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The “Roop” Economic Corner: Support our local products

Jul 18, 2008 Peeping Tom

Introduction:
I am assuming that our policy makers share my belief that the private sector drives our economy. However, this may not be the case.
We hear our politicians turn business pundits talking about what we need to create wealth, all the while pounding on the private sector as the evil empire and insisting that all tax advantages go directly to the consumer without going through the private sector.
This is a very confusing policy. How will the consumer have a reduction on goods if not through the private sector?  That is where zero rating policies are ineffective in reducing prices and curbing cost of living woes.

Support Local
Products
1. The reality is we prefer to buy foreign products, such as certain fruit juices, even if there is a competitive local product on the market, such as the Topco juices. We have to realize that the more Topco juices sell, the more jobs will be created. If we continue to give our wealth to others through our conspicuous consumption of their products and services, we will continue to have billions of dollars in aggregate income and only thousands of dollars in individual family wealth.
Additionally, we will continue to have the power of income rather than the power of wealth which only allows us to pay our bills and contribute to the power of wealth for others.
2. When we in the private sector call on the government in a country such as ours to develop an integrated economic plan that ensures legislation is in place for fair competition and the understanding that in a developing country, certain tariffs need to be established if our products are to be successful globally, it is for a reason.
I wonder why Lays did not consider setting up a manufacturing plant in Guyana and find it cheaper to ship large quantities of products in. Same with our pepper industry; it is cheaper for a company to ship in pepper sauce than for a company to produce locally and sell internationally.
Ever wonder why we see certain products all over the country but they have not set up a plant in Guyana to produce the pepper sauce here even though the pepper is shipped out of Guyana. Well the answer may be in the above.
3. We have to improve the quality of Guyanese products and the ability to effectively market our products to our citizens.
This will assist in overcoming a major hindrance to the growth of our economy. One company that has made us proud of our local products is DDL. 
Their concentration on quality control, packaging and marketing has put products such as our Eldorado Rum on the world market.
Economies of Scale – Cost of Production: 
We all struggle in Guyana with this very issue. Why? It’s all about our economies of scale.
Henry Ford proved long ago that the cost of producing an automobile was very different when you produced 100 cars a year than when you produced 100,000.
With a mass market for automobiles, it paid to invest in expensive mass production machinery, whose cost per car would turn out to be modest when spread over a huge number of automobiles. But, if you sold only half as many cars as you expected, then the cost of that machinery per car would be twice as much.
Why do we struggle with this concept in Guyana? There are many reasons, but the most important factor is the limited local buying power and the difficulty for our products to compete in the global market place.

Conclusion:
The more we support our local products, the better chance they will have to manufacture or grow on a larger scale.
 Fair competition must be allowed and government’s heavy hand must stay away from such areas.
Please submit your questions on any economic issue you would like to discuss in this corner to [email protected]

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