-NAMILCO’s dominant position leads to exploitation concerns
The government will move to make the domestic flour market more competitive as it wants to ensure that the National Milling Company (NAMILCO) does not use the “dominant position” it enjoys to “exploit consumers”.
Minister of Tourism, Industry and Commerce, Manniram Prashad said yesterday at a press conference that President Bharrat Jagdeo will address the issue when he returns from the US.
This is as a result of the government’s “serious concern” over the flour price increase by the company, which means the price of bread and biscuits will automatically increase.
The minister convened a meeting with two of the country’s largest bakeries, Banks DIH Ltd and Bakewell, and NAMILCO on Tuesday following a release from the Bakers Lobby Group, which said the prices for bread and biscuits would climb as the local market re-adjusts to flour prices that had been previously subsidized by the government.
At the meeting, the minister said, NAMILCO indicated that it would reduce the price of a bag of flour from $7,500, which was the price during the subsidised period, to $7,300, but after further discussion, the company said it would sell a bag of flour for $7,000 to some bakeries and $6,700 to the larger bakeries.
However, the minister was still not happy as he said that should one examine the world market price for wheat, bakers should be purchasing flour below what they paid before the government subsidy was introduced. He said it was for that precise reason that the government would have to take further measures to ensure that it was not being held to ransom.
The milling company has the monopoly on the importation of wheat and milling in Guyana. During the period of the subsidy, the government had also granted licences to persons to import flour and all the administrative processes in the acquisition of flour importing licences were waived. The minister said yesterday that that measure is still in effect.
“The Ministry of Tourism, Industry and Commerce and the Government of Guyana, we are extremely disappointed with this piecemeal kind of bargaining that you have to go to NAMILCO with,” the minister said. He based this on the discussion he had with the company on Tuesday, adding that NAMILCO decided arbitrarily that it would make a further reduction in the price.
“It can be clearly seen that they are out there to hit consumers unfairly with price increases that have no merit,” the minister said. “What NAMILCO should have been telling us at the meeting yesterday [Tuesday] is that the prices should come down to pre-subsidy level… or even less.”
He said there was evidence that during the subsidy period, the company acquired wheat at a very low price, yet the government paid the subsidy when the company should have come out and told the government that it was overpaying.
Contacted yesterday, Chief Executive Officer (CEO) of the company, Bert Sukhai, expressed surprise at the minister’s remarks in the light of the meeting held on Tuesday. He described the remarks as “harsh”. He questioned why it was that after government opened up the market for the importation of flour and waived the requirements to acquire an importation licence there was no cheaper flour on the market.
Meanwhile, the Bakers Lobby Group, formerly the Association of Bakers, in another release said that following the meeting with the minister it was decided that the increase in the price of flour would not be as steep as originally proposed as NAMILCO had reduced it. The group said that the milling company had also made a commitment to look at further reductions as cheaper wheat becomes available later this year and said it would work with bakers to improve the quality of flour supplied to them.
Stabroek News understands that the members of the lobby group include Banks DIH, Bakewell, Salt and Pepper, Compare Bread, Jack’s Bakery, Freddie’s Bakery, Pearl’s Bakery, Graham’s Bakery and Humphrey’s Bakery. According to information reaching this newspaper, provided by a member of the group, all of the bakeries would raise the price of their bread, but no benchmark for increases was set. It was pointed out that because the bakeries have varying overheads to meet they would impose different increases.
At least one of the bakeries in the group had increased its bread price by $30 as of yesterday even though the minister indicated that increases should only range between $5 and $10 because of what the bakeries were paying for a bag of flour.
