Inclement Weather and Rising Retail Prices
Good Day, Ladies and Gentlemen
INCLEMENT WEATHER
Let me start off by extending my sympathies to those persons who suffered losses
or discomfort as a result of the heavy, persistent rains that we experienced
last week. The inclement weather also took its toll on our national
infrastructure and we are still assessing the extent of the damage. I want to
take this opportunity to commend the many public officers who worked long hours
to restore conditions on our roads, in particular the employees of the Ministry
of Communications, Works, Transport and Public Utilities. Also, I want to thank
you, the members of the public, for the patience and understanding that you have
exhibited during this period. I am aware that because of the ongoing flood
mitigation works, particularly in Castries and Anse La Raye, vehicular and
pedestrian traffic have been made more challenging, but these works are
necessary to ensure that in the future we will have greater capacity to deal
with the weather that we experienced last week.
ANOTHER SOBER REMINDER
Last week’s weather was another sober reminder, although I suspect that by now
none is required, of the need for us to always be prepared during the hurricane
season. Although we are into what officially is the last month of the season,
this has not spared us from bad weather. This hurricane season has been a
record-breaking one. Never before in the history of the Atlantic Hurricane
season have we exhausted the English alphabet and had to resort to the Greek
alphabet for storm names.
This year we have had thirteen (13) hurricanes, which breaks the previous record
of twelve that was set in 1969. Also, there have been three (3) Category Five
hurricanes this year - Katrina, Rita, and Wilma, another record, and Wilma, with
its pressure of 882 millibars broke the old record set by Gilbert in 1988, to
make it the strongest hurricane ever recorded in the Atlantic Ocean.
TAKE RESPONSIBILITY FOR OUR ENVIRONMENT
We must remember, however, that our own actions continue to contribute to the
severity of the impact of these weather systems on our lives. The indiscriminate
disposal of plastics and other non biodegradable material, poor land use
practices, and non-adherence to acceptable land development and building
standards, among other factors, cause our rivers and drains to clog, our slopes
to become more vulnerable, and our dwelling houses to be compromised. We must
stop taking a short-term, live-for-today approach to the way we live our lives.
Every action that we take today has a consequence that extends into tomorrow.
NEMO, the Ministry of Works, the Solid Waste Management Authority and the
Ministry of Physical Development can only do so much. There are only so many
laws that we can pass to deter action that can lead to national disasters. The
onus has to be on each and every resident of Saint Lucia to take responsibility
for our environment and our country. If we don’t, then we will continue to
suffer the sort of discomfort and inconvenience that we lived through last week,
and it will only get worse.
NO NEW INCREASES IN CONSUMPTION TAX
This week, I want to touch on a matter that I am certain has been occupying the
attention of most Saint Lucians, and that is the rising cost of certain items on
our super market shelves. One product which comes to mind is Carnation Milk. For
several years a tin of Carnation Milk was sold at $1.99. Now, the price has gone
up to $2.36 a tin. As usual, the Government is blamed for the increase. I have
done a little research on this product and my findings suggest that the supplier
of Carnation Milk has infact increased the price at which the milk is sold to
importers and retailers. I am told that suppliers have increased the cost of a
carton of Carnation by 17.3%. Carnation Milk is a price controlled item and the
new price of $2.36 is the price calculated by the Ministry of Commerce and
Consumer Affairs.
Before I say a little more on this subject, please allow me to put to rest
another rumour that appears to be making the rounds, which is that it is a
Government-imposed increase in the Consumption Tax that has caused prices to
increase in the supermarkets and in retail stores. This is simply not true. I
repeat, nothing can be further from the truth. The last adjustment in the
Consumption Tax structure took place in July, 2003, and there has been no change
since that date. Frankly, I have no idea why some brokers insist on telling
importers and purchasers that increases are due to increases in Consumption
Taxes.
But, why the recent increases on these items?
Much of what we consume in Saint Lucia has to be imported into our country. When
a product lands in Saint Lucia, whether the mode of transportation is by air or
sea, the importer has to meet three unavoidable costs: the cost of the product,
the cost of insuring the product during transportation from the source to Saint
Lucia, and the cost of freight, that is the cost of transporting the product.
Customs charges are then applied to the value of the product, and as I have
said, these charges have not increased in the last twenty nine (29) months. What
have increased, however, are in some instances, the cost of producing the item,
and in most instances, the cost of transporting the item. Both of these
increases are a direct result of the increase in the cost of fuel. The
Government does not have to interfere with Consumption Taxes for prices to rise.
The Consumption Taxes may remain the same for years, but prices will rise simply
because importers have to pay more for buying and transporting goods from
overseas. Take this example. The Government has waived Duty and Consumption
Taxes on agricultural inputs such as fertilizers. Yet, the prices of fertilizers
to farmers continue to increase because we have to pay more to buy overseas
whether we import from Trinidad and Tobago, The Dominican Republic or Holland.
THE IMPACT OF THE RISING COST OF FUEL
I want to explain further.
Many manufacturing processes depend on the use of fuel during the production
system. It stands to reason, therefore, that if the cost of fuel, which is a
unit of production, increases, then the cost of production is also likely to
increase. Additionally, the manufacture of the packaging material used for the
product in question often depends on the use of fuel, and this is particularly
the case for plastics, which are very fuel-dependent. So, you can understand why
the cost of the product would have increased even before it is shipped to Saint
Lucia. But that is not the only cause for the increased cost. To get a product
from its point of origin, be that point the United States, the United Kingdom,
or Trinidad, to Saint Lucia, the product has to be transported either via
airplane or ship. Both of these forms of transportation depend heavily on the
use of fuel. When fuel prices go up, then the shipping costs also increase.
Therefore, on top of the increase in what is called the FOB cost of the product,
or the cost minus insurance and shipping, there has also been an increase in the
cost of freight. The result is an increase in the cost of the product when it
arrives in Saint Lucia, or what is called the landed cost.
CUSHIONING THE IMPACT
This, therefore, is the effect that the volatile and ever-increasing price of
fuel is having on our economy. Our Government understands this and has tried, as
best we can, to cushion Saint Lucians from the full effect of this increase on
some commodities. This is why, for example, Government continues to lose revenue
from the sale of kerosene and Liquid Petroleum Gas (LPG), or what we call
cooking gas, because we want to provide a buffer, particularly for the more
vulnerable and disadvantaged among us. This is also why the prices of basic
commodities like rice, flour and sugar have remained the same since 1997. That
is what we are, a Government of all Saint Lucians for all Saint Lucians, which
is particularly sensitive to the plight of the poor and the vulnerable among us.
BE WARY OF PRICE GOUGING
All of this is not to say, however, that we should not be on the look-out for
price gouging and for those who would seek to capitalize on the increase in fuel
prices to impose unreasonable increases in the retail prices of commodities.
This is an imperfect world, and there will always be those who seek to profit at
the expense of others. I want to encourage the Department of Consumer Affairs
and the National Consumer Association to be extra watchful during this period to
ensure that our people are not exploited by unscrupulous and dishonest
merchants, traders and retailers. Our Government will have no patience or
sympathy for those persons.
OVERSEAS MEETINGS
In closing, I want to inform you that I will be away for nine days while I lead
a CARICOM delegation to a meeting with Prime Minister Tony Blair of England, and
then proceed to attend a meeting of Commonwealth Heads of Government in Malta.
Both of these meetings are extremely important, especially as we seek to ensure
that small island states like ours are not consumed and destroyed by the waves
of trade liberalization and globalization. So, you will not hear from me until
Monday, December 05, 2005, God willing.
Until we next meet, please take care of yourselves, stay safe, and protect our
environment.
