Lack of inputs increases price of products

The lack of raw materials in Panama means that consumer prices will increase between 5% and 39.7%, according to specialists.

This situation affects directly local consumers, since they have to face high costs of local products.

Employers who engage in this type of business affirm that the productive sector of the country is having to export much of the inputs used to produce. This reduces not only competitiveness, but also they are making more expensive products.

For example, a tin of evaporated milk manufactured in Panama has a cost of $1.11, while the imported one for sale in the market is at $0.97, i.e. 14.4% cheaper than the one made in the country.

Two-pound instant milk for children in our country has a cost of $14.10, while the value of the imported ne is $10.10, i.e. 39.7% cheaper. 1,000 sheets of toilet paper Made in Panama has a value of $1.60, while the one brought from outside is $1.45, 10.3% lower. National first quality rice, five pounds, cost $1.97 and the imported one $1.68, a 17.3% lower price.

The same fact applies to footwear and apparel, since those manufactured in our country are more expensive than the one brought in from, for example, China or Colombia.

Ricardo Sotelo, President of the Union of Industrialists of Panama, said that in fact the lack of raw material has an impact on the final cost of the products made in Panama, which will depend on the type of product that industrialists use to manufacture.

He stressed that, for example, in the case of the Panamanian brewing industry, the inputs they use to produce are almost 100% imported.

He added that same fate is being experienced by the industrialists who are dedicated to producing pork, chicken and milk who have to import more than 35% of raw inputs to be able to supply the local market, percentage that depends on the type of activity in which they are engaged.

Sotelo said that the ideal scenario would be that in which the Panamanian industrialists could supply much of the inputs produced locally to reduce the cost of their products.

He explained that this situation occurs due to lack of policies aimed at strengthening the country's productive and agricultural sectors which they have been insisting for several years.

He added that in the case of agriculture, the impact is remarkable and we can see this through the growth as a sector, which was only 0.4% in 2015.

The situation for Panama is much more worrying if one takes into account the warning made by the Secretariat of Central American Integration (Sieca) pointing to that contraction in the Central American trade is explained by monetary factors, such as the evolution of exchange rates and international prices of raw materials.

Sieca also points out that fluctuations in the prices of raw materials in international markets changed the relationship of prices of goods exported and imported in Central America.

For the President of the College of Economists, Olmedo Estrada, the price of raw materials is very heavy when it comes to producing goods, which could increase the price of local products between 5% and 40%.

Estrada stressed that the Panamanian industry does not take advantage of what is called economies of scale, that is, produce volumes to lower production costs per unit produced.

He added that industrialists are not taking advantage of new technologies to improve their production.