Justin, I agree, but jawboning the issue is no solution. Despite all the effort of their parents to provide proper training during childhood, people still try to talk with their mouths full!!

The increases in the prices of major commodities in the food supply chain have been steep and sharp. The BBC reports that from March 2007 to March 2008, the price of wheat increased 130%, soya 87%, rice 74% and corn 31%. However, the rate of price increases has really taken off this year. For example, since January 2008 rice prices have increased 141%. So what is driving all this?

The price increases are generally attributed to a lethal combination of high fuel costs, bad weather in key food producing countries, the increase in land allocated to bio-fuels, and a surge in demand – much of it from the rising middle classes of China and India. Ethanol production in the USA has increased from 12 billion litres in 2004 to 42 billion litres in 2007 and is forecasted to be around 50 billion litres in 2008, while meat consumption in China has moved from 20 KG per person in 1980 to 50KG per person in 2007.

A major part of the problem is that once the price of rice or wheat has risen, other factors kick in which make things worse. There is panic and people start hoarding, speculators buy up supply, and food producing countries impose export controls to try and preserve food for their own people. This then means less is available to be exported to countries which rely on food imports. So, is the era of cheap food over, can the current problems be solved?

In theory, the rapid increases in food prices should create incentives for increased food production, which should resolve the problem. WFP head Josette Sheeran says she is confident the world could produce the food it needed, it was just a question of riding this difficult period and getting enough resources to invest. She went on to argue that “soaring food prices should be a wake-up call for the world to make long term investment in the food supply chain.” Small farmers will be unable to deliver more food without that investment. Amy Barry from Oxfam argues that agriculture has been badly neglected. “Agriculture stopped being sexy, it was all about unglamorous logistics,” she said. “The focus was more on delivering health and education services. That has to change.”

But it is not going to be a quick fix. Fuel prices are forecasted to remain high, demand from China and India is likely to continue growing and by its very nature, farming supply always responds with a lag. Many economists believe that government subsidies and price controls on food have slowed the adjustment process by shielding consumers from the food price increases.

Agriculture clearly needs to needs to move up the policy agenda and aggressive efforts made to expand local and regional production. It may not lead to cheap food but at least it may avert food shortages.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×3201026

We recommend an article written by Peter Laurie, who is not too far behind Lowdown as a columnist who uses words to make sense of the issues, wrote an this article which appeared in the Nation just passed. It is an article which is a 100% improvement on Carl Moores dribble.

The news story speaks to our food import bill being at a staggering BDS $ 1/2 billion, over the said period, and how there are efforts to reduce this bill. The story goes on to further say, et al, how “officials in agriculture believe they can help break the gigantic bill if the incentives offered by Government are modernised to meet current market demands so that they can improve productivity”.

While we in PDC are are in agreement with the idea that there is a serious need to reduce the food import bill of the country, we certainly are of the very strong position that we in Barbados need to import more food and too plant more food locally to meet the various different demands, tastes, preferences, incomes, costs, supplies, export demands, etc. that relate to this – albeit small – country of Barbados.

Thus, to drastically reduce the food import bill but at the same time to continue increasing the amount of food into the country, a future PDC Government will, et al, make sure that IMPORTS OF GOODS AND SERVICES INTO THE COUNTRY ARE ZERO-”PRICED” AT ALL POINTS OF ENTRY; that ALL EXCHANGE RATES WITH THE BARBADOS DOLLAR ARE ABOLISHED; AND THAT TAXATION IS ABOLISHED. Also, to make sure that greatly more, and perhaps, better food is planted in Barbados to meet increasing local and export demand a future PDC Government will make sure that TAXATION AND INTERESTS RATES ARE ABOLISHED; THAT INSTITUTIONAL LOANS FOR PRODUCTIVE PURPOSES ARE DEEMED NON-REPAYABLE; THAT AGRICULTURAL LANDS ARE PRESERVED FOR THE PURPOSE OF SOLELY AGFRICULTURAL ACTIVITY AND DEVELOPMENT AND THOSE ALONE; THAT NO FOREIGERS SHALL BE ABLE TO OWN OUR LANDS; AND THAT VERY REASONABLE CAPS SHALL BE PLACED ON THE AMOUNT OF LAND SPACE AN INDIVIDUAL BARBADIAN, MAJORITY OR FULLY OWNED BARBADIAN BUSINESS OR OTHER ENTITY CAN “OWN”, “PURCHASE”, “SELL” OR “LEASE”.

PDC

Oil is still cheap enough to have relatively inelastic demand, and at the moment producers are fully stretched in barely meeting demand.
When a shortage occurs price will go through the roof.

Check out the California gas crisis when a 3% supply shortfall caused an instant doubling of price.

Speculators may be on to a good thing, it is their money they are gambling with. I wish BL&P would have been smart enough to speculate in Oil futures but instead they just pass any market increase straight on to us as fuel surcharge.

If speculators are wrong, and the useless media pundits are right, they will get their fingers burnt.

I am sticking to my prediction of $170 dollar a barrel by year end.

Any one out there want to take a bet?

Is the increase not caused by over zealous traders and speculators? Why is it that opec is silent on increasing production.

We as a nation need to know our weekly consumption of gas and diesel to see if we are conserving our usage or merely being price takers.

You should understand that an increase in the gas and diesel price has a multiplier effect in the economy. When they are such massive increases the economy slows, there are less sales and the result is government gets less revenue. Now, would it not be better to reduce the tax take on the input side and therefore reduce the multiplier effect so that government will be able to maintain tax revenue from no so reduced output side of the equation.

By the way I am not an economist but a realist. Economics is a bit of gobbledigook for me. Once I know how to balance my cheque book and plan a budget. I am fine.

If you should evr give credence to such postings as above, you are seriously, seriously missing the point.

The mainstream press and oil companies have been lying to you for years, and still you are grasping for any excuse but the trurh.

When this state of denial is finally over will be the day we start adressing the real problem.

The world’s economy is based on cheap oil and there isn’t any left.

Refinery shutdowns, pirates in the Molacca straits, rocket attacks, Nigerian rebels…….when will you people realise that oil is doubling every year for one reason and one reason only.
It is very precious and it is getting harder to obtain….simple.

“How much higher (oil) will go . . . depends on a number of things: the political situation, whether there is a natural catastrophe, whether there are speculations in the market, whether there are strikes in certain producing countries,” al-Badri said at an energy conference over the weekend in Rome. “So there are many other factors other than OPEC production.”

One factor today was an attack on a Japanese oil tanker off Yemen in the Gulf of Aden. The tanker, the Takayama, was hit by a “rocketlike weapon” at 4:40 a.m. Yemeni time, according to the Japanese coast guard. None of the 23 crew members was injured.

“There’s clearly some geopolitical tension in the market,” Mark Pervan, a senior commodity strategist at the ANZ Bank in Melbourne, Australia, told CNNMoney.com “This will die down, but the market is pretty jittery at the moment.”

Oil’s surge is also partly due to the weak dollar. Crude prices are denominated in dollars and generally rise when the dollar declines.

“Today it’s a trader’s market,” Stephen Schork, editor of the Schork Report, an energy newsletter, told CNBC. Every time traders see weakness in the dollar, they buy crude oil.

“There is plenty of oil,” Schork said. The problem is “the lack of ability to refine oil.” He said there’s no reason for oil prices to be at these levels: “Fair value is $85 to $90 a barrel.”
a

Diaspora-ite here is a snippet which we feel summarizes the oil situation in simple terms. You should not count the Governor of the Central Bank out. The situation can change with a strong dollar which is possible with a change in government in the USA.

Well, I’ve got news – and 2 words – for the esteemed governess: China and India! The demand for oil from those 2 countries are the reason why oil isn’t coming down again, unless of course that all world economies implode. Such naive reasoning by a high government official makes me wonder if the government of Barbados really has a grip on reality, or if they are merely ducking down and hoping for the best.

And as to the statement by PiedPiper to the effect that, “I am not advocating Communism but look at the nations like Sweden, Norway and Denmark that have a Socialist concept where everyone has an equal opportunity to reap the benefits of hard work and a government that will support you to that end,” I will merely say that if you think like some, that the rate of taxation is too high in Barbados, you don’t want to follow the mode of Sweden, where the top marginal rate of taxation is around 65%, the VAT is around 20% and there is no incentive to “work hard” because whatever you earn is going to be taxed punitively. Besides, while not agreeing with unbridled capitalism, the underlying presupposition behind socialism is the use of force; or the ability of government to use state means of enforcement to ensure compliance with their policies.

I certainly do not have all the answers but I believe that the closest I have seen to a made-in-Barbados solution was provided by Peter Laurie in his column in the Sunday Sun. He seems to be advocating not communism, or socialism, but “communalism,” or a return to community. With that I can agree.

I guess my follow up question would be what aspect of government expenditure was being concomitantly reduced?

Tax revenues from petroleum products must have constituted a major source of revenue. if one gives this up, then one either needs another major source, a major build up in debt or a major reduction in government expenditure.

Passing on the oil price increases, subsiding them both have costs tot he economy. Its a matter of what you prefer or what you think has the best cost-benefit tradeoff.

My own sense is that given that oil and food prices seem stuck at high levels for the foreseeable future, I can see the merits of passing them on and pushing the economy to adjust. That is painful and costly but I cannot see that it is an inherently flawed or clumsy policy.

the debt levels built up by one policy affects the policy options open to the other. The national debt of barbados spiked post 2000 and is certainly around worrying levels.

The above comments that have been attributed to Mr. Jemmott, do indeed evince that a least one head of one private sector body in Barbados is very confident in the very positive and rational position he is taking to this talk in Barbados about layoffs coming to the country. Very truly, Mr. Jemmott must be commended by our party for being very refreshingly thoughtful on the subject, and for showing the country that you do NOT have to go down the line of implementing old tried, tested but failed methodologies at this perilous time in Barbados, given that what Barbados must have right now are modern and workable solutions to the current serious economic and financial problems we are facing in the country, and that will, when implemented by whomsoever, bring greater levels of prosperity and redistribution of wealth and income to the masses and middle classes of people in the country.

PDC

The date on my copy of the paper by Dr. Reid that you quote is October 12, 2001. I recall that it was written shortly after the 911 disaster in the USA, and seemed to convey the message that the time was ripe for a reappraisal of the (then) BLP government’s development strategy. It seems that Owen Arthur convinced the people of Barbados that the solution was to finance their way out of the crisis.

I remember seeing our former Prime Minister roundly abusing Dr. Reid on CBC television, without making any attempt to answer any of the challenges contained in his paper.

Six-and-one-half years later the chickens have come home to roost, but it is now Prime Minister David Thompson who has the misfortune to sit on the clutch of addled eggs that Owen Arthur should be made to suck!

Fortunately, many of the persons who contributed to the economic recovery of the early 1990s are still available and if requested will readily apply their intellectual energies to taking this blessed Island safely through its present discontents.

The following is an extract of some elements of that policy which were announced

Energy Pricing Policy
It is important that we maintain an energy pricing policy in which, as far as practicable, only the change in the price of crude is passed on to the consumer. In this regard, the tax on energy products becomes a critical issue.

Indeed our energy pricing policy has sought in recent years to reduce the tax on all energy products. We have reduced the total tax on gasoline by over 21 cents per litre or 82 cents per gallon since 1994.
In the case of diesel the reduction has been $1.15 per gallon. In addition, this government we have removed all the taxes on fuel oil and kerosene.
The success of our policy is evidenced by the fact that in 1994, when the price of crude was under $15 per barrel, diesel was sold at $1.29 per litre, whereas now that the crude price is $64 a barrel, a four-fold increase, diesel is selling at $1.49 per litre. In the case of gasoline, the price at the pump rose from $1.54 to $2.30, way below the fourfold percentage price increase for crude.

In the event that the price of crude oil continues to increase the Government will reduce the excise tax to ensure that the tax take on energy products remains the same. Obviously the tax take will fall if and when energy prices fall.

To mitigate the effects of rising energy prices we will -

1. Intensify the efforts to maximise the production of crude oil and natural gas;
2. Diversify the energy mix to make natural gas and other non-liquid fuels more dominant in the domestic economy;
3. Introduce and maintain a comprehensive set of energy conservation and efficiency measures aimed at maximizing the efficient use of energy;
4. Ensure that renewable energy plays a progressively more significant role in the economy.

The Government itself will be in the forefront of these activities since as the single largest employer on the island its energy consumption is huge. The Public Sector Energy Conservation Programme is spelt out in Appendix II hereto.

Renewable Energy
The Government’s target as originally set is for renewable energy to contribute in excess of 30% of the island’s primary energy by 2012.

However, given the unprecedented level of oil prices, we will be seeking to achieve this target in a shorter period. At the moment, the main renewable energy sources are bagasse and solar water heaters which contribute about 15% of the island’s prima ry energy supply.

We will now carry out a programme to develop other forms of renewable energy such as wind energy, fuel cane, and to improve the contribution of the current sources.

Wind Energy
The Government in recognition of the potential for wind energy in
Barbados has been examining its feasibility for producing electricity to be fed into the grid as far back as the nineteen eighties.

These wind power feasibility efforts were reactivated when a joint detailed assessment study of a Lambert’s east site in St. Lucy was undertaken a few years ago. This favourable assessment has led the
BL&P with the Government’s support to develop its own in-house plan for wind energy investment for this site in the very near future.

We will support the BL&P proposals to develop the wind farm which will generate 26,000,000 kilo watt hours (KWh) annually which at today’s prices have a retail value of $ 8.8 million with an import fuel saving of $4.6 million dollars.

Fuel Cane
As part of its plans to transform the sugar industry into a sugar cane industry, the Ministry of Agriculture and Rural Development through the Barbados Agricultural Management Company (BAMC) commissioned a Feasibility Study on a Fuel Cane Power Generation Project which was undertaken by Schaffer and Associates International of the United States of America. It is envisaged that through this fuel cane project, 30 mega watts of electricity will be produced.

A 30 MW plant should generate 263 million KWh with a reduction in the fuel import bill of Barbados of US $29 million per year.
The Cabinet has agreed that the fuel cane project is deserving of national support and hence requested that a project unit be established within BAMC to prepare a Pre-investment Plan and a Budget for its full implementation.

It is proposed that this investment will come on stream by 2008.

Concessions for Renewable Energy
At present items needed to support a Renewable Energy Programme are not shown as a separate category under the Customs Act.

I propose, therefore, Mr. Speaker to exercise the authority provided to the Minister responsible for Finance under Part II Section A of the
Common External Tariff to grant conditional exemptions for energy conservation schemes by waiving the import duty payable on the energy systems referenced in Appendix III hereto. The items to benefit include:

•Wind turbine systems
•Solar systems
•Bio-fuel systems

Energy Conservation
A demand side management study carried out by the BL&P suggested that an opportunity for saving 6% of total energy cost through more energy efficient activities of electricity users. There is an equally large opportunity for savings in non-electricity application such as in the transport sector. Given the fuel import bill of $350 million dollars over the last year it is estimated that energy efficiency savings can be as much as $24 million as the fuel import bill reaches the $400 million mark.
A national Energy Conservation Programme containing the following elements will now be implemented in Barbados.

Home Energy Efficiency
Inefficiently designed homes contribute to the wasteful use of energy.
Consequently, Mr. Speaker, Government proposes to support the use of materials which keep houses cooler, such as thermal barriers, roof insulation, window tint and ceramic roof coatings by treating them as “energy efficient systems/components” attracting an import duty of
5%. rather than the present 20% which they carry at present.

Home Energy Audits
Home Energy Audits should be encouraged as a standard practice in managing household spending, and lead to significant savings on energy costs. Indeed, Energy savings as little as $20 dollars per month per household will lead to over $40 million dollars in savings annually.
For each house holder there is need for separate advice on what components to buy (solar lights, fluorescent lights, thermal barriers, window tints etc).

It is therefore proposed that the cost of a ‘household energy audit and recommended conservation systems/materials’ up to $2000 be allowed as a deduction from assessable income under the Income Tax Home Allowance Scheme. The Ministry of Energy and Public Utilities will develop criteria for approval and certification of the auditors.

Energy Savings from Fluorescent Light Bulbs
Fluorescent light bulbs can be five times more energy efficient than incandescent bulbs. Although fluorescent light bulbs are more energy efficient than incandescent bulbs/fittings they both carry the same import duty rate of 20%.

To encourage greater use I therefore propose to reduce the import duty on fluorescent light bulbs and fittings to 5% effective immediately.

Transport Sector

The energy used by the transport sector is in excess of 30% of our national fuel import bill representing over $100 million in import value.
The following initiatives are proposed to induce significant savings.

Diesel Vehicles
Diesel and gasoline powered vehicles attract the same levels of excise tax.

However, diesel vehicles get up to 40% more mileage per dollar than equally sized gasoline vehicles. A diesel driver therefore spends less money and produces less green house gas emissions when traveling on the road.

I propose therefore, Mr. Speaker that there be a separate tariff for gasoline and diesel vehicles should be introduced. The existing tax structure will apply only to gasoline vehicles and a new tariff structure for the diesel vehicles based on equivalent fuel efficiency will be introduced.

Consequently, with effect from April 1, 2006, the minimum rate of excise tax of 46.95% which at present is applied to a gasoline vehicle with an engine size under 1600 cc and a chargeable value under
$45,000 will now be applied to a diesel vehicle with an engine size under 2000cc and a chargeable value under $45,000. Further details of the new excise tax structure for diesel vehicles may be seen at Appendix IV.

On the basis of the above if all gasoline vehicles were to be replaced by diesel vehicles the $160 million paid for gasoline annually would be reduced by $40 million. While such a transition is unlikely I intend to assist the process by mandating that effective September 1, 2006 all taxi owners and operators of vehicles for approved tourism ventures desirous of accessing the duty free concessions available under Part II B of the Customs Tariff can only do so by purchasing diesel powered vehicles in the future.

Electric, Solar, Hybrid, Natural Gas and Liquefied
Petroleum Gas Ethanol, Vehicles

I propose, Mr. Speaker, to encourage motorists to assist us in reducing the over $200 million spent on transport fuels annually by providing special concessions on vehicles that use energy sources that are less costly than traditional or locally available fuels.

I therefore propose that with effect from April 1, 2006 hybrid vehicles as well as those powered by solar energy, LPG and Compressed
Natural Gas will attract an excise tax at a fixed rate of 20% as compared to the lowest rate of 46.9% on regular cars.
The management of the Transport Board has been mandated to undertake a technical and economic feasibility study of using alternative fuels to power the Board’s fleet.

Meanwhile, ECONOMICS is one of the worst and most wicked POLITICAL ideologies, philosophies and psychologies ever invented by the European man in the 18 – 19 Centuries, and so damningly spread by him and others right up to this point in time. It is totally absurd for persons to suggest that anyone else should avoid being political about the so-called economic and financial affairs of Barbados at any given time, when in truth and in fact these affairs themselves are a major part of the political affairs of the country.

Surely, Voters must stop electing DLP and BLP Governments in this country, and must start electing a PDC Government, if they wish to achieve far greater levels of intellectual, social, material and financial progress and development for themselves and others.

PDC