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Food Prices: ‘What Goes Up May Not Come Down’

photo

Rupert Roberts

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s principal has warned Bahamian shoppers to brace for the possibility that increased food prices may be here to stay, warning: “I don’t believe in what goes up must come down.”

Rupert Roberts told Tribune Business that no one in the food industry knew whether the anticipated prices rises, resulting from supply chain woes and other post-COVID factors, will prevail for one or five years but said prices rarely came down after an increase.

While estimating that the 13-store supermarket chain has “put through” cost increases on a small minority of its 30,000 product lines to-date, he added that the possibility of up to 20 percent price hikes “on most items” by year-end 2022 could not be discounted based on US inflation estimates and information he was receiving from suppliers in The Bahamas’ northern neighbour.

“I was talking to Senator Michael Halkitis, and he asked me the same question,” Mr Roberts replied, when this newspaper queried how long projected increases in food prices may last for. “I said: ‘Senator’, this could be a year, this could be five years.

“When we were talking to Thailand, trying to secure canned mackerel, they went from $29 to $42. Those fishermen are not going to take $29 for their can of mackerel any more. I don’t believe in what goes up must come down. We’ve seen a lot just stay up there.”

Still, Mr Roberts voiced optimism that Super Value’s pre-emptive buying and inventory build-up will hold off the worst of any price increases until “more like the end of March”. He added: “We probably have 30,000 SKUs (stock-keeping units). The larger stores have 30,000 items. I suspect so far that there’s 200-300 we have to put through to increase prices.

“I don’t want to make an issue of this, but I said to the authorities that by the end of this year we might have as high as 20 percent price increases on most items. Freight costs have got caught in everything. Most of the items are going to experience that inflation. We have the US saying they had a 7 percent increase so far. It’s very easy to have another 15 percent increase.”

The Super Value chief also warned that price increase concerns could be exacerbated by the recent surge in Omicron cases in the US and other major food-producing markets that serve The Bahamas, which is estimated to have an annual food import bill of around $1bn and brings in most of what it concerns.

While expressing confidence that the supermarket chain’s health protocols have served it well to-date, and that it is well-placed to cope with any Omicron-related worker absences, Mr Roberts said staff shortages at overseas wholesalers/distributors; processing and manufacturing plants; farms; and transportation companies could all impact supply to The Bahamas.

“I spoke to someone in the know today. Production and supply in the food industry is going to be hit hard by this recent outbreak. Whole factories are completely shutdown by the rapid spread,” he added. “What concerns me is one of our suppliers in Florida said half their warehouse staff are out.

“We’re concerned that we may have three-four months of problems. We may have problems in the supply chain with factories having to close or go half-speed, especially on perishables. We are stocked up for an extra three months of hard groceries, but cannot do that with perishables, cereals, rice.... They have to be on a monthly basis.”

Mr Roberts added that Super Value will be able to “at least for a while handle” any supply chain disruption on products that have a long-lasting shelf life, having “over-stocked with at least three months’ supply” that was acquired before price hikes started to emerge.

“I warned the buyers that every time they place an order, they had better know where to put it,” the Super Value chief said. “We were aiming to build up six months’ of hard goods, but when we got up to three we realised we couldn’t have six months in the warehouse. We had to slow down....

“We’ve followed the learning curve for the past two years. The first year [of the pandemic] we got stuck. We avoided those problems last year.” The Super Value principal added that the transition to 10 percent VAT had gone relatively smoothly thus far, especially from an information technology (IT) perspective, with the chain aiming to beat the 90-day deadline to change all product prices.

“The quicker we have the prices changed the better off we’re going to be, and the better off consumers are going to be,” Mr Roberts told Tribune Business. “We have an earlier target date than 90 days. We don’t want to be dealing with that for 90 days.

“We’d like to have that behind us by the end of this month. We hope to get ahead. We have three months to do it, but have a goal of doing it in one month. If we fall behind schedule it will not matter too much. I think we can do it. As we put up inventory, we will put on the new price.

“It’s really the leftover inventory that we have to go and reprice, and we will do it as swiftly as we put up new stock. We will deal with it there and then, and not have to go back to that. We stock weekly, so I don’t see why we can’t be ahead of the game in four weeks.”

Mr Roberts said this was the third VAT adjustment, including its introduction, that the private sector had gone through and the supermarket chain had learned lessons each time.

He added that stock on shelves at year-end would now carry two prices, that for 12 percent as well as 10 percent VAT, as Price Control did not permit the removal of the old labels. The check-out price, though, will reflect the new 10 percent rate and elimination of zero ratings/exemptions.

Comments

LastManStanding 5 days, 11 hours ago

That is just the way that inflation works. No way you can just print off a ton of money and not expect this to happen, on top of the supply chain issues.

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longgone 5 days, 10 hours ago

Come on Man, you know things never go back down. Hell, we're still paying "War Tax" from WW2.

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ohdrap4 5 days, 10 hours ago

“I don’t believe in what goes up must come down.”

At least he is being honest.

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John 5 days, 10 hours ago

With the forecast looking so gloomy for increasing prices, one would expect the effort to grow more food locally would be greater. government can subsidize the production of some foods to encourage local production.

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Proguing 5 days, 10 hours ago

We have to pay for Biden's green energy transition...

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Bobsyeruncle 5 days, 8 hours ago

Really ?? Why are you so neurotic that everything that happens in The Bahamas is because of Biden or Liberals. The Bahamas is an independent nation, not a US state. Enough already.

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Proguing 4 days, 17 hours ago

It's not me, it's Goldman Sachs who says it:

https://finance.yahoo.com/news/biden-...">https://finance.yahoo.com/news/biden-...

High energy prices = high transportation costs and higher cooling costs. Sorry, but the Bahamas being independent does not protect us from increasing fuel prices...just as it does not protect us from Biden dictating us our tax structure, or Obama forcing us to abandon our banking secrecy. These are facts.

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GodSpeed 5 days, 8 hours ago

It'll come back down.....when this whole system collapses.

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