By NEIL HARTNELL
Tribune Business Editor
Negotiations with the Government over expanding price controls on the Bahamian food distribution industry have gone silent for more than two weeks much to the sector’s relief.
Philip Beneby, president of the Retail Grocers Association (RGA), which represents more than 130 food store operators, confirmed to Tribune Business yesterday the industry had received no response to its last 1,000-product strong proposal since sector representatives met Cabinet ministers on Tuesday, November 9.
Since then, the Government’s agenda has likely been dominated by Tropical Storm Nicole, which ultimately became a hurricane, plus the Grand Lucayan sale’s collapse and the ongoing fall-out caused by the implosion of its flagship digital assets investor, the FTX crypto currency exchange.
“I think it’s a good thing that it’s gone quiet. That’s why nobody is saying anything,” Mr Beneby confirmed to this newspaper. “Nothing has been said subsequent to that meeting. That’s correct. They promised to get back to us and nothing has happened. I think they’ve had their hands full.
“It’s operations as normal. The talks haven’t been concluded. We gave them our proposal and they promised to look at it and get back to us. That was the last list we gave to them. That’s where we are. We’re still waiting to hear back from them. I guess they’re probably studying it thoroughly before they get back to us.”
Rupert Roberts, Super Value’s owner, also confirmed that there has been no movement on the Government’s proposed price controls since industry representatives met with Chester Cooper, then acting prime minister in Philip Davis KC’s absence, and Michael Halkitis, minister of economic affairs. “Nothing has been said,” he added.
In a meeting that was cut short by Nicole’s imminent arrival in The Bahamas, the two ministers were said to have promised to consult further with their Cabinet colleagues on the matter and would report back to merchants and wholesalers on the Government’s position in “due course”.
Few other food distribution operators would comment for fear it would awaken the long-running controversy, one saying: “Like they say, let sleeping dogs lie.” Another confirmed: “It’s gone totally quiet. Deathly quiet. As far as I’m aware there’s been no change. I think the Government finds itself really overwhelmed.”
Tribune Business confirmed that price control inspectors have made no moves to enforce the Government’s originally-proposed list of price-controlled items, or levy sanctions against retailers and wholesalers, even though the amendments are said to have been gazzetted.
The issue was yesterday picked up by the opposition Free National Movement (FNM) as it sought to score political points in the House of Assembly. Kwasi Thompson, former minister of state for finance and east Grand Bahama’s MP, said: “What has happened to the arrangements that were so urgent and so impactful to the fight against inflation? Has there been an agreement with the Retail Grocers Association? Are the new regulations being enforced? The public would like to know.”
John Bostwick, attorney for the Retail Grocers Association (RGA), told this newspaper on November 9 that the industry had expanded its list of price-controlled items to “more than 1,000 individual products”, a significant increase 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.
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 since 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”.