Inflation & its Solution

By Bill Lindo

Belize City, April 2^nd 2023:  This is a short explainer on how the local oligarchy steals from Belizeans using global inflation as the cover.  This writer is a firm believer in capitalism, but in the American version of Hamilton, Lincoln, Carey, FDR, and Sun Yat-sen, not the British version of Smith, Marshall, Friedman and Keynes.

In a February 2023 blog I wrote:   “Some 2,390 years ago, the Greek, Plato wrote, “Ruin comes when the trader, lifted up by wealth, becomes ruler.” And American President Thomas Jefferson, who wrote its Declaration of Independence wrote, “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.” The great German-American Friedrich List the economist who created modern Germany, wrote in 1845, “The merchant imports poisons as readily as medicines. He enervates whole nations through opium and spirituous liquors… In the time of war he provides the enemy with arms and ammunition. He would if it were possible, sell field and meadows to foreign countries, and when he had sold the last bit of land would place himself on board his ship and export himself.”  Neither George Price, nor any subsequent Belizean government has been able to “discipline” the merchants and bankers of Belize – and so, forty-one years later, Belize still has no financial nor economic Independence, and thus misery abounds in the land”

A few days ago, the Statistical Institute of Belize (SIB) issued its report on local cost of living, especially for food and transportation, and on foreign trade (imports vs. exports which is a shame). According to SIB the food and non-alcoholic beverages of the Consumer Price Index (CPI) rose 14.6% from January to February 2023. The food items rose in one month to an un-believable 16.9%, with flour going up by 37.3%; vegetable cooking oil increased by 36.5%; dairy products rose by 20.6% and cereal products increased by some 19.7%.  

Putting these numbers another way, it means that the increase in minimum wages ($ 5/hour) enacted in January 2023 just lost some 20% of its value, or the increase now must be $ 6.00 per hour for the worker to purchase the same quantity of goods as he purchased in January 2023. In other words, inflation makes people poorer – they slide into poverty through no fault of their own, because of the greed of the oligarchy. But remember, merely a manipulation of the money supply will not cure inflation.

80-day “Cyprus” Rice grown by author

Now let’s look at the details of just four locally produced commodities which every Belizean consumes – rice, corn, soybeans and chickens. Chickens cannot be raised without corn and soybeans, which usually accounts for some 80% of the cost of the boiler chicken.  Below are the costs per acre to grow corn, rice and soy mechanically, on at least 50 acres.

ITEMS	Corn 2019	Corn 2023	Rice 2019	Rice 2023	Soy 2019	Soy 2023
Seeds	$ 130	$ 174	$ 115	$ 138	$ 91	$ 120
Fertilizer	$ 146	$ 173	$ 198	$ 237	$ 170	$ 190
Gas & Butane	$ 36	$ 46	$ 51	$ 59	$ 36	$ 46
Diesel	$ 135	$ 175	$ 145	$ 184	$ 140	$ 175
Machinery	$ 285	$ 310	$ 279	$ 306	$ 280	$ 305
Labour	$ 360	$ 360	$ 350	$ 350	$ 385	$ 385
Total  Costs	$ 1092	$ 1238	$ 1138	$ 1274	$ 1102	$ 1221
Unit/pounds	$ 0.24	$ 0.28	$ 0.25	$ 0.28	$ 0.50	$ 0.56

The above table of unit costs tells us that even though prices of imported seeds, diesel fuel and fertilizers increased between 2019 and end of March 2023, the average increase in local production costs was an average of 12%, therefore the retail costs should also increase by the same 12%, but this was not the case.  Thus in 2019, corn which costs $ 0.24 per pound to grow was retailing at $ 0.29, while the same hybrid corn costing $ 0.28 per pound to grow in 2023 is now retailing at $ 0.44 per pound or some 57% more. Using the same mark-up from 2019, yellow corn should be retailing in Belize City for some $0.34 per pound. If we put it another way, the difference between the current retail price of yellow corn and the just humane retail price, then the Belizean economy is paying some $ 15 million dollars + in excess charges.  At $ 10 per day that $ 15 million dollars can feed all the children of Belize for a whole week. Yes, Belize has food security in corn, but because of the monopoly situation of the corn industry, prices to consumers are higher by some $ 15 million dollars in March 2023 because of the greed of producers, not the retailers.

Let us turn our attention to soybeans. This bean only became a commercial crop in Belize after Mr Sinha of CARDI spent over 20 years developing a seed suited to Belize that now yields 2,000 lbs. +/acre for “open-pollinated” seeds if all inputs are done correctly.  Soybeans are grown mainly for the high protein content of the meal or left-over trash (after extruding the beans) to extract the crude oil. Chickens on average need about 19% protein for fast growth. Corn only has about 9%, under normal situations, thus the cheap soy-trash which has between 42% and 48% proteins is mixed with the corn along with a few vitamins, salt and lysine (amino acids) to feed the chickens we consume.

Belize consumes over 13 million birds per year, so soybean meal is required in vast quantities.  Belize harvested over 55 million pounds of soybeans last year, so Belize is self-sufficient in soybeans for feeding chickens.  As with corn, while the production costs of soybeans increased by some 12% between 2019 and 2023, the retail prices have sky rocketed. In 2019 soy meal was selling at $ 0.43 per pound. Today it’s selling for $ 0.73 per pound. This is 70% above the 2019 price, eventhough production costs only increased by 12%.  Soybean monopoly prices are taking some $ 6 million dollars from the Belizean economy by over-charging.

Chickens on a per-capita consumption basis is very high in Belize – one of the highest in the world.  We consume over 58 million pounds. Corn and soy meal makes up 80% of the cost of raising a boiler for meat which is usually slaughtered in seven weeks’ time. In 2019 a live boiler was sold to the processing plant for $ 1.25 per pound and retailed, dress-weight at $ 2.32 per pound, for a whole broiler chicken. Today that same whole broiler chicken is $ 2.89 per pound, or 54% more expensive. In other words, if monopoly pricing was not used, Belizeans would have saved about $ 13.5 million dollars buying whole chickens.

Now rice is eaten by most Belizeans – over 40 million pounds of paddy each year. Belize has been self-sufficient in rice production for over 60 years. From the beginning of the People’s United Party (PUP) its first leader, George Cadle Price had insisted that not only must rice be grown in Belize, but that its price, both wholesale and retail must be regulated by the State because it’s a product eaten each day by the poor who needs protection from the oligarchy – price control on essential commodities.

From the table above we can see that the production cost of growing rice paddy was $ 0.25 per pound in 2019, and that it increased to $ 0.28 per pound in March 2023, or some 12%.  Now something strange has happened with the pricing of rice, a stable commodity.  Humans cannot eat paddy rice, but after milling the paddy, the factory gets broken white rice, bran, and 5% or less broken white rice. The yields of rice milling generally yields 50% of Grade A rice, 12% Bran, 15% is broken rice, and the balance of 23% are shell, chaff, etc. From 2018 to 2019 the cost per pound to mill the rice paddy was $ 0.08 per pound.  Mainly because of increased costs of fuel, the current price of milling is about $ 0.10 per pound.  Remember electricity rates have not increased in Belize.  In 2019 the retail price of Grade A rice was $1.10 per pound. Wholesale was $ 0.95 per pound for Grade A; $ 0.40 per pound for broken over 25%; and $ 0.15 per pound for rice bran. Today, Wholesale for Grade A in 5 pound bags is $ 1.42/lb. and $ 1.64/lb. retail in 5 pound bags. Meanwhile the Belize Marketing Board (Ministry of Agriculture) have reopened the Big Falls, Toledo rice mill and is selling Grade A at $ 1.17 per pound wholesale, while the retail price of Grade A is $ 1.35 per pound or some 21% less than the other millers. The government should enforce the price of Grade A rice at not more than $ 1.35 per pound retail, as this would save the Belizean people some $ 8 million dollars per year.  And the government price paid for paddy at $ 0.40 per pound should be only for “milpa” rice to guarantee the small rice farmers a reasonable income. No big farmer should receive this price for their paddy.

The above is showing that eventhough Belize has basic food security in rice, corn, soybeans and chicken, the producers because of their monopoly status is over-charging the Belizean public to the tune of about $ 42.5 million dollars per year. We know this is just the tip of the iceberg. Inflation, especially which is caused by lack of supplies as we are seeing in today’s world can only be solved by production and national banking. But we cannot allow producers to take advantage of our people. Belize’s economy must become more, much more self-reliant if we wish to survive the gathering storm coming towards the Western world.

Perhaps it’s time we throw out the neo-liberal dogma and discipline the oligarchy before they destroy us with their greed.  Everyone who invests his time, money and brains must make a profit or the economy will collapse, but none has the right to get greedy and over-charge, especially for basic food stuffs –that is plain wrong. Inflation can and must be defeated.  In Belize the lack of access to money and government protection, especially to the local Belizeans must stop. Belize belongs to Belizeans — not to foreigners because of the colour of their skin and because they have better access to money which was created out of thin air.  They are not here to help – they come to take – to exploit – to create slaves.

 Belizeans, remember the wise words of that great Belizean founder George Price who understood the solution to this crisis very well.  He would say that it is not a matter of too little money or too much money; but that it is, “…we, who are the best judge of our own necessities… , not London, not Washington, nor the US Federal Reserve, and certainly not CFATF!  Price’s outlook was and is the intent of our Party’s Constitution’s Article I, Clause f:  That the  creation of money and control thereof in all its forms, including the national currency is, and remains the  sole responsibility of the people through their duly elected representatives…

We must take charge.  I believe that we have the wherewithalto make Belize as a great agro-industrial republic.  As patriots, we must be about the job of ensuring that this storm – this economic crisis and potential crash/collapse is actually solved in the shortest amount of time possible.  

Today is Palm Sunday – let’s remember the words of Jesus the Christ and our saviour – “I came to free you of your DEBT (a Golden Jubilee).”

Long Live a Free Independent Christian Belize!