Economist suggests using taxes on food imports to support farmers

Experts have linked skyrocketing food prices in Barbados to a rampant epidemic of non-communicable diseases (NCD), Barbados TODAY has been told.

Deputy Principal of the University of the West Indies Cave Hill Campus Professor Winston R Moore and former chairman of the Barbados Childhood Obesity Prevention Coalition (BCOPC) and health advocate Dr Kia Lewis confirmed the relationship between the price of food and consumption habits and their direct linkages to poor health.

Professor Moore, a regional and internationally respected economist, told Barbados TODAY that given the economic and healthcare burden of the NCD problem, the government should urgently put policies in place to encourage Barbadians to eat healthier food.

Acknowledging that the cost of healthier options was deterring people from buying nutritious food, based on a 2022/2023 study he conducted in collaboration with his colleague Dr Antonio Alleyne, he suggested that the government should introduce higher tariffs on imported processed food and lower the tariffs on healthy food.

The study, Mapping Taxes on Healthy Foods, found that food imports high in sugar, sodium and fats were taxed at 35 per cent but healthier foods were taxed 10 per cent more.

“The price of any good is a crucial determinant of whether an individual will purchase that good,” the study states. “This implies that policymakers could conceptually manipulate food choices and diet by strategically adjusting certain foods’ prices using taxation. People get energy and nutrients from the food they consume; however, the more unhealthy food, the greater the problem with diet-related diseases.

“This concept of imposing health-related food taxes has been proposed and utilised in many countries worldwide to stem the rising tide of obesity and other diet-related conditions and is motivated by the economic concept called market failure. This idea suggests that if the market fails to lead to an outcome that maximises societal well-being, the government should intervene in the market to correct this market failure.

“Given the dependence of Barbados on imported goods and services, one of the main taxes on goods is tariffs. The tariffs on imported goods can encourage consumers to purchase healthy foods or switch to more unhealthy foods to meet their caloric requirements . . . On average, the tariffs for energy-dense foods are lower than those for primarily fresh produce. This tariff difference pushes up the prices for fresher products and might lead consumers to switch to more energy-dense or unhealthy foods.”

Using information from the study, Professor Moore used the tariffs on imported tomatoes and chocolate to paint a picture of the stark difference in price markups.

“The average duty on tomatoes is 199 per cent while the average duty on chocolate is 20 per cent. This makes it cheaper for people to buy chocolate. Let’s say we import tomatoes for $2; that means that by the time they get to the supermarket shelf, they will cost around $8. Similarly with the chocolate, if it costs $2 by the time that gets to the customer it would probably cost $2.25,” he said, pointing out that people bought food based on their spending power.

“When you go into the supermarket you not only look at your favourite brand but you also look at the price and if your salary cannot afford a particular brand you buy a cheaper brand. Also, if your salary does not allow you to buy those fresh fruits and vegetables then you are probably going to be buying a lot more caloric-dense food, which has high amounts of fat, sodium and sugar content.”

Professor Moore added that the paper suggested that the government not only lower prices on healthy foods but increase the prices of unhealthy foods.

He said there should be a holistic approach to taxing all unhealthy foods as opposed to singling out certain items like what was done with the sugar-sweetened beverage tax. In this way, he said, the government would still be able to generate income from import duties while making wholesome food more affordable and accessible to the average Barbadian.

Dr Lewis said that nine months ago the BCOPC had prepared a paper for the government proposing the introduction of a basket of goods for healthy foods similar to the established VAT-free basket of goods.

But there has been no response from the government to document to date, she said, although she maintained that the government would come around to it.

Dr Lewis said: “Based on recommendations from the Food and Agriculture Organisation, having a healthy basket of goods is one of the mechanisms that could be used to reduce the cost of healthy foods and drive increased consumption of healthy foods. This increases availability of these foods to the wider population. There is a link between the increase in availability of healthy foods, persons purchasing those healthy foods and the reduction of NCDs and increase in overall health.

“Perhaps there have been other priorities and other things that government has been caught up with but we do think it is a good opportunity to bring it back to the top of the pile.”

The suggested basket primarily contained homegrown ground provisions and other staples and seasonal fruits, the health advocate added.

Professor Moore warned that lowering the cost of imported healthy food could harm domestic agriculture. He said the reduction of taxes on produce could decrease the level of protection that farmers enjoy. But, he said that other countries used the additional revenue from increased taxes on unhealthy food to provide subsidies to farmers so they could keep their prices competitive.

(sheriabrathwaite@barbadostoday.bb)