Businesses might pay a higher price

LAST MONTH’S stern intervention by the Fair Trade Commission, as well as continued frustration from government officials over the lack of progress, suggests the current food-price inflation situation is not easing and will, in fact, spiral further, resulting in severe consequences for all concerned.

If consumers are increasingly paying a price, so too will businesses, judging from the commission’s implicit threat to monitor and persecute what it deems to be “anticompetitive behaviour” from cartels, monopolies or entities that collude in price-setting or that try to pass on projected increases in utility costs to consumers.

“The Fair Trading Act enables the commission to take offending businesses to court for any anti-competitive behaviour and any business found guilty by the court of anti-competitive behaviour can face the maximum penalty of ten per cent of its annual global turnover,” the body said in a media release.

The resort to this big-stick approach is notable and suggests efforts by officials to deploy moral suasion have achieved mixed results, if not completely failed.

Once more, Minister of Trade and Industry Paula Gopee-Scoon this week called on businesses to be reasonable when it comes to the price of food on the shelves, not least because the UN’s Food and Agricultural Organisation (FAO) recorded, for the tenth consecutive month, a decline in global food prices.

In the Senate on Tuesday, Minister in the Ministry of Agriculture, Land and Fisheries Avinash Singh called on feed manufacturers and feed grain suppliers to lower their prices now that some of the factors affecting the cost of imports have been reduced. He noted current subsidies to the price of seed material, but urged farmers to shop around, echoing the plea made by Ms Gopee-Scoon not long ago in relation to the exercise of consumer choice.

But president of the Supermarket Association Rajiv Diptee on the same day also said the reason why the dip in global food prices has not been immediately reflected in some areas is a “lag time that comes into play” in relation to international markets.

Mr Diptee said consumers can expect to enjoy lower prices as suppliers and distributors of imported goods fetch products at lower prices.

Others are not holding their breath.

The Fair Trade Commission, which has had to warn business owners against passing on price increases due to changes in the electricity rate regime, is already projecting that such changes could “add to the already high cost of doing business in this country.”

Passing on, unjustly, increases to consumers might appear to be good business for some, but in the long run, businesses themselves might pay more given the commission’s aggressive stance and a loss of goodwill.

The effect of spiralling food inflation on the cost of living could also have direct ramifications for the purchasing power of ordinary citizens as well as savings. This will only dim consumer confidence and reduce the prospects of a healthy economic rebound in some areas.

Sooner or later, someone must budge.