The government will hold discussions with local farmers and producers about the possible measures and mechanisms that might eventually help reduce the negative impact of price hikes due to the ongoing international grain and cereal crisis, Parliamentary Secretary Tonio Fenech said yesterday.
Mr Fenech, who was speaking during the launch of the July edition of the Economic Bulletin, said that the government will do its utmost to see what can be done to protect the local industry and consumers.
He mentioned the measures taken by the government following the international oil crisis.
“The oil crisis is not over yet – it is still $80 a barrel – but we have learnt to live with it. The government pays a subsidy to Enemalta to help control the surcharge,” he said.
“We will soon start feeling the impact of inflation in the agriculture sector and the government is already conscious that the price of a number of imported products has already gone up,” he said.
Mr Fenech explained that there are a number of reasons behind the inflation of agricultural products.
“World consumption of agricultural products has increased but the production has not increased to meet the supply,” he said.
Furthermore, he added, last year China increased its milk consumption by four times its usual rate.
The harvests in several countries were lower due to a number of conditions, including climatic changes, and as a result have decided to export their produce.
“Recently the EU has encouraged farmers to start growing energy-related crops, for biofuel and ethanol, instead of focusing on cereals,” he said.
These were a number of factors that might have lead to a perception of shortage of supply, said Mr Fenech.
“The perception of a problem automatically increases the prices,” he said.
Mr Fenech and Prime Minister Lawrence Gonzi, today, attend an informal Economic and Financial Affairs Council (Ecofin) in Portugal to discuss the crisis with other EU member states.
Another issue at stake is that local farmers and producers are buying cereals and animal fodder at around Lm69 a ton – this is expected to go up to around Lm110 a ton in October,” he said.
He pointed out that it is not easy, and mentioned the recent subsidy issue between Maltese bakers and the government.
“Instead of a two cent increase, we managed to control it to a one cent increase on the Maltese loaf. However, it wasn’t cheap and it will cost the government around Lm800,00 a year,” he said.
Mr Fenech said that the Maltese economy is going through a period of growth that has not yet reached its peak.
“Right now the Maltese economy is going through a pretty good time and is growing as each quarter goes by,” he said.
In the first quarter of 2007, the Gross Domestic Product (GDP) increased by 3.5 per cent thanks to growth in the external sector.
There was a marginal increase in real exports of goods and services but the main improvement in the external sector was mainly due to a decline in real imports.
Mr Fenech said that there was an increase in employment in the private market services – especially in other business activities, recreational, cultural, sports, services, financial intermediation and education.
However, he added, the main contributor to growth in gross value added during the first quarter of this year continued to be the services sector.
“The past seven months have been the best that Malta has had for a number of years. These are the results of several decisions that the government and several stakeholders have taken in the past months,” said Mr Fenech.
He pointed out Malta has also achieved very positive results in the employment sector.
“According to recent statistics issued by Eurostat, Malta ranked third after Latvia and Spain with the highest rate of employment growth at 3.1 per cent,” he said.