Minister Montano: Rice hike due to cartel deal

CONSUMER AFFAIRS Minister Senator Danny Montano yesterday described the decision by three major stakeholders to increase the selling price of rice as a “cartel arrangement.”

Montano criticised the move, noting that it was highly suspicious that the group, comprising National Flour Mills (NFM), JMH Enterprises and Happi Products Limited, held meetings to increase the price and chose to exclude the Supermarket’s Association of TT (SATT). On Thursday, SATT President, Heeranand Maharaj, also criticised the increase, saying it was too high for a staple food item.

Montano reiterated this statement, saying the increase would have a significant impact on the purchasing power of consumers in the lower and middle income groups. “When prices are increased just like that, then they will have to give up something else,” he said. “When you look at it, it smacks of cartel arrangements which are unfair trading arrangements where people build up inefficiencies into their pricing arrangements. This will not be tolerated by government.” He said he had been approached by a number of shipping agents who revealed that NFM had not tendered its shipping arrangements for several years. As a result, he said, they were not enjoying the best shipping arrangements since some agents offer much lower rates. “This will therefore affect the price of the product,” Montano said, adding that the company was “operating inefficiently and passing this on to the public.”

In a release yesterday, NFM stated that increases in freight costs resulted in steep increases in the world market price for the commodity. Heavily criticising NFM for not holding talks with SATT, Montano said his Ministry wanted to meet with the company to discuss the increase. He said although NFM did not think meetings with the Ministry were necessary since rice is not a price controlled item, the company should realise that the Ministry represented the interests of the country. “It would have been common courtesy to let the Ministry and SATT know what is going on,” he insisted. “NFM acted in a high handed manner, which was unfair to the public. They could have announced that the increase was necessary and then put up the price by three or four percent, increasing it again in the next few years. This was not fair to the consumers as a whole,” he said.

Responding to Montano’s statements, NFM CEO Michael Potella said he did not want the issue to turn into “a tit for tat” situation. He said the company normally holds meetings with major stakeholder groups when a situation like this arises. However, the first meeting is held with the major customers and this is mainly done where the issue of flour is concerned. Rice, Potella maintained, is not such a sensitive item. Additionally, the company usually informs the Ministry of changes in world market conditions. “We are running a commercial business in a competitive environment. We don’t have the monopoly anymore. We do our best to ensure fair pricing to consumers.”

Charles James of JMH Enterprises called on the Minister to check the price of rice on the international market before making any assumptions. He noted that Montano could not call the increase a cartel arrangement since he was not aware of what was really going on in the world market. “Rice is a free commodity, anyone can bring it into the country. Minister Montano needs to get more involved in the rice affair and check the world price before making statements like this,” he said. James said TT rice, which is imported mainly from Texas, was still the cheapest in the Caribbean. In some cases, he claimed, local rice is even cheaper than in the US where a 9kg package costs approximately US$12, while in TT it costs $42.90. “Minister Montano needs to check these things and get his facts straight. We are not playing politics and we are not doing this because we want to,” he said.