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A CHICKEN AND EGG SITUATION

Dec 07, 2012 Features / Columnists, Peeping Tom

 

What does the government mean by zero tolerance towards price gouging during the Christmas Season? There is nothing that the government can do against someone who decides to raise prices for chicken and eggs?
There are no longer any price controls in Guyana. And any shortages have to do with market disruptions and not because of a lack of foreign exchange or input into the production process.
There is nothing other than exerting moral suasion that the government can do at this time about any price increases. So, all the talk about zero tolerance is nothing but hot air.
Despite the fact that it is stated that there are adequate supplies of chicken, an artificial shortage will be created soon by unscrupulous business persons and this will spike the prices of chicken and eggs as Christmas Day approaches.
This is how it is and this is how it has always been.  But perhaps now is the time for some action to be taken to prevent this rip-off of consumers every Christmas Season.
A few years ago when the price of chicken hit a then record $300 per lb there was moaning and bawling. There were threats to allow the importation of chicken. But those hiking the prices understood that it would take at least six weeks for orders to be placed and any chicken to hit the market. As such, they knew that they could inflate prices and get away with it.
If perhaps the government was a large scale purchaser or producer of chicken it could have made the necessary market interventions. But it could not do anything otherwise. Today, the price of chicken is nearing $400 per lb, and this is considered the average price, when a few years ago $240 was considered the normal price per lb for whole chicken.
It is therefore disingenuous for there to be any bombast about the stability of prices of chicken this Christmas Season. The price of chicken has long increased above the average of a few years back and therefore all that is happening is that the already unaffordable prices for the poor have become a baseline for price stability, and this is shameful.
The PPP/C government does not seem to have a clue as to how to get prices down, how to reduce production costs, and how to ensure that market disruptions are minimized. The public will pay more for chicken and eggs this Christmas. This is how it has been for the past one hundred years in Guyana, and it is not going to stop this year.
At best, what will happen is that any price increase is going to be moderated, but you can bet your bottom dollar that eggs are going to reach $1,000 per tray in the last week leading up to Christmas and on Christmas Eve chicken is going to retail for as high as $400 per lb.
There is a way for the public to stop this rip-off. All they have to do is to decide that for one week, starting now, they would not eat chicken. Now this will lead to a glut on the market in the two weeks before Christmas and prices will stabilize below $400 per lb of chicken and below $900 per tray of eggs.
What the government should be focusing on is not stabilizing the price at its present levels, but returning it to what it was four years ago when chicken peaked at $300 per lb.
To achieve this objective, the government needs to bring in two major chicken producers from China, give them the land and permits to start large scale chicken farms on the condition that the production will be bought by the government at pre-determined prices.
The Chinese are going to come and they will produce the chicken below $220 per lb and the government will then be able to flood the market at $260 per lb retail. That is all it will take to stop price gouging of  chicken and eggs.

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