Carmen Linares is unaware that several mobile markets have been set up in El Salvador where vegetables and fruit are sold at a lower price. She is 52 years old. There is no cable TV in her home and she rarely uses her cell phone except for calls.
It took him a couple of days to realize that since July 6, Salvadoran President Nayib Bukele ordered merchants to lower the price of food without discussion. He has not been able to buy cheaper food recently either.
“I recently learned that food prices were going to go down, but the truth is that they haven’t gone down much. I usually buy in stores or from trucks that sell fruit on the street and at least vegetables are still almost at the same price. As you can see, I have to buy less,” she told the newspaper. Voice of America.
The difficulty Salvadoran families find themselves in to buy food with a minimum wage of 365 dollars a month is now a point in the Salvadoran government’s sights: President Nayib Bukele ordered merchants to lower food prices under penalty of being prosecuted for smuggling and tax evasion.
“To the importers, wholesalers, distributors and food marketers who are abusing, lower the prices of food or there will be problems.” This was the ultimatum that Bukele gave in a national radio and television broadcast on July 5.
While Bukele waits for prices to drop, his government has set up several mobile markets, a program of the Ministry of Agriculture, where food is sold without intermediaries, and therefore, at better prices.
But the warning has not gone down well with the agricultural sector, which does not see a viable way of lowering food prices without first finding a solution to the reasons why El Salvador sells its food at a high price.
One of the biggest problems farmers point out is that El Salvador has low agricultural production and a high dependence on imported products, meaning it buys food produced in other countries and at other costs.
According to Luis Treminio, president of the Salvadoran Chamber of Small and Medium Agricultural Producers, production in the last agricultural cycle in El Salvador (2023-2024) has been the lowest in the last seven years, and he lists several causes: climate change, increasingly expensive and scarce labor, higher land rent, more expensive agricultural inputs, and the lack of support from the last four Salvadoran governments to promote agriculture.
Besides, El Salvador is the second country in Central America with the largest deficit in food productionfollowed by Panama, according to a report published in December 2022 by the Economic Commission for Latin America and the Caribbean (ECLAC), the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP).
According to Treminio, Salvadoran farmers have been seeking approval for a National Agricultural Policy for 20 years that includes a food reserve to control market prices so that when demand increases, they can obtain the product from the reserve to stabilize the price and avoid excessive increases.
They have also asked governments to encourage home-grown crops by supporting subsistence farmers when crops are lost due to rain or drought. They have also asked them to protect crops by means of reservoirs to capture rainwater when drought threatens.
But they are not only looking to anticipate crises. Salvadoran farmers also hope that the National Center for Agricultural and Forestry Technology (CENTA), a Salvadoran public institution, will be able to change, with the help of technology, the traditional way of farming in El Salvador, for example, by using less chemical fertilizer and more organic biofertilizers that are more environmentally friendly and cheaper.
“President Bukele is being poorly advised. The situation that must be resolved first is the situation of production. You cannot force the producer to sell cheaper when he is producing at more expensive prices. If he wants to control the price of food, he should first control the price of agricultural inputs so that the producer produces at a low cost and sells at a low price,” Treminio told the newspaper. VOA.
But Bukele is pushing for criminal cases for tax evasion and smuggling against those who do not lower food prices. A threat that even extends to large supermarket chains, with national and foreign capital, which are already being investigated for their retail prices.
The Consumer Ombudsman, a public institution in El Salvador, claims to have its sights set on 60 cases of unjustified price increases on some basic basket products.
But official inflation data, which measure the increase in the price of goods and services, indicate that food is the good with the highest price increase in El Salvador. Of the 12 products and services that make up the Salvadoran economy, Food prices are expected to have an inflation rate of 3.63 as of June 2024double compared to 1.48 for all products.
In addition, the basic basket went from 200.02 dollars in 2019, when Bukele assumed his first term as president, to 256.02 dollars currently. According to an opinion poll by the Francisco Gavidia University (UFG), 64.3% of Salvadorans “have reduced their consumption of some products or services due to rising prices.”
Initially, the COVID-19 pandemic caused the production of goods and services in the world to decline, impacting inflation worldwide.
For economist Rafael Lemus, economies that are not very dependent on the international market have been able to weather the crisis better. This has not been the case for some countries such as El Salvador, whose economy is purely import-based, meaning it depends on the price that the international market sets for its product. Therefore, a “threat” to merchants does not solve the root problem.
“The economy does not work based on threats, it works based on incentives and support. There are mechanisms to regulate prices under certain conditions, for example, that there are few importers and in this way a follow-up can be done with an invoice, that is, how much they bought from the importers and then how they are selling it to the distributors,” he told the VOA.
According to the Central Reserve Bank of El Salvador, in 2022, The country imported 116 million dollars worth of fruits and other foodstuffswhile it exported only 7 million dollars in that area. By 2023, fruit imports increased to 123 million dollars versus an export equivalent to 5 million dollars.
An import reality that hit the Central American country hard at the end of 2023, when its neighbor Guatemala went into a national strike, squeezing the economy not only of Guatemalans but also of El Salvador, whose dependence on food ranges between 60% and 90%.
According to official data, the countries from which El Salvador buys the most products are the United States, the People’s Republic of China and Guatemala, the latter being the country from which most of the fruits and vegetables consumed in El Salvador come.
“The initiative to protect consumers from price increases is a good one. However, it must be taken into account that the main consumer products for Salvadorans come from Guatemala, and there is currently price speculation in Guatemala. […] El Salvador should agree on these measures with the Guatemalan government so that prices can be regulated and a rebound effect for Salvadorans can be avoided,” he added. VOAagricultural engineer Douglas González.
The drought and constant rains recorded between June and July have caused farmers in Guatemala to increase the price of their products, according to González, a fact that is already impacting the Salvadoran economy.
El Salvador is not the only country in the region that has recently sought to control prices. Cuba has set a maximum price cap on several basic products in an attempt to contain an inflationary trend.
On the other hand, Javier Milei, one of Bukele’s main allies in the region, has chosen to do the opposite of the Salvadoran president: deregulate the economy in Argentina by removing state control over prices.
“We have an outstanding debt in El Salvador: that there be a regulatory body that controls prices and that it be the State itself that governs it. As we are, it is not possible. We are a country dependent on the production of other countries, therefore it is not so easy to lower prices,” he added. VOA Katia Aguilar, member of the Roundtable for Food Sovereignty in El Salvador and coordinator of agroecological processes at the Salvadoran Ecological Unit (UNES).
For Bukele, the rise in food prices in El Salvador is already a crisis, influenced not only by the international market but also by abuses in the local market. With his government cabinet, he seeks to lower prices by warning of consequences for alleged illegalities that he claims have been identified in the marketing of food.
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