No resolution over food price control ‘stalemate’




Tribune Business Editor


The Bahamian food distribution industry was last night said to have reached a “stalemate” over efforts to strike a price control deal with the Government via a 1,000-strong product list designed to “more than half-way” meet its demands.

John Bostwick, attorney for the Retail Grocers Association (RGA), which represents more than 130 food store operators, confirmed to Tribune Business that no resolution was reached at yesterday morning’s meeting with senior Cabinet ministers which had to be cut short due to the threat posed by Tropical Storm Nicole.

Striking a more conciliatory tone than other accounts provided to this newspaper, he said both Chester Cooper, acting prime minister in Philip Davis KC’s absence, and Michael Halkitis, minister of economic affairs, promised to consult further with their Cabinet colleagues on the matter and report back to merchants and wholesalers on the Government’s position in “due course”.

Mr Bostwick told this newspaper that the industry has expanded its list of price-controlled items to “more than 1,000 individual products”, a significant expansion on the 20 items and categories included in its initial October 26, 2022, counter-proposal but still some way short of the Government’s initial 38 categories and 5,000-plus products.

“We met with the acting prime minister, Chester Cooper, and minister of economic affairs, Michael Halkitis,” he disclosed of the 9.30am encounter. “We drew the Government’s attention to the latest submission by the retailers and the wholesalers, and we have asked again that they consider them in the spirit in which they have been advanced - truly meeting the Government half-way in addressing pending inflationary pressures and towards ensuring the Bahamian public are afforded better pricing during this Christmas season.”

Mr Bostwick said the food distribution sector’s latest price controlled goods proposal covers “what is quite a wide range of items”, and added: “It still involves some whole categories of products, quite a few categories. We’re talking more than 1,000 individual products.

“They [the ministers] indicated they would discuss the matter with their Cabinet colleagues and we would hear from them in due course, taking note of the fact the country is under imminent threat from Nicole. At this present moment, the Retail Grocers Association and the wholesalers continue to stand ready, willing and able to partner with the Government towards achieving the shared objective of bringing relief to consumers.”

Philip Beneby, the Association’s president, declined to comment when contacted by Tribune Business and instead referred this newspaper to Mr Bostwick. However, other well-placed sources described the food distribution industry as being in a “stalemate” and a “stand-off” with the Government on the latter’s plan for a major price control regime expansion to help ease the cost of living crisis for middle and low income Bahamians.

Mr Bostwick did not go that far, merely saying: “As far as I’m concerned we’re still talking and working on a solution for a good Christmas.” This newspaper, though, understands that the Government is still trying to push its initial 38 categories and 5,000-plus products while trying to soften-up the industry by asserting such measures are temporary in nature and will only be in place for 45 days.

However, sceptical merchants and wholesalers fear that once implemented these price controls will never be removed. The view among some is that the Government, having bitten off more than it can chew with its original pledge in the Prime Minister’s national address, and promised more than it can deliver, is now seeking to save face by pushing for reduced prices, margins and mark-ups to create a “feel good” Yuletide season for consumers.

One source, speaking on condition of anonymity, told this newspaper: “I don’t know about the wholesalers but they want to put the retailers completely under price control. That would put 80-90 percent of their items under price control, and there’s no way the retailers could accept that. Every category has 20, 30, 40, 50 items, and the retailers offered them over 1,000 items.

“I don’t think that the Government had any idea their 38 categories covered over 5,000 items. The Government is dealing with an industry they don’t know and they’re dictatorial about it. They’ve laid an egg and don’t know how to hatch it. I don’t see how they expect one industry to absorb inflation for the entire country. I don’t know if there will ever be a resolution. They want retailers to sell at cost and make up on volume.”

The Government’s initial proposal capped food wholesale margins, or mark-ups, at 15 percent for all 38 product categories listed, while those for retailers were set at 25 percent across-the-board. The move, which was designed to ease the cost of living crisis currently battering thousands of middle and lower income Bahamians, employed the blunt tool of price controls - albeit on a “temporary” six-month basis - to achieve this.

The goods impacted, some of which are already price controlled, were baby cereal, food and formula; broths, canned fish; condensed milk; powdered detergent; mustard; soap; soup; fresh milk; sugar; canned spaghetti; canned pigeon peas (cooked); peanut butter; ketchup; cream of wheat; oatmeal and corn flakes.

The remainder were macaroni and cheese mix; pampers; feminine napkins; eggs; bread; chicken; turkey; pork; sandwich meat; oranges; apples; bananas; limes; tomatoes; iceberg lettuce; broccoli; carrots; potatoes; yellow onions; and green bell peppers.

However, the move blindsided Bahamian food merchants and their wholesale suppliers, who had received no advance warning or consultation on the Government’s plans. They warned that the 38 selected categories included more than 5,000 product line items, and would lead to between 40-60 percent of a retailer’s inventory becoming price controlled with mark-ups below their cost of sales.

This would result in a large portion, or the majority, of their inventory being sold at a loss. Besides threatening hundreds of industry jobs, and the very survival of many operators, the RGA and its members also warned that the original proposal could result in food shortages as retailers/wholesalers decline to stock loss-making items while also increasing prices on non-controlled items, thereby further fuelling already soaring inflation.

However, the Government has agreed to some of what the food distribution industry has been requesting, namely higher mark-ups for Family Island retailers and perishable products that have a shorter shelf-life and go bad much quicker.

While the Association had supported 25 percent on all dry grocery items, it requested that this be increased to 30 percent for Family Island businesses due to the extra shipping, logistics and overall business costs they endure compared to New Providence.

And, due to “the rising costs of electricity and shrinkage (spoilage), the food retailers had called for a 35 percent mark-up in Nassau, and 40 percent in the Family Islands, for perishable goods as opposed to the Government’s originally proposed 25 percent limit.

The Government has agreed to a five percentage point increase in the mark-up for price-controlled perishables, such as meats and vegetables, along with “a slight increase for the Family Islands to cover transportation”.

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