Infinite Observations

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Eco,Products,Store,Counter,With,Large,Assortment,Of,Fresh,Vegetables
Wladimir Kruythoff

Wladimir Kruythoff

Founder & CEO Infinite Observations

Pilot Study On Price Ceiling On Staple Items – Foodstuffs | 2021 – 2022

Commodity Food Price Data Collection & Reporting

Prices provide key information for almost all activities on a global scale. As overarching indicators they give timely insight in the supply and demand forces in a macro-economic context. The overarching indicator nature of prices are also significant in the context of catastrophe risk management better known as natural and/or man-made disaster management, which is directly related to weather associated crop production, the transmission of global volatile commodity prices to the consumers on the domestic markets and food security as well as many other extreme
occurrences. From December 2021 to July 2022 Infinite Observations executed  a small-scale preliminary study of commodity food prices for the ministry of Tourism, Economic Affairs, Traffic and Telecommunications (Ministry TEATT) of the government of Sint Maarten. The aim of the project was to evaluate the feasibility of using a price ceiling as a form of price control mechanism and the following objectives were taken into consideration:

  • Carry out a small-scale preliminary study in order to evaluate the feasibility of using price ceiling as a form of price control government mechanism;
  • Update the current list of staple food items and suggestions to add items to the list with the motivation and methodology of calculation;
  • Determine the most beneficial target audience for the use of price ceiling based on available resources;
  • Investigate the adverse events/effects of establishing a price ceiling;
  • Improve or suggest improvements upon the study design prior to performance of a full-scale execution if proven to be successful;
  • Additionally, the pilot should consider alternative mechanisms to achieve lower food prices and addressing perceived state of market disequilibrium;
  • Create a data collection and pricing model to monitor and calculate margins on price controlled items;
  • Analyze existing data collection methods and monitoring activities and make proposals for improvements;

To meet the objectives Infinite Observations will proposed a mechanism with enough flexibility to be incorporated into the economic strategy of government. The reduction or stabilization of prices could be achieved through the use of design strategies that Infinite Observations will propose in our research findings. The research itself will be divided into two parts, namely a (1) Survey and a (2) Report (that includes planning, design, observations, recommendations and conclusion) . The study was only limited to the data collected during the survey for the life cycle of the project.

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fig.1 Commodity food price data collection by Infinite Observations’ surveyor

report image website

fig.2 Infinite Observations’ project report.

An Interactive “Market Place Mapping Dashboard”

One important aspects of the in this project is a “Market Place Mapping Dashboard” that is the link between data collection, monitoring and making that data available to stakeholders, policy and decision makers as well as consumers. A Market Place Mapping Dashboard can lead to better policy and decision making, strengthen
the capacity of the department while making it possible to monitor (local as well as global) commodity price changes, can lead to lower prices, which can result in a more prosperous society.

fig.3 Infinite Observations’ “Market Place Mapping Dashboard”.

Domestic Agriculture: Diversification of Sint Maarten's Economy

Hurricane Irma & Maria (2017), followed by the COVID-19 pandemic that begun in 2019, then the war in Ukraine (2022), which has led increase in food and energy prices, has laid bare the vulnerabilities of food security on Sint Maarten as well as many other Caribbean Islands. Domestic agricultural (, livestock, fishery, etc.) production is the only long term sustainable response program to price increases stemming from food shortages as a result of human induced and man-made catastrophes. Any government agricultural policy framework will have to be an approach that will better enable (small scale subsistence) farmers and the food sector to simultaneously improve productivity, increase competitiveness and profitability, improve resilience, access markets at home and abroad, manage natural resources more sustainably, contribute to national food security, and deal with extreme market volatility, while avoiding trade distortions. The agricultural policy framework must consist of the following: (1) macro-economic governance, (2) agricultural research and development, (3) markets, (4) land management, (5) climate change, (6) public expenditure, (7) policy priorities, (8) farmer knowledge, organization, awareness and education, capacity building, (9) financial services, (10) technology and (11) taxation.   

fig.4 Global price increases (including Sint Maarten) from 1970 to 2022 (click image to enlarging).

Research Findings

Infinite Observations stressed that price ceiling intervention programs are suitable to use during emergency situations, i.e. in times of drought and crop failure, flood, hurricane aftermath and other catastrophic events as well as during war time as a short-term strategy to curb rising commodity prices as a result of inflation.

However, in the medium- and long-term government needs to adopt policy and social measures to counter rising prices and bridge the gap between combined demand and supply. The need to introduce structural economic and social reform to transition from is single pillar (tourism) economy, that is dependent on a single or few form(s) of income source(s), to one that invests in, i.e. agriculture, fishery and sustainable (solar) energy.

Through grants and subsidies for the European Union government can explore production and productivity initiatives and support current efforts to produce agricultural outputs as well as the implementation of new technology for farmers so that supply would equalize with the created demand in markets and lower prices for consumers, while creating employment.

Data collection and monitoring of commodity prices are not equal to a price ceiling. Data collection and monitoring of commodity prices, CPI data, cost of living data, various market analyses are all tools that authorities must use
on a regular basis to study and understand the local market in relation to global prices. Based on the data collected, policy and decision makers can/ must implement countercyclical measures, i.e. a price ceiling (short term)
and accompanying medium and long term economic policy to curb inflation, the impact of rising cost of fossil fuel, i.e. for electricity and transportation, and as a result increasing commodity food items and services.

The program must be accessed regularly to ensure that vulnerable low income households can do better than making ends meet. Government must also be aware that vendors, wholesalers and retailers, need to make sufficient profit margin on the market.

Government must also acknowledge when and how a price ceiling intervention program will be implemented there is a need to create an awareness and consult with the various stakeholders in society, from low income households, to traders and legislators, so as to work together to create a well thought through intervention program that will impact market imperfections and irregularities as well improve the livelihoods of beneficiaries and non beneficiaries.

Price data should be:

  • Collected every month;
  • Previously collected data can serve as baseline;
  • Consistency in product selection is vital;
  • Timing of data collection every month;
  • Well trained and experienced surveyors;
  • Proper documentation;
  • Secondary data should be used to enhance the analyzes and interpretation;
  • Facilitate sharing of data with other agencies;
  • Foster a culture of learning and improve the quality of data collection;
  • Characteristics such as price, weight, barcode, etc should be recorded accurately;
  • Timely quarterly reports on price data should be made available to the
    general public (via all major media outlets and on a dedicated website);
  • Comparison should be made between price data of the domestic market and regional as well as global markets.

Policy responses are key to providing medium-, and long-term solutions. The focus should be on:

  • Diversification of economy;
  • Rapid fiscal and monetary policy adjustment;
  • Measures must not reverse any past key fiscal and structural reforms;
  • Develop and implement social safety program to protect vulnerable low
    income households;
  • Ensure short-, medium- and long-term economic efficiency and fiscal stability;
  • Measures can be in the form of (a combination) targeted taxes, tariffs, transfers, subsidies and grants;
  • Focus on subsidies and grant in the agricultural and energy sectors;
  • Programs will require detailed planning, administrative capacity, transparency, accountability and assessments.

This article gives a short overview of some topics discussed in the report: “Pilot Study On Price Ceiling On Staple Items – Foodstuffs | 2021 – 2022”.  For a copy of the report please contact the Ministry TEATT of the government of Sint Maarten. For information on surveys and data collection services contact us at Infinite Observations.

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