Business & Economy

Gov’t policy, monopolies blamed for high cost of food in Panama

By Giovanna Ferullo M.

Panama City, Aug 10 (EFE).- Food prices remain high in Panama despite declines elsewhere in the region and while the government attributes the problem to the workings of the free market, analysts point the finger at antiquated agricultural policies and abuses by the firms that dominate distribution.

“The prices are not going to go down and those who say they will go down are telling lies,” Agriculture and Fisheries Development Minister Augusto Valderrama said recently, calling the elevated prices a function of the law of “supply and demand.”

Prices of food and non-alcoholic beverages rose 3.4 percent in June compared with the same month in 2022.

Roughly half of all working people in Panama, a nation of 4.2 million, are part of the informal economy and as such, are not covered under minimum-wage laws.

But even among people with formal jobs, average monthly pay is around $380 per month, among the lowest in Central America.

In June, according to the Consumer Protection Authority (Acodeco), the cost of the basic food basket reached $290.17, up $4.25 from a year earlier.

Panama, like other developing countries, suffered from supply-chain disruptions during the Covid-19 pandemic and from spikes in fuel and food prices associated with Russia’s February 2022 invasion of Ukraine and the subsequent Western sanctions against Moscow.

But while comparable nations have seen an easing of food inflation in recent months due to improvement in the global economy, Panamanian families have seen prices continue to rise, financial analyst Carlos Arauz tells EFE.

“The distribution chain in Panama is totally polluted and it’s a toxic element that impedes competition,” he says, citing the role of monopolies and oligopolies in keeping prices elevated.

Economist Felipe Argote said that because of regulations limiting food imports, the normal dynamics of supply and demand do not apply in Panama.

For the last 40 years, he said, Panamanian governments have subsidized “inefficient” agriculture, generating profits for a handful of producers.

The dean of the School of Economics at the University of Panama, Rolando Gordon, laments the absence of an agriculture and fisheries policy.

“There is no solution in the short term, unless prices fall drastically in the international market, which I don’t see happening,” he says. “The problem with imports is that there is a monopoly of three or four companies. There is no real competition, not in fertilizers or anything.”

The analysts agreed that the government should promote the adoption of the latest technology in agriculture and foster farming cooperatives, as well as being prepared to intervene in the market with prize freezes or subsidies to ensure food security for Panamanians.

EFE gf/dr

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