• Fears 25% across-board mark-up will ‘devastate’

• And four days not sufficient for orderly transition

• Say list way larger than 38 products stipulated

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Food stores throughout The Bahamas were yesterday said to be “up in arms” over the details of the Government’s expanded price control regime amid fears it will “devastate” the industry and jobs for hundreds of workers.

Philip Beneby, the Retail Grocers Association’s president, told Tribune Business the 25 percent across-the-board mark-up that the Davis administration is applying to the targeted 38 product lines is “not enough to survive” for many retailers.

And, with the changes due to take effect from Monday, October 17, he added that the four days granted to the industry to adjust pricing on both store shelves and electronic point-of-sale systems was simply insufficient to facilitate a smooth, orderly transition.

Mr Beneby told this newspaper that food stores are instead now facing the prospect of incurring extra losses, as they will have to sell existing inventories for those goods that are not presently price controlled - but will be come October 17 - at the new, lower government-imposed mark-up instead of the higher gross margin previously anticipated.

Disclosing that no merchant had been consulted on the impact prior to the Prime Minister disclosing the changes in his Tuesday evening national address, the Association president warned that the fall-out could impact the Government’s own tax income if stores were forced to close or cut back on operations as a result.

Confirming that grocers across The Bahamas are voicing the same concerns and fears, Mr Beneby said former FNM MP for North Eleuthera, Ricky Mackey, who owns a food store, had also discussed the price control controversy with him yesterday.

“It’s not just the retailers in Nassau. It’s coming from all over The Bahamas,” he told Tribune Business. “It’s coming from Abaco, it’s coming from Eleuthera, it’s coming from Harbour Island. I just hung up from Ricky Mackey, the guys in Eleuthera. They’re all up in arms over this. It’s not only here. They’re all concerned when you’re going to have a devastating effect on one’s livelihood like that.

“You have to be careful. We are all partners with the Government because we collect revenue for the Government. We collect VAT for the Government. Do you want to put those who collect your VAT out of business? We also pay Business Licence fees and other taxes to the Government.

“Why do you want to devastate us like this? You say you are trying to help the consumer, but in helping the consumer you are placing another industry in peril. That is what’s happening.... A 25 percent mark-up is not enough to survive.”

Mr Beneby spoke out after the extent of the price control regime’s expansion was unveiled in the Price Control (Application to Additional Items) Regulations 2022, which are due to take effect on Monday, October 17, and last for at least six months until April 17, 2023. The Prime Minister, in unveiling the move, said it was for a six-month trial although there is every possibility it may be extended further.

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. The regulations were signed on October 12, the same day as the Prime Minister’s speech, by the minister responsible for consumer protection, who is Michael Halkitis, minister of economic affairs.

The retail mark-up for eggs appears to have been increased from the present 10 percent to 25 percent, providing a very modest boost for retailers. But, while the 25 percent maximum across-the-board mark-up is slightly higher than the “general” 23 percent permitted currently, Mr Beneby said the increase was insufficient to offset the expansion of price controls to more products.

And he argued that the expanded price control regime was much bigger than the impression given by the Prime Minister’s reference to 38 items. “The list is vast and wide,” Mr Beneby explained. “They talk about chicken. What falls under chicken? There’s whole chicken, cut-up chicken, chicken wings, chicken drumsticks, chicken leg quarters.”

The same applies to pork, under which comes centre-cut pork chops, pork chop ends, pork loins, fresh pork, pork legs and pork shoulders. “When they say sandwich meat, what does it cover?” he asked. “It covers bologna, salami, turkey. They say 38, but when you start counting the list and come down it’s way more than 38 items. It covers a wide, vast array of product. They say 38, but that 38 can expand to over hundreds of varieties of items.”

Mr Beneby also warned that the October 17 deadlines gives merchants too little time to prepare for the change in mark-ups and pricing. “It’s not enough time, and what happens to your present inventory is that you are going to reduce its price to meet that deadline,” he explained.

“That again eats into your profit margin because you have to reduce what was previously at a higher mark-up to 25 percent. That’s another blow yet again. The list has been expanded, and you’re going to have to reduce the prices on the existing inventory of those items. Those reduced mark-ups, that’s not a good thing for the retailers.”

One industry source, speaking on condition of anonymity, told Tribune Business yesterday that it appeared the Government wanted food retailers and wholesalers to subsidy the cost of food for the Bahamian people at a massive financial loss to the private sector.

Pointing out that the price control expansion will aid high income earners, as well as the middle class and poor it is designed to help, they added: “Don’t make the food industry subsidise it. There’s better ways to do it than what they’ve done.

“At the end of the day, we’ll see if the Government is prepared to do anything other. I don’t see how they can make the food industry subsidise the cost of living. It’s like making the gas people subsidise the cost of gasoline. They cannot do it. We’ll see if they’re going to make adjustments, back off on certain things or leave as is.”

Rupert Roberts, Super Value’s principal, told Tribune Business food store operators were “very distressed” over the price control regime’s expansion and agreed the window in which the industry has to effect the changes is “very short”. However, he declined to say much more on the basis it could prejudice further talks with the Government.

“The food industry was not consulted on the new price control and therefore we have to consult the Government,” Mr Roberts explained. “I don’t think we should be discussing it before we talk with them. It may jeopardise the negotiations.

“It’s safe to say we were not consulted. Therefore we have to consult the Government. If they had consulted us I think we could have helped them with their plans. We’ll leave it and let everything come out in the wash.”

Mr Beneby added: “I’ve spoken today to many of the retailers, large and small, up and down, and no one seems to have been consulted or had any dialogue with anyone in the Government as far as I know.

“They have to be careful over the way they are trying to help the poor. The same people, the same consumers they are trying to help, are the ones they are going to hurt in this exercise they’re putting in place. It’s going to have a devastating effect. We are sitting down, trying to crunch some numbers.”

Mr Beneby said the Bahamian food industry is due to meet on the issue imminently, and is hoping to have a meeting with the Government before Monday. 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, thereby further feeding already-high inflation. And it also provides a disincentive for retailers to stock price-controlled items, which could result in a shortage of such products.

Mr Beneby, pointing out that small and medium-size food stores will suffer the greatest impact, added: “It’s going to essentially run them [small food stores] out of business. The medium-sized ones may last a little longer than the small, but they are all going to be greatly affected.”

He said persons outside the industry looking in would not recognise these challenges, but those in the trade with “the feel and knowledge of it, when we suggestions like that we know right away the impact it’s going to have on our business. It’s going to have a significant impact”.