By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
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.
Comments
Porcupine 4 years, 4 months ago
Mr. Beneby is absolutely correct. The very idea of price control is an affront to any thinking person. This is what competition is supposed to do, correct? Soon government will believe it has the right to tell us what to wear. End price control and the price controllers. Use these same people to go around and see if government employees are actually working while on the job. The people, remember the people's time, would be much better served in this way. If government was even slightly more efficient, taxes could be lowered and we wouldn't need price support.
Hoda 4 years, 4 months ago
Let the prices rises. Of course then Bahamians will be saying of this govt don’t get care about poor people, you can’t even buy eggs. Raise minimum wage. Of course the merchants will be saying well we closing down.
There may be times when price control may be called for or a stratagem, the price of eggs, I don’t know. I think they need to price control some of these dilapidated buildings, these slum lords renting to people.
hrysippus 4 years, 4 months ago
Price controls contravene the laws governing economics. They cause more problems than they solve. If you disagree then just take a look at how price control on gasoline in Haiti has worked out.
mandela 4 years, 4 months ago
Well knowing how for example in the event of a hurricane without price control things like fuel and a basic necessity like water would be priced out of the poor man's range and only the rich and famous would have drinking water and be able to drive around after the hurricane for example.
TheMadHatter 4 years, 4 months ago
That is a separete law on price gouging that will still stand.
lobsta 4 years, 4 months ago
Price controls are obviously not a good idea... but so isn't a protectionist retail market like we have in the Bahamas. Super Value, Solomon's and others have obviously no clue how to run stock and inventory. In a competitive environment they would be put into bankruptcy tomorrow.
TheMadHatter 4 years, 4 months ago
You are correct. Their inventory control and sales analysis sucks. I have spoken to numerous managers about it, but they just look at me like im crazy. They make up for lost sales and erroneous pricing by simply raising prices. They use the same method govt does at mof, increase taxes and borrow to make up for your shortfall. Never ever go abroad to learn how to do things properly and efficiently, cause we is independent. That's why MHH airport can't use their control tower which was built below FAA minimum height - among MANY examples like it.
akbar 4 years, 4 months ago
Yet he is not explaining how a price increase will alleviate the problems of his supply chain! Vertical integration seems not to be a part of Bahamian business person's acumen. Like typical Bahamians looking for the gubberment for their solutions and profiteering. Our economy is just to small for a free market spirit without a substantial commitment from the business community to explore and implement innovative market strategies. Without this the consumers will suffer. Just my humble opinion.
TalRussell 4 years, 4 months ago
Yeah, no. When senior members Royal Constabulary are being pushed aside over to jobs that were non-existent before the political collaborative decision to transfer even occurred to be transfer, when a comrade commodore can take off on 3 months paid vacation, and when $17 million is being spent on drones which were not properly price researched while colony's hospital's junior doctors are being fired is not the time for price gouging of a half dozen eggs. Even when the food stores shelves are stocked high and full many selections food stuffs - the money strapped shoppers, might as well be steering at empty stores shelves stocked with can't afford, not even the half dozen eggs,, much less so many other choices tasty and healthier food stuffs . You can't make this up, you just, can't.
Dawes 4 years, 4 months ago
Maybe the supermarkets should show what the price would be if there was no price control so the public could see. They keep telling us that without price control other items would go down in price, so lets see how low those would go and also how high the price controlled ones would go. Then we would know whether price control is good or not.
Ashinnabash 4 years, 4 months ago
HOW ABOUT WE LOOK INTO PRODUCING EGGS?
ohdrap4 4 years, 4 months ago
Many tried, all failed. Price control being one of the reasons. http://www.tribune242.com/news/2014/f..." rel="nofollow">http://www.tribune242.com/news/2014/f...
SP 4 years, 4 months ago
Blah, blah, blah, blah, blah. We are 40 miles off the U.S. coast and we are the 6th most expensive country in the world to live in!?
You people are debating the price of eggs while we should all be demanding the powers that be to break monopolies and lower prices on everything!
The government would make even more income due to the increase in volume sales when more people could afford more goods pay VAT on consumer goods.
Three stooges Pindling, Ingraham, and Christie, as finance ministers obviously knew absolutely nothing about finance, market forces or basic sales principles!
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