DESPITE GLOBAL FLUCTUATIONS IN THE PURCHASE PRICES OF THESE BASIC COMMODITIES, LOCAL PRICES HAVE REMAINED STABLE AS A RESULT OF THIS GOVERNMENT INTERVENTION.

As a longstanding measure of support to homegrown Micro-, Small and Medium-sized Enterprises (MSMEs) and the consuming public by extension, government subsidies are generously applied to imported container-loads of flour, rice and sugar, and sold at the Government Supply Warehouse to local retailers and manufacturers at severely discounted prices. The Supply Unit of the Warehouse is responsible for procuring, selling, and ensuring the even distribution of essential commodities such as parboiled rice, brown and refined sugar, and white and whole-wheat flour. These items are imported annually through a transparent tendering process, which carefully considers several factors including service reliability, product quality and price.

Despite global fluctuations in the purchase prices of these basic commodities, local prices have remained stable as a result of this government intervention. Government subsidies have a significant impact on pricing dynamics and strategies. They are designed to support domestic industries by lowering the cost of raw materials sourced from abroad. If utilized as intended, subsidies can make imported goods more affordable for manufacturers; resulting in lower production costs. This, in turn, can lead to more competitive pricing of finished local products.

Permanent Secretary in the Ministry of Commerce, Manufacturing, Business Development, Cooperatives and Consumer Affairs, Mrs. Sophia Alfay-Henry underscored the continued impact and value of government subsidies on flour, rice and sugar to the business community and consumers in the current global economic climate. Mrs. Alfay-Henry said it was important to highlight the gross disparity between the global and local prices of these staples.

“The prices of [these] commodities are very volatile—especially flour, given the unstable price of wheat. To ensure affordability, to ensure that the prices of these commodities don’t increase, the government has been selling these commodities below the purchase price or the cost in most cases,” she said. “We purchase brown sugar under contract at a price of $98.00 and when it’s unavailable from that supplier, we purchase at $144.00—notwithstanding, brown sugar is sold at $100.00 per bag [in both instances]. In the case of refined sugar, it is purchased at $108.00 for the 110 lb bag and we sell it at $98.00.

“Currently, a bag of flour is purchased at $128.00 and is sold to the bakers at $85.00—that’s a difference of $43.00. The government is actually bearing that cost. With respect to the total value of the subsidy for the last financial year, it was $7.5 million on flour only and in total [approximately] $11 million. It’s very important because a lot of our small shops, our caterers depend on these basic commodities to make their products … to earn a livelihood.”

The Permanent Secretary also noted the cumulative impact to exporters who relied almost exclusively on the government supply of these commodities to continue producing their goods cost-effectively.

Below is a snapshot of the purchase and selling prices of white flour and brown sugar for the last two financial years:

Commodity	Total Purchase Price FY 2022-2023	Total Selling Price	Difference	Total Purchase Price FY 2023-2024	Total Selling Price	Difference
White Flour	$25,375,000	$14,875,000	-$10,500,000	$22,400,000	$14,875,000	-$7,525,000
Brown Sugar	$7,878,400	$8,000,000	$121,600	$11,520,000	$8,000,000	-$3,520,000
						-$11,045,000

 

Commodity	Purchase Price per bag 2022-2023	Purchase Price per bag 2023-2024	Selling Price per bag 2022-2024	Retail Price per lb. 2022-2024
White Flour	$145.00	$128.00	$85.00	$1.00
Brown Sugar	$98.48	$144.00	$100.00	$1.00