The Tribune

• Optimistic November 1 pricing not ‘dictated’

• Association eyeing ‘plausible compromise’

• Attorney brands offer ‘fair and considerate’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian food retailers were last night hoping the Government “embraces their Herculean effort” to craft an alternative to the major price control regime expansion that satisfies the needs of all parties.

John Bostwick, attorney and legal adviser to the Retail Grocers Association (RGA), told Tribune Business the group had yesterday submitted its counter to the Davis administration’s initial proposal of expanding price controls by 38 product categories although he declined to give details on its contents.

This newspaper understands the Association, which has 120 members ranging in size from ‘Mom and Pop’ stores to the likes of AML Foods and Super Value, is likely to have presented a solution that drastically shrinks the number of additional items subjected to price-controlled margins and mark-ups with the Government refusing to budge from the November 1 implementation deadline.

Mr Bostwick, while agreeing that there will be new in-store prices on that date, voiced optimism that they will not be “dictated” by the Government and that a compromise can be reached which helps to ease the cost of living crisis for middle and lower income Bahamians - the Government’s key objective in this exercise.

“We did actually manage to get the Association’s position in to the Government today, and that position has just been shared in full with all of our members,” he disclosed to this newspaper. “It’s now up to 120 members; from the large to the small and everyone in between, and they are digesting it. We had to create a sub-committee, a tight working group, to develop it.

“We’ve been able to move forward now, and come back with a position that I think is a very good position. We are now in a wait and see position to see what they do with it, and what the Government thinks of it.” Food merchants and wholesalers have warned that the original 38 product category proposal would threaten jobs and store closures, as it would result in between 40 percent to 60 percent of retail inventories becoming price-controlled.

This would result in these products becoming loss leaders, with retailers losing money in stocking and selling them. As a result, some may elect not to carry such products any more, resulting in potential shortages of certain food items while, to compensate for price-controlled losses, merchants would likely hike the prices of non-controlled goods further fuelling already-high inflation.

“We did meet our target deadline of having a position in writing back to the Government today,” Mr Bostwick affirmed. “We are hopeful the suggestions will be received by the Government in the spirit in which they were produced, which is to find a solution that mainly works for the public at large, the Bahamian people, while meeting the objectives of the Government and protecting the livelihoods and incomes of members of the Association.

“I think the Association is confident it has produced a more than plausible compromise and a more than acceptable compromise. With that, we can only be hopeful that the Government sees it as worthy and embraces it - that Herculean effort it took to be fair, inclusive and considerate to all persons affected - the merchants, customers and administration.”

Michael Halkitis, minister of economic affairs, on Tuesday warned that the new prices will be enforced from November 1 and that the Government will not be shifted from that deadline. “There will be new prices hopefully by November 1, but those prices will be agreed between the Association and the Government of The Bahamas, not as dictated by the Government of The Bahamas,” Mr Bostwick replied.

“The Association remains grateful for the consultation process that is ongoing.” The Government previously said the expanded price control regime for both industries is a temporary measure. For food retailers and wholesalers it will last six months until May 1, 2023, while for their pharmaceutical counterparts it will remain in effect for three months until February 1, 2023. Both deadlines can be extended.

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.”

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.

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.