By NEIL HARTNELL
Tribune Business Editor
Food retailers are seeking "at least" a three-fold increase in the mark-up permitted on eggs by price control, with their Association chief renewing calls for such regulations to be abolished.
Philip Beneby, head of the Retail Grocers Association, confirmed to Tribune Business that the group and its members have written to the Government's Price Control department to arrange a meeting over their calls for the mark-up to be increased from 10 percent to around 35-40 percent.
Revealing that this has been a long-standing "issue", Mr Beneby said the fragile nature of eggs meant Bahamian food stores frequently lost product to damage and spoilage before they reached supermarket shelves.
With the associated refrigeration demands adding to retailers' already sky-high electricity bills, he explained that the current mark-up means they suffer significant losses on "a staple" for many Bahamian families because they are unable to cover their costs.
Confirming that eggs are effectively a "loss leader" for the Bahamian grocery industry, Mr Beneby said the sector was also exposed to sudden global market price swings as this nation is no longer a producer.
"Eggs have been an issue with price control for a very long time," he told Tribune Business. "The price of eggs fluctuates; we don't produce eggs here, and it changes from time to time and place to place.
"We are only allowed a 10 percent gross mark-up. We would be seeking a higher mark-up on egg prices. Eggs are very delicate, and we're having losses on them while having to keep them under refrigeration and all the other issues with it.
"The mark-up that's being looked at is at least a 35-40 percent gross mark-up. At 10 percent, eggs are not a profitable item. It's an item that we carry in store as a necessity item customers require but it's not a profitable item. It is a staple, a Bahamian staple."
Mr Beneby said the Association, which counts the likes of Super Value and BISX-listed AML Foods, the Solomon's and Cost Right operator, among its members, has written to the Price Control department seeking a meeting on egg mark-ups.
"A meeting was requested," he added, "but nothing has been arranged along those lines yet. We're waiting to confirm a meeting with them." Mr Beneby, who revealed that between 70-75 percent of the inventory sold by his company, Carmichael Road-based Courtesy Supermarket, is price controlled, again reiterated that such regulations were unnecessary in the modern Bahamas and failing to fulfill their objective.
"There's no need for price control," he told Tribune Business. "That's not my call; that's my opinion. There is no need for price control. The market is a competitive market, and therefore competition will drive it and prices. There's no real need for price control, but who am I? The Government introduced it.
"Everybody is trying to hold the line on prices as best we can. The inventory on price control is anywhere from 70 percent to 75 percent of the total. About 70 percent of items are price controlled, at least in my store. I can only speak for my store."
The debate over whether price controls have outlived whatever use they had, and should therefore be abolished, or if they remain a vital tool in ensuring lower income Bahamians can afford to purchase basic food items, has reared up at frequent intervals in recent years - especially when Dr Duane Sands, minister of health, unveiled the proposed reforms to the price-controlled "breadbasket" food line-up.
Food retailers, gas stations and other industries subject to price controls, such as auto dealerships, argue that they are outdated, antiquated and ineffective, and are a sign of how inefficient and bureaucratic the Bahamian economy remains by forcing them to sell a substantial portion of their inventory below cost or at a loss.
Such industries suggest price controls are no longer fit for purpose, are failing in their alleged role to protect consumers, and cause unintended consequences for the Bahamian public. In the case of the food industry, selling price-controlled items at a loss forces them to hike the price of other products higher than they would to compensate, disadvantaging consumers.
In countries such as Venezuela, loss-causing price controls have caused companies to stop or restrict the supply of such products, resulting in shortages and price hikes that place them beyond affordability for many consumers.
Price controls were first imposed under the Pindling government in a bid to ensure Bahamians were able to afford a reasonable standard of living, and advocates argue that they remain fit for purpose by ensuring those on low incomes can afford staple food items and are not exploited by unscrupulous merchants seeking to extract every cent in profits.
Successive administrations have declined to address the issue, with many suspecting they are eager to avoid any negative political fall-out from abolishing or easing price controls and subsequently being accused of being against the “small man”.
However, these regulations are viewed by many as ill-suited for market economies, especially since they have failed to keep up with ever-increasing expenses. Many observers believe the Bahamian food retail and wholesale industry is sufficiently competitive to ensure prices remain keen, thereby achieving the same effect as government regulations.