By YOURI KEMP
Tribune Business Reporter
A Cabinet minister yesterday demanded that food retailers “respect” the law and adopt the Government’s expanded price control regime or face an enforcement crackdown that will see fines and penalties levied.
Senator Michael Halkitis, minister for economic affairs, said ahead of the weekly full Cabinet meeting that price control inspectors have already been dispatched throughout The Bahamas to ensure the food distribution industry is complying with the price control changes implemented via regulation on October 17.
Asserting that ongoing negotiations between the sector and the Government cannot be used as an excuse to delay implementation, he argued that the Davis administration had already agreed “reasonable” concessions with higher margins for perishable products and retailers in the Family Islands.
Mr Halkitis said: “While there’s some negotiations going on with the Government, let me just say categorically there are no negotiations that will hold up the amendments. The amendments to the regulations are in place. We put them in place on October 17, we had some discussions with the retail grocers and retail pharmacies.
“We had discussions with retail grocers where they expressed some concerns. We went back and we made some adjustments. We increased some margins to account for perishables and to account for Family Island transportation. We thought that was a reasonable concession to some of the concerns that they raised, and so for all intents and purposes the amendments are in place and we expect them to be respected. We expect them to be respected.”
The Government has indeed agreed to some of what the food distribution industry has been requesting, namely higher mark-ups for Family Island retailers and perishable products that have a shorter shelf-life and go bad much quicker.
While the Retail Grocers Association had supported 25 percent on all dry grocery items, it requested that this be increased to 30 percent for Family Island businesses due to the extra shipping, logistics and overall business costs they endure compared to New Providence.
And, due to “the rising costs of electricity and shrinkage (spoilage), the food retailers had called for a 35 percent mark-up in Nassau, and 40 percent in the Family Islands, for perishable goods as opposed to the Government’s originally proposed 25 percent limit. The Government agreed to a five percentage point increase in the mark-up for price-controlled perishables, such as meats and vegetables, along with “a slight increase for the Family Islands to cover transportation”.
Mr Halkitis, meanwhile, added yesterday: “There was a concern raised about the issue of changing all of the prices, and what we said to them was: ‘If it’s a difficulty changing them individually, we will allow you to have the price on the shelf until such time as all the prices can be changed individually’.
“So for all intents and purposes, the amendments are in place, and we expect them to be respected. I have given instructions yesterday for our inspectors to go out, once again, to inspect and when necessary to commence investigations in order that we are looking to enforce the law where the law is not being respected.
“Since we brought in the amendments we have hired additional inspectors here in New Providence, and we’re in the process of engaging additional inspectors as well in the Family Islands and have given them resources to do the job that they require. Having said all of that, so far the reports that we have been getting from our inspectors are, by and large, the new margins are being respected,” the minister continued.
“But in light of what we saw being attributed to some operators today, I have given instructions that the inspectors are out today to double check. So we fully expect, and we fully intend, to enforce the law.” Mr Halkitis also denied that the expanded price control regime will harm food stores.
“This is margin added on top of the cost, so it’s not that we’re instructing people to sell at a loss,” he added of the controlled margins and mark-ups. “What we’re saying is you establish your cost, and there’s this margin on top of it, and so we think our position is entirely reasonable.” When the cost to import price-controlled foods increases, wholesalers and distributors can apply for approval to raise prices to consumers while still maintaining the legally-mandated mark-up.
Food stores found in breach of price control regulations can face a fine of no more than $2,500 for not co-operating with an investigation and/or imprisonment of up to six months, and where companies are convicted of violations or penalties under the law they face a $5,000 fine and up to 12 months imprisonment. This liability extends to directors.
The Government’s initial proposal capped food wholesale margins, or mark-ups, at 15 percent for all 38 product categories listed, while those for retailers were set at 25 percent across-the-board. The move, which was designed to ease the cost of living crisis currently battering thousands of middle and lower income Bahamians, employed the blunt tool of price controls - albeit on a “temporary” six-month basis - to achieve this.
The goods impacted, some of which are already price controlled, were 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 were 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.
John Bostwick, attorney for the Retail Grocers Association (RGA), told this newspaper on November 9 that the industry had expanded its counter-offer of price-controlled items to “more than 1,000 individual products”, a significant increase on the 20 items and categories included in its initial October 26, 2022, proposal but still some way short of the Government’s 38 categories and 5,000-plus products.