Tribune Business: “This is a global concern, the rising cost of foods.

“We’ve been tracking this for some time. Once we started seeing reports on a regular basis, and the warning signs were coming for a few months, we’ve been forward buying; buying for two months in advance at today’s prices.

“That’ll spare us from some of this, but when you are a predominantly food importing country, you’re at the mercy of the markets.

“While there’s been a lot of talk about food security, the foods you’re talking about cannot be produced in the Bahamas. We’re not a grain producer - the soil’s not right.”

Despite all this, Mr Watchorn said the price increases borne by Bahamian consumers were likely to remain small - “only about a couple of percentage points”.

While it was difficult to forecast what would happen, given that there were so many factors impacting the global food producing market, Mr Watchorn still concluded: “Unfortunately, prices are going to go up.

“Retailers and ourselves will do our best to maintain prices, but we’re operating in a very high cost environment with energy costs, and our ability to absorb price increase is not like it was before.

“When energy was not as high, we had the ability to absorb some of this. We just have to be prepared. There isn’t much we can do about this.

“We’re a food importing nation, and I know we talk about growing food here, but what you’re talking about producing we’re not able to produce on a large scale to meet our needs here.”