New agreement provides for competitive, higher mark-ups; consumers told prices will fluctuate

- by Marlon Madden February 10, 2023

By Marlon Madden 

Barbadians can look forward to an extended ease in supermarket prices for the next six months.

Declaring, “We understand that the consumers are having a difficult time,” Senior Minister for the Coordinating the Productive Sectors Kerrie Symmonds announced the new deal which is awaiting Cabinet’s approval to take effect.

In outlining the slightly adjusted compact in a press briefing at his Culloden Road, St Michael offices, Symmonds explained that Government would again remove the 17.5 per cent Value Added Tax (VAT) from the items while pork producers have agreed to a mark-up of only 10 per cent. In some cases, customs duties will be removed from some items.

However, consumers have been put on notice that they can expect price fluctuations as retailers and distributors adjust for market changes in freight and other expenses.

The parties agreed that the second compact would be extended to 47 categories associated with the basket of goods including bread and some pork and poultry products.

The new-look prices social compact was announced on Thursday, following several days of negotiation between Government and the private sector. The  first six-month compact came to an end on January 31, 2023.

This time around, distributors and manufacturers have agreed to a markup ranging between 15 per cent and 18 per cent on dry goods and up to 20 per cent on cold storage products included in the basket of goods, compared to the 12 to 15 per cent across the board in the first compact.

While the majority of poultry producers are not involved in the compact, they are expected to work with the supermarkets to offer the best price possible.

Officials are hoping that within a matter of days the Cabinet will give the nod to forgo the taxes for the next six months for the agreement to take effect.

Stressing the importance of the compact, Minister Symmonds said the Mia Mottley administration was prepared to “stand in the breach” in the defence of the people of this country and “in defence of their pockets at every opportunity”, but he insisted that legislation was not necessary as some have suggested.

“We do so not by coming down heavily by way of use of the Parliament for legislation as some people have urged,” said the Foreign Affairs and Foreign Trade Minister.

Poultry producers have already indicated that they want no part of a new compact given the decline and “injury” they experienced over the six months of the first deal. Some poultry farmers were also said to have exited the industry as a result.

However, the poultry operators earlier gave the assurance that they would not increase prices but rather, revert to the pre-compact markups.

Asked to respond to this development, Symmonds was careful to indicate that they were “acting in good faith and quite frankly, to the best of their financial interests”.

Pointing out that some of them were at the discussion table, Symmonds said consumers should be grateful that they would still be able to source chicken products “at a price that is reasonable than they would have otherwise been able to obtain”.

Included in the new compact are members of the Barbados Pig Farmers Society and some poultry producers, as well as eight of the island’s main supermarkets – Massy Stores, A1 Supermarket, Jordan’s Supermarket, Cherish Supermarket, The People’s Market, R.L Seale and Bridge Supermarket.

Several distributors and manufacturers are also involved in the initiative – Armstrong Agencies, Stansfeld Scott, Massy Distribution, Brydens Stokes, Hanschell Inniss, Western Wholesale, Massy Distribution and Supreme Distributors. The bakeries on board are Purity, Crumbz and Zephrin’s. 

Thanking the business community for its “heavy-lifting” in joining a second compact, Symmonds stressed that the first effort resulted in a “tremendous amount of pressure” on some retailers.

“The private sector carried a heavy burden. They came to the table and they put skin in the game in the defence of the interest of the ordinary consumer in Barbados and I want to thank them for the sacrifices they have made and the commitment they have demonstrated towards social stability in this country. It has not been done without great pain, and quite frankly, for some businesses, great peril as well,” said Symmonds.

Noting that some of the entities opted not to continue in the compact as a result of the significant impact it had on their operations, the government minister urged Barbadians not to hold it against them.

President of the Barbados Chamber of Commerce and Industry (BCCI) Anthony Branker in turn thanked the Government for having discussions with the business community before a decision was taken.

He said private sector members were mindful of the impact rising inflation was having on consumers while indicating that the businesses that are signing onto the new compact were doing so “in the interest of Barbados”.

Branker said: “It is not a price control, so as we get variation in freight, as we get variations in our first cost, prices will still move up or down but it is a mark-up control. We have agreed to a mark-up range so that there will be some competitiveness among retailers because they can choose to mark-up as low as 15 per cent and as high as 18 per cent on dry goods and then as high as 20 per cent on cold storage products,” explained Branker.

He said only about 20 per cent of retailers opted not to participate in the new compact, which several of them complained last year was having a negative effect on their bottom line.

Branker was not in a position to say what level of revenue those involved in the first compact loss or how much they were likely to forgo in the next round of compact.

Tomlinson Bynoe, Chairman of the Retail and Distribution Group of the BCCI, indicated that the decline on the balance sheet of some retailers could have easily reached between 1-2 per cent during the first compact, while “a successful year” for some of those same players would generally mean only a one per cent increase in the bottom line.

“It means then that some persons are maybe operating [at] break even and some in loss position. That is why under the next round of the compact you will realise that not everyone has come back to the table because for those said reasons, some from a financial perspective, just could not facilitate another round,” said Bynoe.

In any event, he pledged that the retail and distribution sector would continue to play its role in assisting where necessary to keep costs manageable.

“We just want to reassure Barbaidans that just as this process moves forward you can expect from retail and distribution the same level of support that would have been given over the last six months,” he said. 

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Distributors and manufacturers have agreed to a markup ranging between 15 per cent and 18 per cent on dry goods and up to 20 per cent on cold storage products included in the basket of goods.

The markup in the first compact  was 12 to 15 per cent across the board.

Distributers and Manufacturers in Compact

Armstrong Agencies

Stansfeld Scott

Massy Distribution

Brydens Stokes

Hanschell Inniss

Western Wholesale

Massy Distribution

Supreme Distributors

Supermarkets in Compact

Massy Stores

A1 Supermarket

Jordan’s Supermarket

Cherish Supermarket

The People’s Market

R.L Seale

Bridge Supermarket.

Producers in Compact

The Barbados Pig Farmers Society

Some poultry farmers

Bakeries in Compact

Purity

Crumbz

Zephrin’s

Pork producers have agreed to a markup of 10 per cent and sell their produce at $7. 25 per pound or $15.95 per kg. Pork hocks, knuckles, pork mix stew, from the hind and shoulder legs at $7.75 or $17.05 per kg.

(These prices are the upper price limits which will be discounted down in times of build up)

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