By Bequia Observer
How to ignore the basic rules of economics in one easy lesson:
Over the last few years, there has been an explosion of business in the fruits and vegetable section of the food market in Bequia.
The number of traders dealing in produce has more than doubled from within recent memory and, normally, that would be good for the consumer as one basic economic rule is that more competition brings lower prices.
But not in Bequia, and for one simple reason: collusion.
Now I’m not saying that dealers are getting together and deliberately setting prices, it’s just a little more complicated than that; it is, in my belief, what happens in a small community where everyone knows everyone and no one wants to step out of line.
The moment it becomes known that Vendor A is charging, for example, $9 a pound for tomatoes, then I will defy you to find anyone charging less than that. At least openly.
When you get a whisper in your ear that, “Hey, bro, don’t worry. For you, it’s $7 a pound” you think you’ve a special deal but I can assure you that even that is misleading. Try the same delaying tactic anywhere else and you’ll get the same story and the same reduction.
Anyone who bucks the system lasts a few weeks, maybe their idea being to attract new business at first but very soon they to fall into line and start charging the “standard” prices.
Because, in St Vincent, no true “wholesale” market exists as it does in larger countries, it is impossible to say for certain what traders are paying initially for the produce they sell but there has to be a huge variance in their costs for the same product. Some will buy from friends or relatives who are small farmers, some from other traders in Kingstown market, some have cold storage facilities so can buy in more bulk thus attracting discounts, other smaller traders buy from day to day almost and pay at the top end; whichever style they are, they have their own set of costs and expenses and without collusion, the set retail prices that the customer currently suffers should not exist.
Difficult although it may be, the Government, through perhaps the trading standards department, should investigate and at least show willingness to try to stamp out this practice which costs Grenadines consumers considerable amounts on a daily basis. At the very least, it would indicate Government’s “disapproval” of this pernicious practice and with that the hope that traders would choose to become more competitive to the benefit of consumers.
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Other reasons for high prices include: (1) the small-scale and unmechanized nature of production and (2) the small-scale of retailing which necessitates high prices to feed a family of five or more people, a feature that also raises the production costs.
A lack of free competition in which much cheaper identical or superior imported produce that is available only to the rich because sky-high import duties make them to expensive for ordinary people.
We can’t or won’t do anything to remedy the existing system.
I do not entirely agree. With many fruits there is no mechanization. Picking a mango in SVG is the same as picking a mango anywhere, except that SVG has a greater abundance than most other countries. You are right about the expensive things. I noticed real mozzarella cheese in Europe costs around 2 Euros, the same in SVG at the former Aunt Jobes was 80 EC.
I am very glad someone wrote on this topic. The problem is not just Bequia. the problem may even be Caribbean-wide. Look at even governmental fees:
In Europe Work Permits do not cost anything, technically not in the USA or Canada either. In SVG it costs over 2000 EC, and similar in other Caribbean countries. I went to Georgetown once and Tomatoes were selling for 3 EC a pound. In Kingstown on the same day they were 8 EC. At times you see an abundance of tomatoes or some other fruit and the sellers can’t get rid of them. On a Saturday afternoon you can suggest a fair price to the seller knowing that by Monday they will be rotten and can’t be sold. They refuse your suggestion and would rather throw the fruits away, often left on the street when they go home. Our problem here is GREED. It is difficult to change the attitude when the entire region is full of it (and potentially most of world at this time). The subject itself is fascinating. The best way to curb the attitude and keep it at bay is primarily through leadership, but how are we going to accomplish this when our leadership is the greediest of all? Look at our Customs! Look at the greedy system we have set up!!! Any business being established will inevitably have to use something imported, and the duties on everything are undeniably too high, making the cost of business here higher than elsewhere. The government never loses because the Customs Duties guarantee they get a big cut up front. How can we compete on a global scale when it costs more to produce here than elsewhere?
The subject of economics in SVG is a very fascinating one and has to do with our very terrible and greedy system, very bad leadership and the wacky mindset, poor work ethic and desperation of our people.
If I can respectfully respond. I think you are mixing-up too many economics concepts. What you see is not fully explained in what you articulate. I will just use one of your many examples. The vendor preferring his/her bananas to rot than selling at a bargain price. You may call the vendor greedy, and he/she may well be greedy but this is also simple economics. Also, this practice is more likely to occur on the mainland than the Grenadines. I will use your words to support my point – St Vincent has more bananas than most other places. In a nutshell, the vendor is keeping the price high by having the bananas rot on the weekend instead of having a fire-sale. The vendor knows that on Monday-to-Friday that he/she will provide fresh bunches at fair market prices; therefore, the vendor is rational and is looking out for his/her self-interest basic free market principles. You my friend is also self-serving, no problem with that, you want to buy at the end of the day/week when you think the economic supply curve is in your favor (supply higher than demand). Your beef is that vendor has you figured out so you called him/her greedy. But who is being greedy?
The author has prematurely jumped to an unsupported conclusion, collusion. However, what the author went on to described was perfect competition. Many sellers with almost undistinguishable products selling at basically the same price. Those vendors cant compete on prices; that is why if one vendor reduce prices, he/she must immediately increase prices back to the equilibrium just to stay in business. C-ben has given you some of the reasons why the prices are high. There is no collusion to have artificially higher prices- it makes no business sense with these perishable products. How long will you think those eggs are going to last in that sun to have unaffordable high prices? The vendors compete on customer services, entertainment, unique personalities etc but not price. That is the economics in a pure competitive market not collusion.