By KHRISNA RUSSELL
Tribune Chief Reporter
krussell@tribunemedia.net
A FORMER Price Control Commission chairman says the inflation on goods has been compounded by a markup system that is not consumer friendly.
In an interview yesterday, Danny Sumner said the government should pay keen attention to the markup on items in a way that lessens the blow to the consumer while allowing wholesalers to still make a profit.
Mr Sumner is the most recent PCC chairman and was released from his contract in December. Despite no longer holding the post, Mr Sumner said he remains concerned about the plight facing the average shopper.
“The country has vendors in the United States and in Canada or wherever they purchase food items from,” Mr Sumner said. “The wholesalers then bring these items in and some of these items go directly to the food stores. Some food stores have local vendors here so a lot of the food stores purchase locally.
“This could have a little implication as to how the prices fluctuate.
“Be that as it may, we know that there is inflation going on and things are going up worldwide, but to combat this situation right now I think we need to get everybody on deck to sit down and rationalise what is the margin after customs duty and VAT.
“So, if a certain food store chain brings in these foods for the country we need to sit down and let them rationalise with us either on the wholesale level or the retail level as to how they get to the pricing before the items go to the shelves and if we do that we can minimise on some of the pricing that is going up.
“I don’t think we are really dealing with price gouging. It is more of a markup system that maybe it is not consumer friendly.
“We know for a fact that the markup price on breadbasket items is only 23 percent. That is documented and that is law so the items that are being deemed as breadbasket items, the markup is 23 percent.
“Now, there is no set markup for other items other than breadbasket. So, we don’t know if they are marking up the other things 30 percent, 40 percent or even 50 percent.”
He continued: “This is something that is critically important. I think it is something that needs to be looked at to see how the merchants or how the owners reached the prices that they are targeting on the Bahamian consumers and if they can do that I think and maybe perhaps the government could revamp the law a bit. I think the price control law needs to be brought up to speed a bit.
“We don’t want to overburden the retailers and wholesalers because they do have overhead expenses and staff to pay, etc, but on the same token the consumers have to survive and are bearing the cost of these high prices.”
Mr Sumner pointed to increased gas prices, adding this would also impact the cost of goods.
“So, with all this in mind I would like to see a better dialogue between the consumers, the government and wholesalers and retailers that is where we can itemise things.
“When you look for example like meats, they are extremely high and most of them are duty-free and some things are high in the produce area like grapes, etc, but, like I said, we don’t know what pricing is passed on to the stores before the consumers.
“So, if we could have some kind of mechanism or some kind of meeting to see if we can come to a good solution to minimise the pricing that would help,” Mr Sumner said.
This comes as many people have been feeling the pinch financially in recent weeks from a spike in prices, particularly when shopping for groceries.
Comments
ohdrap4 2 years, 3 months ago
The wholesaler cannot markup execessively because the independent food stores might beat them.
To save money, I either purchase from the whosaler or wait for specials.
You can save money also by making your own pancakes, cookies and breads. Or simply cooking your own food. A deli sandwich or fast food package is at least $10 these days.
I tend to shop the stores where markup is about 33%. You can figure it out by comparing to amazon.
Those places that we call exoensive markup by 80% or even 100%.
tribanon 2 years, 3 months ago
Government imposed price controls are seldom a good long term solution to concerns about the effects of runaway inflation on food costs.
What government really needs to do is:
(1) Introduce price controls on the outrageous transportation, handling and other costs incurred at the ports on food imports that are greatly enriching the privileged families that have a controlling ownership stake in the ports, and
(2) reduce most of the barriers that exist to increased competition in both the wholesaling and retailing of food.
M0J0 2 years, 3 months ago
I believe they do believe Bahamians or really slow, now when Bahamaians start shopping direct from the states the slogan will be please shop home.
ohdrap4 2 years, 3 months ago
You could try. But shipping, insurance, freight , brokereage and govt duties and vat is staggering.
Try to price a washing machine and let me know what happens. I bet it is just easier for your to order from the local shop and get it delivered within a day or two.
I once saw these fellas with a bag of 50 lbs of rice at the airport, customs seized it as there was no permit from agriculture.
Also if you buy, let's say 50 lbs of chicken and ship it, you will never get the rate supervalue gets with a whole container out of Brazil, so there will not be much difference in price.
Years ago, I and 2 friends used to buy a box of 100 apples and share. The one who did the counting kept the extra apple. That is also a way to save if your weekly earnings is low, 4 or 5 people can buy a case,.
observer2 2 years, 3 months ago
Lashing out against private businesses is futile.
In a market driven economy businesses will charge as much as the market can bear without pushing their costumers to a competitor.
The problem is the Bahamas is actually a an economy of monopolies with very large players like Supervalue having near monopoly powers because of the barriers to entry by better capitalized foreign competition and a highly beaurocartic, inefficient and politicized business environment.
The Bahamian government through VAT, duty, stamp, business license are taxing activity (individual goods and services) which harms the consumer. They should be taxing profits...all profits including capital gains taxes on rich foreigners on their global wealth. Thats where the money is.
Secondly allow anyone to compete in the shipping business (Arawak Ports is a monopoly for 20 years - all goods coming into the Bahamas must use them at crazy prices, Power generation BEC/Focol are a monopoly, Water and Sewerage / monopoly on water, fuel importation Focol monopoly, Post Office / barely functional for the efficient deliver of goods and services through out the Bahamas, Potter Cay / what a disgrace, lack of banking / Canadian bank monopoly, exchange control/government control of the free movement of funds into different currencies, blocking Bahamians from investing abroad and making enough on their money to buy food.
No matter how much foreign investment comes in, it will not trickle down to the poor because its being consumed by the monopolies first.
That's why so many ppl can't afford to buy groceries anymore.
Emilio26 2 years, 3 months ago
observer 2 so it true that bahamians are legally barred from having foreign bank accounts?
tribanon 2 years, 3 months ago
ZZZZZZzzzzzzz......
The_Oracle 2 years, 3 months ago
A classic example of a Civil Servant with no clue as to the complexities of the subject he is speaking about. Let me give a little breakdown in the hopes it causes him to delve a little deeper. In order of profitability, in most businesses, the number one beneficiary is Foreign vendors. They make their Gross without our very high costs of doing business. We send $$, they send Goods. We incur trucking/shipping costs, insurance and clearing costs, which leads to #2 : Government. Thats right, BEC/BPL, License fees/taxes, Clearing fees and duties, taxes, a long list of annual overheads before the first item is sold.
3 Salaries. Payroll. NIB, Insurance and pension plan costs. Benefits.
4 Repairs and renewals to buildings, vehicles, computer systems,
5 Inventory losses, especially in Food wholesale / retail. Otherwise in theft.
Getting the picture? The last time I did this exercise, Ownership Net Net was #7. It barely existed. And that is Pre Hurricane. Post hurricanes Net Net is deferred for a number of years. Looking at one little aspect without looking at the whole picture is disingenuous or ignorant.
242realdeal 2 years, 3 months ago
Can someone please speak to the realities of doing business in the Bahamas? Almost everything we sell in this country is imported. You must be living under a rock if you do not know that prices are increasing the world over. Add in the fact that the government is the largest shareholder in the food business. 20% duty, 10% VAT, 1.25% business license fees plus numerous inspection, application, renewal fees, road tax, etc. The government takes about 35% of every dollar you spend in the grocery store, the owners make 5% in a very good year. Shipping rates are one of the highest in the Caribbean, same with utilities, same with stealing. The high cost of living is driven by the high cost of doing business. And if the 1st cost of goods is increasing, isn't the government actually making more in consumption taxes as there % add on is now on a higher base?
tribanon 2 years, 3 months ago
Your point about the government being "the largest shareholder in the food business" in our country is a most astute one. Our corrupt politicians of both the PLP and FNM persuasion have always taxed to the max the very things most of us cannot do without in our lives, and food is right up there at the top of the list of the most heavily taxed items.
Our corrupt PLP and FNM politicians have always taxed food to the max to get the tax revenues they need to pay for and continue growing the grossly over-bloated and unproductive civil workforce they have created.
Without a shadow of doubt the most cruel people in our country today are our corrupt politicians who will continue taxing food to the max so that they can continue handing out government jobs, government promotions, government benefits, government allowances, etc. to their perceived supporters, many of whom will soon find that they too can no longer afford meats, vegetables and fruits.
With the stroke of a pen the Davis and Cooper led PLP administration could significantly drive down the cost of food simply by lowering the more than 35 cents in taxes that government effectively takes on each and every dollar we spend on food today.
IslandWarrior 2 years, 3 months ago
We want your customer to pay your expenses as a separate line of income on your books; what is the name of this income area?
Benefits? Why should the public see an increase in the cost of goods for your company's "Benefits" I suspect the public is also paying for family vacations and weekend fishing trips to the keys.
Repairs and renewals to buildings, vehicles, computer systems, again are upfront business considerations and should be seen as illegal that you are publicly saying you are passing these costs on to the public.
Inventory losses, theft are also seen as weaknesses in your business strategy is in no other environment would you be so bold to publicly say these costs are justifiable reasons for this level of increase.
You may want to look into the weaknesses in your management before passing poor practices onto the customers.
Dawes 2 years, 3 months ago
Maybe you can open your own foodstore and keep prices down as it sounds so easy.
IslandWarrior 2 years, 3 months ago
I don't have to own my "own food store" to know where there are weaknesses; any business with "smart" business practices would know that buildings and equipment should be on a long-term maintenance plan and placed on a life cycle schedule. (but the procedure, we all know, work "unmaintained systems" into the ground, as long as its working) then complain about equipment upkeep.
For example, all buildings occupying food stores (Except a few new buildings) are past 40 - 50 years of useful life and would fail the simplest "energy efficiency" assessment. None of the stores uses "energy-efficient" windows or doors, which would reduce the cost of energy by 10 - 15 per cent. (savings that can build new modern, eco-friendly, efficient buildings over time)
By now, vehicles used by the company should be powered by a rechargeable battery. Furthermore, the Food Industry should take the lead in renewable energy and energy efficiency (all food stores vehicle conversion should have been completed three years ago) as an example of good management and having an energy plan. Then we can talk of benefits, benefits with the community attachment where employees are active participants and stewards in an efficiency drive.
Spoilage, again, is a sign that somewhere in your management, there are weaknesses; or equipment inefficiencies. High theft to the point that it's affecting your decision to pass the cost on to the public is a severe security weakness or criminality to the point that this should be a police matter and not an issue that is passed on to the public.
All the points given for the increase are unwarranted and could be a simple case of bad, poorly trained management.
Now, if it were my business (if you would like to know), I would have a serious professional assessment of my operation, including all the tax, shipping, and other issues, then determine if I am doing this bad in business, maybe I should not be in this line of business.
Bahamians are very creative, and as it were with the automobile industry, Bahamians will, in short order, find a way around high priced food stores.
tribanon 2 years, 3 months ago
See @242realdeal's post above about the outrageous aggregate level of taxes the government is imposing on food.
ted4bz 2 years, 3 months ago
At this point it is pointless to go on ranting and whining, or advising the government what to do, we all should have stock up. Everything was leading to this, there were many warning signs, those who were paying attention did the smart thing, we stocked up, we had two full years head start and we took advantage of it. We are pretty much pass all those points now. So, what is left to do? As we pay more to eat, we must learn to pay more attention to the things that matters most and less to things that does not matter at all. Eat to live. Live not to eat. Buy less. Eat less (it is healthier). Moving along.
ThisIsOurs 2 years, 3 months ago
"we all should have stock up. Everything was leading to this, there were many warning signs, those who were paying attention did the smart thing"
you sound like the police commissioner who at the start of the pandemic wondered why all these stupid bahamians (he didnt say stupid) were constantly going to the foodstore, just shop for 2 weeks and stay home.
30-50 dollars een enough to stock up. no time. nothing to do with "smart". Im sure plenty smart people were left jobless or underemployed in GB Abaco and hotels generally. Added to that Our country is most likely 70% low to minimum wage workers... the census will tell us for sure
The_Oracle 2 years, 3 months ago
So Island Warrior, how do Normal business costs get covered If not covered by the goods services provided?
IslandWarrior 2 years, 3 months ago
Exactly, "goods services provided" and not inefficiency and poor management. The article speaks to (perks and benefits), having spent time in Germany, Colombia, China, and our favourite USA, we all know that the cost of food in the Bahamas, on many items, are in some cases are 200 to 300% higher in the Bahamas. Not to mention the poor food quality; we already were not getting value for the dollar. The essential part of life, food, is killing us with unreasonably high prices; God help the people living on the family islands.
hrysippus 2 years, 3 months ago
This PLP administration presently in power is just repeating a tactic taken from the corruption smeared Pindling government of the 1980's; blame the greedy merchants and pretend that the politicians are trying to rein in their greedy ways. It was total rubbish then and it is total rubbish now. Adam Smith's invisible hand dictates prices not our third world politicians.
tribanon 2 years, 3 months ago
The extremely high level of aggregate taxes on food is a major contributor to our outrageously high food prices. See my reply to @242realdeal's post above.
John 2 years, 3 months ago
Firstly what Danny Sumner should address is how collects TWO sets of taxes on almost every item that is imported into the country. Customs duties and VAT. In fact Government collects tax on a tax. The VAT is calculated after customs duties are levied on imported items and so government, in reality, collects over 45% tax on most items, 75% tax on car parts and over 109% tax on some items like cigarettes, alcohol and bed mattresse. . . What Sumner was alluding to , maybe, was when a retailer acts like both the retailer and wholesaler and imports goods for resale. By doing this and bypassing the middle man, that retailer is able to realize certain economies of scale and the items he imports are much cheaper than if he had bought through a wholesaler. Of course this retailer does not pass all the savings on to the consumer and, of course, he is justified in not doing so because he takes additional risk. Has to outlay additional cash that may involve bank loans or overdrafts and additional handling of the goods. So , of course, his mark up is higher but his nextt price to the consumer is less. . . Another thing that is happening in The Bahamas, not necessarily with food, but with items like clothing, shoes, electronics, car parts. Importers are bypassing tge US markets and bringing goods directly from China especially, Japan and South America, Even Africa. By doing this, especially with Chinese goods, these importers avoid the high trade tariffs imposed on Chinese goods. Especially those that were imposed with former president Donald Trump’s battle with that country. So some prices of items of clothing , electronics and furniture have come down and many customers who shop for these items abroad do not realize the are actually paying more because they don’t take the time to calculate the freight, duty vat, insurance etc., when they import items. Even the prices of car parts are lower but remember now that government collects 55% duty on car parts plus 20% vat calculated after the customs duty is added.
IslandWarrior 2 years, 3 months ago
You are so correct.
Emilio26 2 years, 3 months ago
Do ships from China and Europe come to the Port of Nassau or only the Freeport Container Port?🤔
tribanon 2 years, 3 months ago
ZZZZZZzzzzzz.......
LastManStanding 2 years, 3 months ago
Grocery stores are low margin businesses, they are not making a killing like so many people fantasize they do. What do people honestly expect Mr. Roberts or any other grocer to do? The primary factor behind the rise in costs is inflation, which is something completely outside of the merchant's control.
IslandWarrior 2 years, 3 months ago
Inflation can not be as high as 60%; what is happening in the Bahamas now and has been happening is nothing less than criminal. The run on the Bahamian people is a well-documented fact that is not new. Wireless Service (Batelco) was charging $6 a minute before Vonage came online, and the high cost of electricity. The New Car Dealers tried to bamboozle Bahamians with the cant buy in Florida (Dealer Protection foolishness) that backfired on them, and the Japanese use car market flourished.
The same is starting to happen in the food industry; it will take one bright mind to create another "Well Managed Food Wholesale Club" that will put an end to this madness, as said, ask the new car dealers how life has been over the past ten or more years holding onto their stubborn selfish "Exclusive Saller Agreements."
Online food shopping may just work in the Bahamas.
Emilio26 2 years, 3 months ago
Well I remember bahamian business Katherine Kelly writing to the Tribune about two years ago at the first quarter of COVID-19 that the Bahamas government needs to ban online shopping and only allow bahamians to shop at local retail stores.
tribanon 2 years, 3 months ago
ZZZZZZZZzzzzzzzzz.......
johnd 2 years, 3 months ago
i would suggest as food and clothing and prescriptions are a must for people reduce the vat to nil on those items and raise the vat back to 12 5 % on everything else people and tourists would spend more money on food and clothing also it would boost the restaurant business if there was no vat on these items this system works very well in several states in the u s also it eliminates price gouging in all grocery stores also the grocery stores would see a much quicker turn over on there shelves and a lot less waste on items not being bought because of over pricing
bcitizen 2 years, 3 months ago
Government is one of the biggest drivers to the cost of goods, duty, fees, business license on gross, port charges, inspection fees, having to buy someone lunch just to do their job. So much red tape all costs to business. Mandatory corporate company lawyers. Businesses are the VAT tax collector for the government. Does anyone think that administering that is free to a business? Just the elimination of that stupid penny has cost business money with little accounting blips etc. that need to be dealt with. Government needs to look at their own self and not private companies as to cost of goods in The Bahamas. NIB rate increases with another one coming soon. Running and maintenance of backup generators because, BPL sucks so bad. All extra costs to Bahamian business and ultimately the consumer. My suggestions to lower prices to shut down the price control department and use the savings to give business a tax break. I wonder how many people they have on their payroll.
tribanon 2 years, 3 months ago
You're so right. The extremely high level of aggregate taxes on food is a major contributor to our outrageously high food prices. See my reply to @242realdeal's astute post above.
TimesUp 2 years, 3 months ago
Working hard to be a Bahamian business owner in the Bahamas getting demonized by your own people to make 20% profit while the government does absolutely nothing and yet makes 45% profit on everything you sell..... Priceless.
tribanon 2 years, 3 months ago
Amen brother. And many business owners today are struggling to make any profit at all from their toiling effort to keep the doors of their business open so that our corrupt politicians can afford to lavishly party with a huge entourage of their friends in far flung places like Dubai.
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