Return to drawing board
The debate over the duty being charged on certain items being imported by fast food operators [and the threat/possibility of job losses as a result] is not making a lot of sense.
Perhaps we should put that another way: The various players in the debate have so far done an abysmally poor job in trying to convince Barbadians about the issue — and that does not set the tone for a sensible resolution.
In simple language, as we understand it, the operators of Burger King and Subway restaurants are claiming that the 184 per cent duty being charged on key ingredients is literally crippling them, with at least one warning that no change could see them out of business by the end of the year.
Interestingly, their major challenge, it would appear comes from the fact that the duties are applied to their primary ingredients, including hamburger patties. That must be frightening for a hamburger joint!
On the other hand, we have the Barbados Agricultural Society and the Barbados Manufacturers Association charging that any change in duty could result in the loss of hundreds of jobs. They contend that the operators should source their products locally.
This position has led to the counter charge from the restaurant operators that the local products do not meet the standards of the international food giants whose names they are using. And it is here that the whole thing appears to degenerate into the ridiculous.
Let’s ignore product quality for the time being and focus on duties. In relative terms, both Subway and Burger King are new to Barbados, and it would be reasonable to conclude that they would have known and factored into their economic model all costs that would be associated with the business.
Their situation, it would appear, is far different from those business operators, who for example, complain that the increase in VAT from 15 per cent to 17.5 per cent was killing them.
Why was there no lobby, that we are aware of, prior to setting up to have this high duty lowered? These operators will have to do better at convincing Barbadians that this aspect of their problem is not a result of their own poor planning. After all, every other type of business must play with the tax hand they are dealt.
Now we return to local sourcing and product quality. There is no doubt that traditionally Barbadian vegetable farmers, in particular, paid little attention to the look of their produce, and Barbadian consumers just accepted it. However, with the advent of modern techniques, and competition, in many cases were it not for the labelling consumers would hardly be able to tell the difference between the imported and home-grown.
It’s been a long time since we have had reason to question the quality of our local poultry, pork, lamb and beef. We can produce supplies for five-star restaurants but can’t meet the grade of fast food restaurants that can be found on every street corner in the US?
Why is it that our producers can’t meet the standards required by the international brands? Were they given specs in advance? Did they try and fail? Is there a lack of knowledge or equipment? Are there issues that exposure to the right environment, perhaps in a jurisdiction that is meeting the required standard, would correct?
We find it hard to believe that the highly educated population of Barbados can’t produce beef patties to the “standards” of a fast food operator; that in 2013 our bakeries can’t produce and slice buns “right”. If that is accurate we have a really huge problem on our hands.
Having said that, however, and always being mindful of the volume of agricultural subsidisation done in the United States and Europe in particular, we still have to question any arrangement which at this stage requires a near 200 per cent duty to protect local farmers and their employees.
Whether or not we accept it, it is clear that nationally we need to return to the drawing board and look at how we can return realistic and sensible viability to agriculture in Barbados, as opposed to a false viability predicated on astronomical tariff protection.
Perhaps we may need to break down the whole equation: look at every agricultural input, every duty attached to each input; whether incentives should be offered to encourage cooperative-type approaches so that a dozen small farms can operate as one large entity and benefit from economies of scale; whether water for irrigation is supplied from natural reservoirs at minimal rates, while residential and other commercial customers depend more on desalinated water, etc.
We need to welcome investors and we need to support our local producers and the two do not have to be mutually exclusive. We are satisfied that with the right arrangements there is nothing Subway or Burger King requires that we can’t produce here — unless they are offering customers semi-conductor burgers and nuclear sandwiches.
It calls for understanding and a willingness to work together. And if the goods are produced in a manner that satisfies all sides the issue of import duty becomes moot!