The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Small, inner-city and Family Island food stores were yesterday said to be “leading the way” as the industry works “feverishly” to supply the Government with an alternative to the massive price control expansion by this Friday.

John Bostwick, the Retail Grocers Association’s attorney and legal adviser, told Tribune Business that larger operators such as Super Value and AML Foods had “magnanimously” taken a supporting role over the sector’s response knowing that smaller operators and their staff will be “hurt the most” if price controls are expanded to 38 product categories.

As a result, smaller-scale grocery merchants are taking the lead in crafting a viable alternative to the Davis administration’s initial proposal because they know “what they can survive on”. Although Mr Bostwick provided no details on the Association’s likely solution, he indicated it will likely involved a drastically slimmed-down price control list compared to the Government’s version that potentially covers up to 5,000 different line items.

Speaking after the Government confirmed on Friday that it has granted food retailers and wholesalers a one-week extension, until October 28, to come up with a viable alternative that satisfies both sides as well as consumers, Mr Bostwick told this newspaper: “When we first met with the Government last Monday, they gave us until Friday to come back.

“Last Wednesday, we would have written to them requesting an extension to this Friday’s date - from October 21 to October 28. They agreed to that. They allowed us to have that extension. In between times, we are working feverishly. The reason we asked for the extension is there was no way we could canvass every food store in every constituency in three days - Tuesday, Wednesday, Thursday. Impossible. We couldn’t canvass everybody in Nassau to be honest.”

Mr Bostwick said the Association was determined that its solution would not be “Nassau centric” or dominated by the larger food merchants. “It’s incredibly important even in New Providence to get a cross-section because this initiative covers every level of income. You have your small ‘Mom and Pops’, a 500 square foot retailer in Governor’s Harbour, Eleuthera,” he added.

With the impact from the proposed price control expansion differing island by island, and from merchant to merchant, the Association’s legal adviser said it was critical that the consultation net be cast as widely as possible so that all views are taken into account. Logistics and transportation costs vary between Family Islands, depending how far they are from Nassau, and have to be factored into its government response.

“We can’t sit here with this Nassau centric way of operating,” Mr Bostwick told Tribune Business. “This Association is not Nassau centric. It’s country-wide, every constituency in The Bahamas, so we need their input. We also need the input of the small guys as opposed to the big guys.

“The big guys magnanimously said that the effect of this resolution will impact the smaller operators and the Family Island operators the most. They’re the least flexible to withstand that change, and also they have the tightest margins and lowest volumes, so any change affects them the most.

“It was said to them that they come up with the first list. The larger operators said they will leave it with them. They said: ‘You know what you can survive on, and we will support you leading the way with suggestions as to what you can survive with. The understanding is that you guys will be hurt the most; tell us what you can survive on’,” he explained of the industry’s position.

“It makes no sense the larger guys writing the list. It might destroy them. They make the list; they know what they need to survive, and the larger ones will support them. The answer is true indicative democracy.” Food retailers have previously warned that the Government’s price control expansion, as it stands now, could lead to store closures and staff terminations as more products will now be sold at a loss.

The price control regime’s expansion effectively means merchants and wholesalers will be selling more of their inventory as ‘loss leaders’ where they are unable to recover their cost of sales. The consequences will likely involve merchants further raising prices on non-price controlled goods to compensate, thereby further feeding already-high inflation. And it also provides a disincentive for retailers to stock price-controlled items, which could result in product shortages.

The Davis administration unveiled the move as a bid to further ease the cost of living crisis for thousands of middle class and low income Bahamians, who are being continuously squeezed by soaring food prices and are seeing living standards/quality of living eroded as they increasingly struggle to afford basic commodities such as food and medicines. However, retailers have pointed to the unintended consequences, and say there are better ways to meet this goal.

Mr Bostwick yesterday said “every piece” of the current controversy could have been avoided if the Government had consulted with food retailers and wholesalers before making its announcement. “In my personal opinion, consultation is a fundamentally important thing in a progressive, mature civil society,” he added.

“I think it’s important that the public understand that the grocers are not their enemy, and are working among themselves to be extremely democratic. You cannot turn around and the big guys in Nassau are making the decisions and don’t consult the membership.”

The Ministry of Economic Affairs, in a statement issued on Friday, confirmed that food retailers and wholesalers, plus their pharmaceutical counterparts, have until October 31, 2022, to complete the transition to the new price-controlled margins and mark-ups - effectively granting them the week’s extension. Price control inspectors will not begin enforcement of these changes, whatever they ultimately may be, until November 1, 2022.

“The minister of economic affairs [Senator Michael Halkitis] and officials met separately with a group of pharmaceutical wholesalers and retailers on Friday, October 21. The meetings were fruitful and, in both instances, both sides committed to continuing the dialogue,” the statement added.

The Retail Grocers Association, in a statement last week, said the price control expansion will “affect more than 5,000 items to which inventory and price adjustments would have to be made. To facilitate such changes would be a very expensive undertaking, and would mean that 40 to 60 percent percent of total revenues for local wholesalers and retailers would be controlled.

“Additionally, such a decision was made without prior industry consultation and at a time when businesses are faced with already slim profit margins, increasing electricity costs, increased operating expenses and theft. The sector employs some 4,000 persons, and the expansion of the price control basket will undoubtedly have a ripple effect which would prove detrimental, with mass store closures, particularly among the smaller food stores and the real potential for food shortage in the country.”