Price gouging and priceless populism

Mark Wignall

Thursday, June 07, 2012    

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After absorbing the budget presentations of Finance Minister Peter Phillips and Prime Minister Portia Simpson Miller, although I am still using a microscope to detect the faintest signs of a growth policy in both speeches, it is clear to me that the prime minister, in her masterstroke of a paean to populism on Tuesday has made the exercise so far, "Peter's Pain" and "Portia's Triumph".

Immediately after Dr Peter Phillips' presentation, many wholesalers/distributors, especially in the rum trade, locked their doors to their faithful customers in a refusal to sell until the June 1 day of increase came around.

This is standard among Jamaican businesses over the last 40 years. They do this because they know the powerlessness of the retailers plus, not too deep down, they believe that these customers are all stupid and have no other choice but to grin and bear it.

Before June 1, one bar owner said to me, "Imagine, mi go a Miss S... fi go buy jus' two bottle a rum an' she tell me sey she nuh have none. Is 10 year now mi a buy from har and she lock up di rum because she a wait until price increase drop when June start."

With price increases on items like salt mackerel, tin mackerel, salt fish and ground provisions, whenever the little man found the time and the money to steal a moment's recreation in a rum bar, he was just as confused as was the bar owner.

Wray and Nephew White rum, a Jamaican staple in recreation like ackee and salt fish is in eating habits, was costing 50 per cent more at the distributors/wholesalers and no bar owner could afford to tack on 50 per cent to his sale price, no matter what Peter Phillips had said. Most of those whom I spoke to had raised their prices inside a band of 14 per cent to 25 per cent.

"Mi go inna one bar an' cigarette price and rum price increase. Mi sey to di man, mi neva know sey cigarette price gone up an 'im tell me sey him haffi pay more fi it," said one man to me on Tuesday.

I explained to him that Carreras was probably the most taxed company in Jamaica and simply could not bear any more of the tax burden, plus there was in fact no tax increase on cigarettes. "Mi woman buy pound and a half a chicken back and di price gone up. When she tell di shop sey chicken price nuh gone up, di woman tell har sey she haffi pay more fi it because chicken feed gone up."

The prime minister's speech was standard Portia, in that it had broad appeal to those at the bottom of the economic pyramid. Subsidised housing, free housing, but since not many will consider books for their children as priority, the tax on textbooks remained and Portia was again given a free pass, because only she can get away with such matters.

Peter's pain is Portia's triumph. Peter had increased the price of basic foods and GCT on JPS users consuming 300kWh and over per month.

Portia announces free housing, and like magic made GCT disappear from all householders' light bills. Poor Peter, the pained second-placer.

Most businesses operating from the home (employing owner and maybe one other) are unregistered and they probably consume 400 kwhr to 600 kwhr per month. Frankly, I believe this is a pragmatic move because, were they registered, the government would not be collecting the "mandatory" minimum $60,000 per annum anyway. Better to keep them productive and tax-less upfront, but remain in a position to catch them finally with GCT at the food and grocery items end.

Talawah beer is a hit

In a Sunday Observer May 20 article, "Red Stripe to grow own raw materials in Jamaica", the following was said, " 'We are looking at establishing commercial agreements with farmers, using a blend of two to three large farmers with 800 to 1,000 acres along with several small farmers, to grow cassava and sorghum to brew our beer,' said Red Stripe Head of Corporate Relations Marguerite Cremin about the initiative, called 'Project Grow'."

In a Jamaica Observer article prior to that date, May 4, Red Stripe struck an energy chord from which I expected to see more discussion simply because "energy" seems to be the buzzword among our larger and medium-sized enterprises.

Said the article, "Supply Director for Red Stripe, Cedric Blair, said the company had long recognised the benefits to be derived from cogeneration, which is the simultaneous production of electricity and heat. With that system, the heat that may otherwise be wasted in the production of electricity is captured and utilised to produce steam, which may be used for both industrial and domestic purposes."

This is a perfect example of what the business innovation template ought to be in Jamaica, and I am hoping that Red Stripe would be willing to share its expertise and knowledge with those smaller manufacturing entities who are at present non-competitors.

Jamaica is a country big on recreation and in addition to the tried and proven beer that we have come to love "like cook food" - a cold bottle of Red Stripe - since April there has been a new beer on the market called Talawah. In these tough times, it is a steal at $100 per bottle.

For the health conscious, it has only 4 per cent alcohol by volume in comparison to Red Stripe and at 4.7 per cent and Heineken at 5.3 per cent.

One shop owner said to me two weeks ago, "As soon as mi buy two crate dem sell off." My problem with that is it seems to me that more on-the-ground marketing needs to be done to get it into many more outlets for consumers.

If a little man goes to a corner shop with $200 in his pocket, he can buy a tin of "dutty gal" for about $90 and still has $100 in the heat of the summertime to buy a bottle of Talawah. His woman would probably not agree with his second purchase, but men will be men, no matter how much we indulge in an excess of moralising.

I also like the idea that Talawah strongly identifies with Jamaica in terms of its design colours. Even moreso, in a broader sense, the fact that Red Stripe is partnering with farmers to grow sorghum and cassava ought to send a strong signal that in these tough times, radical, innovative thought must lead to action that completes the link between larger manufacturers and employment among those tilling the soil.

I shall be watching this one with much interest.





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