One of the things that has surprised us in this country is the price of food. Before we left we thought (perhaps naively) that food here would be cheap. “It’s a developing country, many people are very poor – surely food must be cheap – how else could they live?” The truth is that food here is expensive and takes a huge slice of many peoples’ income – and the poorer you are, the bigger the slice.
Some things – the ones that are grown locally, are very cheap. A big, ripe, delicious pineapple is about 60p. A sweet, sweet mango around 40p when in season. Many things, however, are really expensive. A box of Cheerios is £3.50 and a litre of UHT milk about £1 (and as anyone who knows us well will know, Ben gets through his body-weight in Cheerios each day with a couple of cow’s worth of milk on top).
On average we’re spending around £100-£120 per week on groceries (and very occasional meals out). This is about half what we were spending in the UK each week – but we’re eating much more simply (lots of rice & pasta, cardboard cornflakes, not much meat), we eat less (because it’s hot here) and we’re not entertaining. I had budgeted for around half this amount when we were doing our ‘can we afford to go’ calculations.
To back up this believe that food is expensive here, I’ve done a quick comparison of food costs between the UK and here. It’s based on shopping receipts and a search on Tesco Online, and the results surprised me.
Based on this, I’ve drawn a couple of tentative conclusions:
- On the whole, foods are in actual fact not that much more expensive here as in the UK. Sure, some foods are expensive (e.g. branded cereals, milk), but if we avoid processed, imported food as much as possible then we can live pretty well on £15 / day.
- We have to redouble our efforts to get Ben eating something other than Cheerios for breakfast! (And more generally, we need to start eating more like the locals – more beans & rice)
However – and this is I think the rel point of the exercise, while food prices may be similar, the average income here is much, much lower than in the UK. In the UK, per capita GDP is about US$36,000. In DR, it’s about a quarter of that – a little over US$9,000. Put a bit more starkly, the starting salary for a teacher in the UK is around £22,000 per annum (source: http://www.tda.gov.uk). The teachers at Alison’s school (albeit they only work half days), earn about £200 per month.
So why food expensive here in the DR? A large part of the reason for this is taxes – especially sales taxes (16% ITBIS on most goods) and import taxes (10% duty on most imports). Around three-quarters of Government revenue comes from sales taxes and import taxes (there is income and corporation tax at 25%, but corruption and evasion are endemic so the government relies on the more easily collected sales taxes). One result of these sales/import taxes is that food is more expensive – and especially anything imported.
Sales taxes are regressive – they hit the poorest hardest. 16% ITBIS on a litre of milk equates to around 10 Pesos. Not much if you’re well paid, but a significant amount to the poorest.
This regressive scale is of course especially harsh on those who can least afford it. Apparently it’s called ‘food poverty’ (a new phrase to me and I thought I was pretty well read) and it’s a growing problem across the developing world. Food prices are rising inexorably, and much faster than the wages of the poorest.
I don’t know quite where this is leading. But I do know that it feels wrong. In the news last week was the ‘revelation’ that Mitt Romney (a politician running for the next Republican presidential nomination) ‘probably’ (in his words) only pays 15% tax on his multi-million-dollar earnings. On the other hand the teachers at Alison’s school earn around £200 per month and have to pay 16% ITBIS on a litre of milk.
Some more food for thought, maybe? I’d love to hear what you think.