By Louis Holder
Stabroek Business Editor, Mr Arnon Adams, has repositioned the role of the newspaper “as a vehicle for sustaining a two-way flow of information with its various publics, not least with the government”. This is a welcome commitment to solving issues affecting the business community and can only lead to improving the business environment in Guyana. But to work, those with ideas and solutions have to participate. So, I’m taking the opportunity presented by the Editor to put on the table a couple issues I previously omitted for concern of being overwhelming. These issues affect the growth of the manufacturing sector in Guyana.
Humongous supermarket price margins
To gauge normality, local behaviour has to be compared to that elsewhere. In this case, I’m dealing with supermarket margins, the markup these firms add to the price they buy for to cover their operating costs and generate a profit. In the US, supermarket margins range between 1% and 2%, but in Guyana, it ranges between 20% and 25%. The reason for the lower margins in the sector is the large turnover of goods. Having to stand in line to checkout is an indication of turnover. It is due to these exorbitant margins that local supermarkets can give discounts to account holders and to seniors on special days.
Supermarket-sponsored discounts are unheard of in the US and costs associated with sales/coupons are borne by suppliers, not the supermarket. I hasten to add that these large margins do not affect competition among products, as all are treated similarly, but it does reduce the amount demanded as the consumer, faced with budgetary constraints, has to be more circumspect.
A possible solution is for the supermarkets to reduce their margins on locally produced goods by say 10%, coupled with the removal of all VAT by the government from foodstuff. First, as public policy, foods, essential to human survival, should never be taxed, and second, zero-rating of all foods would eliminate the discrimination within the current system where for example, some imported breakfast beverages such as Milo and Ovaltine are zero-rated, but local coffee is not. This solution would reduce the overall cost of feeding families and give local products a competitive edge.
Destructive customs actions
I fully understand that there are persons in our society who operate outside the requirements of the country’s laws, primarily driven by greed. These should be ferreted out from the system. But the searches are very destructive and encompass all manufacturers. For example, Amy’s Pomeroon Foods Inc (APFI) sent a shipment of 10 bags of coffee beans to the airport for freight to Miami. The Customs Officer there, took a knife to one of the bags completely invalidating its contents which have to be maintained in an air-tight environment (see photo below). The loss of that bag increased the cost of the shipment by 11%.
Why the necessity! Can’t technology be employed to stop such wanton destruction? Despite writing to the Chairman of GRA concerning this practice, a reply is yet to be forthcoming. If the country is serious about exporting, as it must, then the authorities need to become active and put proper systems and equipment in place to facilitate not obstruct manufacturers operating within the country’s laws.
