The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Budget’s tariff cuts “can’t compensate” fully for the 20 percent increase in food prices since late 2021, Super Value’s principal said yesterday, although they may cover “half of what was lost” by the return of breadbasket VAT.

Rupert Roberts told Tribune Business that the Government’s import duty cuts and eliminations were “fantastic” as a mechanism to ease the cost of living crisis for many Bahamians, but warned that soaring inflation was unlikely to “level out” much before year-end 2022.

Revealing that the Davis administration had one month ago sought merchant and wholesaler recommendations for Budget tariff cuts, he described those for chicken parts and eggs as “the big ones” given their importance as a major protein source. The Government duly obliged, slashing chicken import tariffs from 30 percent to 10 percent, representing a two-thirds reduction, while the rate on eggs dropped by over 80 percent - falling from 30 percent to just 5 percent.

Mr Roberts told this newspaper that the 30 percent rates, which are now set to end come July 1, are three times’ higher than the mark-ups merchants such as Super Value are allowed to apply to chicken and eggs under Price Control regulations. He suggested that egg prices could fall by as much as 50 percent compared to what they are now when the 2022-2023 fiscal year begins just over one month from now after June ends.

“I think it’s fantastic without studying it too closely,” the Super Value chief said of the Government’s efforts to mitigate inflationary pressures amid its own fiscal constraints. “What I do understand about it is I would think they have given the consumer back 50 percent of the value of the breadbasket. It’s that big.”

Explaining that the tariff reduction impact will likely equal half the increase in costs that resulted from reimposing 10 percent VAT on breadbasket items, Mr Roberts said the duty slash on eggs will help offset forecast price rises stemming from bird flu in overseas markets.

“I thought it would be about a year before we got the laying hens back up to speed,” he added. “But the prices have started to come down already, and we’ve already had 1,000 cases of eggs come in at the new duty rate. Eggs will be priced at half of what they were, and fall more as time goes on. That means double the sale of eggs.

“Chicken is the main protein. We bring in a container a week of each part - wings, drumsticks and leg quarters.” Mr Roberts said consumers had been paying “high duty on chicken and eggs” since the last Christie administration, when tariff rates were set at levels designed to protect domestic producers from imported rivals - something that is now set to change.

However, he warned that the tariff cuts are no panacea or cure-all for food prices that have soared since last year due to a combination of surging global demand, supply chain disruption stemming from the COVID-19 pandemic, higher fuel, freight and shipping costs, and the rise in commodity priced sparked by Russia’s invasion of Ukraine and subsequent shortages of staples such as flour, wheat and cooking oil.

“In the past six months we’ve had about a 20 percent increase in the cost of living, cost of food, and the duties [cuts] cannot compensate for that,” Mr Roberts told Tribune Business. “That cannot equal what the cost of living has gone up by in the last six months. It may compensate for half of what they [consumers] lost in value on the breadbasket but cannot compensate for inflation.

“About a month ago the Government asked for suggestions on what to lower duty on. Chicken and eggs were the big ones we gave them. We were careful not to give them too much or ask for things we would not get, but I’m satisfied on behalf of consumers it’s something intended to help with the cost of living.

“Inflation has not gone away. I still expect it to not start levelling off before the end of the year. It depends. Cooking oil has not settled and flour has not settled. It hinges on the outcome of Russia’s invasion. If we can get the tankers rolling out of Ukraine, that will help build the food supply in flour and flour ingredients. That goes into most cooking and baking.”

The Government, in its food tariff reduction measures, appears to have targeted cuts that will have the greatest impact in mitigating the cost of living crisis. Besides chicken and eggs, the rate on pork is to be slashed from 25 percent to 10 percent, while mashed potato will become tariff-free from July 1 as opposed to the present 35 percent rate.

Protein powder is being cut from 40 percent to zero, while flours of vegetable base will also have their existing 35 percent duty completely eliminated. Prepared beef, pork and turkey are being dropped from 20 percent to zero, while raw ground nuts (peanuts) exceeding 10 percent will also become tariff free. Prepared salmon, herring and caviar are to be cut from a 40 percent import tariff to 20 percent - a drop in rate of some 50 percent.

However, the Government has also been careful not to give too much revenue away given its own fragile fiscal position. Many food items targeted for duty eliminations were only taxed at 5 percent, so the revenue loss is minimal. Among those products going from 5 percent to zero are yeast and baking powder; cheese; shallots; garlic; cauliflowers; headed broccoli; brussel sprouts; cabbages; lettuce; turnips; salad beetroot; radishes; cucumbers; peas and beans.

The list continues on to asparagus; egg plants; celery other than celearic; sweet peppers; hot peppers; spinach; artichokes; olives; corn; beets; and pumpkins, squash and gourds. All preserved vegetables are to be slashed from a 25 percent duty rate to free, with casava; sweet potatoes; yams; and taro also going to zero tariffs.

“I’m sure the consumer is going to be very happy,” Mr Roberts said, adding that freight costs sometimes exceeded all others associated with putting products such as salt on store shelves. “The way you bring it in can save you 16 percent on the cost of an item. With a light item such as cornflakes, a 45-foot container can save you 16 percent,” he added.

Referring to chicken and eggs, he added: “The Government was charging consumers 30 percent duty, and we the merchants were only allowed a 10 percent margin by Price Control. They were charging three times’ the amount in duty that they were allowing merchants to mark up. But I’m really pleased that we settled it. The Retail Grocers Association feels these are good measures and a good move, and the consumer will feel it’s a good move.”