Living with Inflation

Panamá is not immune to the sharp increases in food prices and general cost of living. The rise in the prices of gasoline and diesel has been sobering in an area where $10/day is a very good wage, and skilled labor such as electricians and plumbers make $15. I know of at least one death attributable to the rise in gasoline prices. An older man was returning from work on his bicycle, riding on the carretara (highway), when he was struck by a motorcycle and killed. He had started riding his bike because he couldn't afford gas for his old car. Fortunately, bus fares haven't gone up recently; although there has been a big jump in the number of cars on the road, most chiriquenos still use public transport--or walk or ride horses or bicycles.

Sunday's (May 4) La Prensa had most of an entire section devoted to the food crisis and what the situation is in Panamá. Rice grows in this area; you can see the farms in the lowlands outside of David. I had assumed that Panamá produces all the rice it consumes. Not so. Consumption is about 7.5 million quintales (100 lbs) per year; internal production is about 6 million. The big surprise for me was maize (corn). Annual consumption is about 7 million quintales but only 500 thousand of which is for human food--the rest is for animal feed. Since I have yet to see a feed lot in this area (which is not to say they don't exist), one of the major cattle ranching areas of the country, I assume the corn is going to chickens. The Panamanian poultry industry is huge; traditionally, people eat far more chicken than they do beef. But Panamá only produces 1.5 million quintales of maize. The rest is imported.

The biggest part of the problem is that rice and corn land have been converted to growing melons, watermelons and other products that fetch a better price, mainly as exports to the US. According to the newspaper, there has now been some reconversion of land to growing basic grains, but it's not enough fast enough. For 3 years, the government has been encouraging increased yield per hectarea. That's succeeded, but as a recent article in the New York times, I believe (or Washington Post--I read both) pointed out, the cost of chemical fertilizer has also been rising. Thanks to--you guessed it--the rise in fossil fuel prices.

Certainly we've noticed the jump in food prices. When we first came here 4 years ago (Has it only been 4 years? Seems like we've been here a lifetime), rice was just under $.30/lb. It's now close to $.50. In less than 2 years, chicken has jumped about 20%, as has beef.

Our truck runs on diesel which used to be more economical here--usually about $.40/gallon cheaper. Not now--the price of gasoline and diesel is about the same, just under $4.00/gallon. Like just about every other ex-pat we know here in this valley, we've begun conserving by cutting down the number of trips we make to David, which is the major shopping center. For us the bus is NOT cheaper; the cost for two of us is not much less than the cost of a gallon of diesel, which is what we need for a round trip, and the convenience more than makes up for the difference. Plus I really can't see myself lugging two 40 lb bags of dog food, 16 lbs of cat food, two 12 pack cartons of milk and far more by bus. In the end, it actually works out to be cheaper to use the truck. But we are looking at ways to cut our trips to one every 10 days.

There has been some unrest about food prices in Panama City, but so far not much. Part of that is due to what was a thriving economy here in Panamá and probably still is in Panamá City. But the economy here in Chiriquí has been driven by a 4-year construction boom, which has, if not come to an end, slowed sharply. Land prices in Boquete have maxed out, the housing slump in the US has slowed immigration, and construction as a result is limited to last year's sales and commercial construction. We've already started to hear about home foreclosures and layoffs; since we are really out of the information loop, if we're hearing about it, it has to be significant.

Plus there's the problem of reverse immigration, but that's another story.