No so sure on Cost-U-Less
The Democratic Labour Party campaigned five years ago on a platform that included food price reduction as a principal component. That it was a popular message there is no doubt and they were swept into power.
That they have been unable to deliver on this promise, again there is no doubt. And, without doubt also, Barbadians are going to judge them on this failure when they go to the polls next year.
The big question is though: How will that judgement go down. Will voters see the maintenance of high prices as largely of their doing, or will they be convinced that the major contributor was the combination of conditions well beyond our shores.
We cannot say what would have been in the mind of the Minister of Finance when he approved concessions for the entry of Cost-U-Less to the local retail sector, but it would not be unreasonable to believe that the thinking would have had to include the consideration that a player of their scale would add a level of competition that could only work to the benefit of the consumer.
But if the reports are correct that Cost-U-Less was granted duty-free building materials and vehicles for use in their operations as well a 15-year tax holiday, it would not be unreasonable to ask if other players in the sector who did not benefit from such concessions are not justified in complaining about unfair competition.
If concessions are available then all should be able to benefit equally. If other players have been turned down when they requested then Government has a duty to explain why. If the concessions are available and local players have not been made aware then they and the Government must examine the mechanisms.
There is a larger issue for us though, and we accept that we may only be troubled by it because we don’t have the details, but on the face of it, we can’t help but ask: What does an international retail giant bring to the national table that would warrant such generous concessions?
We are not opposed to facilitation of such ventures by Government, after all, the economy will benefit in some way for their injection. But when a North American company sets up shop here, employs a few dozen people and imports everything from apples, to cornflakes, to sugar and zucchini, do the profits it sends out match the benefits it brings in?
After all, we do not believe the Cost-U-Less board members sat across the table and said they would set up business in Barbados for the purpose of helping Bajans. There may be that end result, but their motivation is profits.
However, when the National Union of Public Workers says it wants to set up its own buying club for members, while the directors may see profits in the move, we honestly believe their motivation is principally the reduction of members’ food bill.
If we judge from the performance of the other international chain that is now established here, PriceSmart, and its anything but flattering social contribution, we have to say there is considerable doubt about the benefits Cost-U-Less will bring to Bim. They may win in many instances on quality and variety, but we don’t see the major price differential when compared to local operators.
Perhaps the Cost-U-Less model, coupled with the impact of tax concessions, will have the effect of a major drop in prices, but we will not hold our breath just yet — not given the experience to date.
When a foreign entity tells Government it will set up a manufacturing plant here if the concessions are right, we hardly bat an eyelid. We expect that the tax holiday and other concessions will bring significant jobs and other stimulants to the economy, even the transfer of technology.
If an overseas company lobbies for concession to set up a hospital or some other health facility, it may not bring the same level of jobs, but the spin-off benefits, the spending from patients coming in and perhaps the added availability of specialist personnel and equipment redound to the benefit of the community.
What new retailing ideas, technology, social good etc does the country get from a Cost-U-Less operation? We don’t see it, but we accept we are not all knowing. Maybe they have some major plan to spur agricultural production to supply their shelves and chillers with local chicken, pork, eggs, fruits and vegetables. Maybe they will provide the impetus for a fresh attempt at agri- processing here.
We just wish to understand what would justify such concessions. And believe us, we can be convinced!