The Tribune

• Say: Waive tomorrow’s deadline if no deal

• ‘Uniting’ with pharmacies to ‘stand up’ to Gov’t

• ‘Ball in the Gov’t’s court’; no reply to industries  

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian food stores yesterday said they “expect” the Government to extend tomorrow’s deadline to implement the major price control regime expansion if both parties are unable to reach agreement by then.

John Bostwick, the Retail Grocers Association’s (RGA) attorney, told Tribune Business “the ball is in the Government’s court” as to the next step since neither the food retailers, wholesalers and distributors or their pharmaceutical counterparts have received any response to the position papers and alternative solutions that were proposed “well within” the time permitted by the Davis administration.

With the November 1 deadline to expand price controls to 38 food product categories, and multiple pharmaceutical drugs, now less than 24 hours away, he said the Association’s 130 members are “somewhat concerned” by the Government’s silence but feel the looming implementation should again be “extended” given that negotiations remain open and have not yet concluded.

“We continue to wait for the Government’s response,” Mr Bostwick told this newspaper. “The grocers responded well within the time allocated and, to-date, there has been no communication from the Government. At this time, we are just waiting. That can also be said for the other associations.”

Asked about the imminent November 1 deadline to implement price control changes, and adjustments, to up to 5,000 food items, he replied: “We are somewhat concerned, but due to the fact the consultation process [has not ended] and the proverbial ball is in the Government’s court, the Government’s hands........ it’s definitely something that we feel is with them now.

“We would hope that should November 1 arrive and there has not been an agreed conclusion to the consultation process, the Government would extend the time for the process to properly and finally be concluded so that we arrive at an agreement that is suitable and livable for all parties.

“In fact, we would expect that the Government will extend the time should there not be a conclusion to the consultation process by November 1.” Other industries also impacted by the price control expansion, as first announced by the Prime Minister’s mid-October national address, also yesterday confirmed that they had received no government reply to their alternative solutions for easing the inflation-driven cost of living crisis for low and middle income Bahamians.

Shantia McBride, the Bahamas Pharmaceutical Association’s (BPA) president, when asked by this newspaper whether it had received a reply from the Government, responded: “No, not as yet. At this time we’re just waiting to have a response from the Government. There’s been nothing as yet.”

Michael Halkitis, minister of economic affairs, last week hinted to the media that the Government is not budging from its November 1 deadline to implement the price control expansion. He could not be reached for comment before press deadline last night. Clint Watson, the Prime Minister’s press secretary, said he would get back to this newspaper’s inquiries as to the Government’s position but no response was received before print time.

The latest developments came as Tribune Business was informed of a growing alliance between the food and pharmaceutical industries due to the price control threat both are facing. Well-placed sources in both sectors, speaking on condition of anonymity because they did not have permission to speak publicly, said their interests were converging to the point where they will “unite” and “stand up” to the Government given the businesses, jobs and livelihoods at stake.

Ms McBride declined to comment when asked about this alliance yesterday, saying: “I can’t speak to that right now.” She, though, did not deny, and this newspaper was told that relations may have progressed to the point where representatives from both sides, and their associations, were likely to pose for a joint picture and release a video explaining to the wider Bahamian public why they have taken their respective positions.

One pharmacy industry source, confirming that the two sectors were exploring “joining forces” and seeking legal advice together, told this newspaper: “That is actually happening as we speak. That is definitely the position being taken. We’re going to unite and stand up to the Government, but are going to pitch it in a way where it does not get a bad view with the public. 

“A strategy is being rolled out, and a video will be produced together to explain to the public what our concerns are.” Another contact added: “The pharmacists have been in contact with the food retailers, the wholesalers, manufacturers and distributors have been in contact. It seems that everybody’s position is similar.”

Tribune Business has also been told that retailers in the food and pharmaceutical sectors, as well as their wholesale partners, have also been assessing how they will respond - and developing a so-called ‘Plan B’ - if the Government does not moderate its demands and work with the private sector to reach a compromise. “That won’t look good,” one source said of such an outcome. “Hopefully we can all avoid having to take to the trenches.

Meanwhile, one wholesaler reveals in today’s paper (see Page 3B) how the Price Control Commission is unlikely to cope with the massive expansion in its workload given that it already struggles to provide timely responses to requests for price increases. Heath Pritchard, vice-president of Asa H Pritchard, told Tribune Business he has had $100,000 worth of butter sitting in his warehouse for five weeks waiting for the regulator to approve a price increase.

Without such approval, he faces selling the entire shipment at a loss or it will spoil and go off before reaching food stores and the end user. Suggesting that the Government is thus “putting the cart before the horse” with its proposal to expand price control by 38 product categories, Mr Pritchard explained that the butter, which took seven months to get to New Providence due to global shipping delays, has a landed cost 15 percent higher than the current price control limit.

In such situations, wholesalers write to the Price Control Commission to request a higher price that compensates for the increased cost but still aligns with the mark-up/margin permitted by law. However, the timeframe in which such approvals are provided is simply taking too long, highlighting a problem that is set to be worsened by the price control regime’s expansion.

The combination of price control expansion, which will cover more than 5,000 items, and delayed approvals could force wholesalers to stop importing certain products because the losses they will incur are just too great. The result would likely be product shortages and greater food insecurity - the opposite of what the Government is trying to achieve.

Food wholesale margins, or mark-ups, are capped at 15 percent for all 38 product line items listed, while those for retailers are set at 25 percent across-the-board. Those goods impacted, some of which are already price controlled, are 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 are 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. This is under the Government’s initial proposal, which it has yet to confirm any changes to.

Price-controlled mark-ups range from 15 percent to 18 percent for pharmaceutical wholesalers. For retailers, the range is from 35 percent to 40 percent. The medicines covered include vaccines, anti-diabetic drugs, decongestants, laxatives, contraceptives, antacids, anti-hypertension medicines, cough preparations, cardiovascular agents and serums.