As the COVID-19 pandemic continues to have an impact on the global supply of goods and services, consumers are already facing increased prices at the groceries and are now being told to brace for more increases.
Confirming this was Supermarket Association of T&T (SATT) president Rajiv Diptee yesterday. “People will always assume that it’s the supermarkets raising the prices, but there have been a plethora of price increases from suppliers,” Diptee said.
He pointed out that the supermarkets can normally access discounts or specials on certain items from suppliers, but with COVID-19 causing major disruptions in international supply chains this has been eliminated.
Citizens have been complaining to Guardian Media about the increases in grocery bills and unsavoury price gouging during the COVID measures.
Some groceries yesterday confirmed that prices on some items will increase. While many of the items that will rise in cost remain uncertain, Guardian Media understands the price of peas and nuts will surely increase due to COVID’s impact on suppliers.
In a recent release by the SATT, Diptee said events took a quick turn as seaports across the world began closing due to the virus at the beginning of March. He said this, in addition to ‘stay-at-home’ orders, sparked waves of panic buying globally, which in turn significantly impacted foreign supplies.
The release said the closure of many global shipping ports had impacted on freight cost with a concomitant increase in prices.
“The equation of limited supply versus an increased demand for goods will figure significantly on the final price of the product, with the end result being increased prices passed over to consumers,” Diptee said.
Yesterday, Super Quality Supermarket owner Feroze Khan agreed the price increase coming from the local suppliers were based on international price increases.
Khan split peas and lentil peas had made significant jumps. He said yellow split peas normally goes for $200 to $250 a bag but has now doubled to approximately $450 per bag.
Grocery owner Kumar Maharaj, who said that peas prices had gone up to $500 a bag in his experience, also confirmed this.
Khan said the price increase came about because supplies that are usually purchased from Canada are now coming from merchants in Miami, which escalates the price.
Also confirming Diptee’s remarks was Shamshad Ali, owner of Price Club Supermarket, who said: “Any price increases, whether today, yesterday or tomorrow, are based on the incoming from the suppliers.”
Ali said the basis of the retail industry leads to grocers adjusting their prices according to the cost of the goods received from their suppliers. He said when his grocery receives its product from the suppliers, based on the price and item, the markup cost ranges between 3 and 20 per cent.
When a supplier raises prices, Ali said, it is based on “the understanding that the suppliers internationally have raised their prices.”
“We cannot confirm or we can’t deny, but at the end of the day whatever price we get we have to add our markup and that’s the price,” Ali said.
Khan also said he is experiencing some shortages as well. He said his grocery would normally purchase 25 bags of split peas and lentil peas a week but this week, the supplier only gave him five bags of split peas and lentils each.
“Food security is perhaps the far more challenging issue that we need to focus on because there are logistical challenges throughout the world,” Khan said.
“If you operate in an environment that is market-driven, we sometimes think we shouldn’t have market prices when it isn’t going in our favour,” said Khan.
He said market forces drove oil prices to below zero and it will also bring the price back up.
Noting that major pork producer Smithfield Foods had closed its processing plant in the United States and sent home approximately 700 workers due to COVID-19, he said he expected shortages and price increases for pork within the next month.
Additionally, Khan noted that many farmers have had to dump their produce because the sectors and industries they would normally supply to—like ships, restaurants and the aviation caterers—were now closed.
He said the uncertainty with regard to when businesses will be reopened is weighing upon farmers’ decisions to plant – which can also cause a shortage if they are not prepared to meet the demand when the economy restarts.
With respect to food security, Khan said on average the food chains would have about three months of food cover.
Diptee confirmed this and also said a lack of access to foreign exchange impedes the logistics of food importers.
“The Prime Minister, when this whole thing happened, said that there was going to be a facility with EXIM (Export-Import Bank) to release US dollars to importers of food. What has happened is that we have not seen that foreign exchange being released to importers as yet,” Diptee said.
When Guardian Media contacted the EXIM bank on this issue, it said it is aware of the issue and has been working with the Ministry of Finance, Ministry of Trade and Industry and the private sector to proactively address potential supply chain disruptions.
The bank’s CEO Navin Dookeran said: “In fact, over the last few weeks, we have already commenced priority forex allocations for essential items and the inputs into local manufacturing of the key essential supplies.”