The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday hinted the Government may permit higher margins than allowed by traditional price controls on its new “breadbasket” foods line-up due to the rise in perishables.

Dr Duane Sands, minister of health, told Tribune Business that the Minnis administration wanted to avoid a situation where food retailers could suffer “up to 30 percent” product losses due to the switch to healthier foods.

Pledging to “bring home” the breadbasket reforms unveiled during his 2019-2020 Budget debate contribution, Dr Sands said he was “certainly open to something reasonable” when it came to the mark-ups/margins that food retailers and wholesalers will be allowed to levy on the new line-up.

Speaking after leading food retailers warned that price controls could threaten the Government’s objective of encouraging Bahamians to eat healthier, he acknowledged the need to avoid a scenario where products are being sold at a loss as this threatened to create “a black market and illegal imports”.

Adding that he was “100 percent certain” that the Cabinet is sensitive to food retail and wholesale industry concerns, Dr Sands said the issue boiled down to “a fundamental philosophical difference” over how to achieve an end goal both sides had agreed on.

And, while the 2019-2020 Budget contained no new or increased taxes, the minister of health said this did not mean proposals to levy a tax on sugary drinks and other economic-based initiatives designed to incentivise Bahamians to eat healthier had been abandoned.

Dr Sands said he had agreed to “sit down and hash things out” with major food retailers once the Budget process was completed after Gavin Watchorn, AML Foods’ top executive, yesterday warned that the Government would be “penalising the industry that can be the greatest help to them” if it imposed price control restrictions that force breadbasket products to be sold at a loss.

Reiterating that this sector, together with food wholesalers, had been consulted extensively on the proposed breadbasket reforms, the minister of health said these discussions had narrowed the range of products to be included in the VAT-free, price controlled list.

“Now we’ve established what should be there, the final step is to look at what is realistic in setting the margins and whether the conventional numbers for wholesalers and retailers are reasonable,” Dr Sands told Tribune Business, “particularly given that a lot of what exists on the breadbasket now, other than milk and a few other things, are for the most part non-perishable items.

“Now we’re talking about going to perishables, which proves a different challenge and the implied loss of product that could be up to 30 percent.” While the majority of the present breadbasket list has a long shelf life, the revisions proposed by the Ministry of Health feature fresh food and vegetables that are vulnerable to damage, becoming outdated, and rotten.

“We need to be absolutely sure we’re not creating an untenable situation that worsens the situation from a public interest sense,” Dr Sands said. “We’ve agreed the ‘what’ at the ministry. Now it’s the ‘how’.

“I am certainly open to something that’s reasonable [on margins]. At the end of the day, we don’t want to create a scenario that’s impossible. How can you sell something for less than you buy it for? How can you sell something for less than it cost? All you’re going to create is a black market and illegal imports. That’s not the goal. The goal is create a healthier population.

“I’m 100 percent certain the Cabinet of The Bahamas is very sensitive to these concerns. We’re also mindful that some members of the public perceive that the lower the price, the better it is. Driving prices to nothing is not the solution. You’ve got to make it more reasonable, economical and more affordable but it doesn’t mean someone has to give up their livelihood to make it happen.”

Spinach, broccoli, romaine lettuce, apples, oranges, strawberries, beans, peas, and almonds are among the items earmarked for inclusion on the new price-controlled breadbasket list, but Mr Watchorn had warned there would be “issues” if food retailers were forced to sell such perishable product at the traditional 18 percent margin.

Agreeing that none of the food retail concerns are “unreasonable”, Dr Sands said the only difference was over the best path to achieve the end goals. “I’ve listened to the discussions, the arguments, and we will consider it in the way forward; consider all these suggestions about what model to use to accomplish the end goal,” he added.

Dr Sands said the breadbasket reforms were on the “home stretch”, and the Ministry of Health was “going to bring this home”. He added that the Ministry of Health had also “not moved away” from its position on introducing sugary drinks taxes and other levies designed to encourage Bahamians to change their dietary behaviour.

While the Minnis administration had decided against introducing any new or increased taxes in the upcoming fiscal year, Dr Sands said this “does not mean we’re going to abandon studies and recommendations for anything that will improve the health of Bahamians”.