Business still feeling the pinch of water levy

Government’s Garbage and Sewage Contribution (GSC) Levy on water bills continues to have a significant negative impact on small agribusinesses, resulting in higher operational costs, a recently released Small Business Association (SBA) survey has shown.

In addition, the SBA said rising fuel prices were also driving up costs of operation for businesses across the micro, small and medium-sized enterprise (MSME) sector.

This is according to a series of SBA surveys carried out during the association’s 2020-2021 financial year to “adequately address several of the issues affecting the sector”.

In the survey to gauge the impact of the sewage levy on agribusinesses, 65 per cent of those firms said the rise in the price of water negatively impacted their business while 35 per cent said it was not affecting them.

The GSC, which took effect in August 2018, is set at 50 per cent of the water bill. In addition to this, the Barbados Water Authority (BWA) had adjusted its water rates for commercial customers in May of 2019, moving it from a fixed 4.66 per cubic metre to a sliding scale.

The SBA has not disclosed the number of agribusinesses that took part in the survey, but an extract from the research said “Of the 65 firms taking part in the survey, 40 per cent said the rise in water prices represented between 11 per cent and 25 per cent of their operational costs, 30 per cent indicated that this price increase accounted for less than 10 per cent of their business expenses, while 20 per cent stated that it contributed between 26 per cent and 50 per cent of their operating costs.

“Notably, 10 per cent indicated that the rise in the price of water accounted for over 50 per cent of their costs,” it added.

Over the past two years, numerous operators in the agriculture business have complained of having to battle high operating costs as they called for a review of the GSC .

After a rise in feed prices recently, Minister of Agriculture Indar Weir indicated that Government was working on plans to reduce operating costs to farmers.

A substantial number of small businesses also complained of the continued impact of the rise in fuel prices on their operations.

An extract from that survey showed that out of a sample of 100 members, 88 per cent are required to drive for the day-to-day operations of their business.

“It is therefore likely that the small business sector has been heavily affected by the rise in fuel prices,” the research concluded.

According to the SBA report, which was recently presented to members, nine per cent of firms surveyed said the rise in fuel prices accounted for over 50 per cent of their company’s expenses.

Meanwhile, 18 per cent said it represented between 26-50 per cent of operational costs.

“Thirty-eight per cent indicated that the rise in fuel prices represented less than 10 per cent of their operational costs. Thirty-five per cent stated that it represented between 11 per cent and 25 per cent of their operational costs,” it added.

In this survey, firms identified various reasons for driving including provision of services to customers, collection of stocks and deliveries, attending meetings or a mixture of some or all of those reasons.

MSME firms across several sectors – manufacturing, general services, professional services, wholesale/retail, construction and tourism – also reported in another survey that the lockdown in March 2020 would result in a significant loss in revenue.

A pull out from the poll of 50 members for this survey showed that “88 per cent of the sample of firms anticipated a significant loss in revenue as a result of the shutdown and 76 per cent believed that they would be unable to satisfy operational costs in the next three months”.

Sixty-two per cent of participating firms said they saw a decline in the performance of their firm since the earlier lockdown [in] March 2020.

At the time of the survey 82 per cent of respondents believed they would need capital and 52 per cent said they would need a moratorium on loans and rent in the next six to 12 months to assist in combating the effects of the lockdown.

“Sixty per cent of respondents stated that they would be engaged in heightened health and safety measures and 52 would be working remotely to ensure their business survived,” the report noted.

It said: “Based on the results recorded, the vast majority of members realised a decline in their operations since the first lockdown in March 2020.” (MM)