For some time, this column has focused on business and what is needed to improve the competitiveness of the firm, the enfranchisement of persons to be self-employed and an enabling regulatory framework for business growth, etc. This week, Business Basics will look at the consumer – the individual who can arguably make or break the business; the person who must buy the products offered by the firm, or in the case of Government, procure services so that taxes can be collected. The consumer wields significant power.
Not much has been said about the power of the consumer in the recent past, owing in part, to the lack of credible consumer advocates. Credit must therefore go to the recently launched Barbados Consumer Empowerment Network for seeking to fill that void in the marketplace. With recent developments relative to additional fees being charged by commercial banks, the increased cost of food in the supermarkets and further increases in utilities anticipated this year, the role of the consumer is critical at this time in advocating for the affordable price of key commodities and services.
The consumer is described as the individual who acquires goods or services for personal, domestic, or household use, without intended resupply, consumption in production, or repair purposes.
Recent developments in the local economy require that consumers are more astute in how they approach spending. The rising cost of living necessitates more vigilance and circumspectness in the use of the shrinking disposable income possessed by the average consumer. Whereas the price and availability of some products will be the circumstance of global supply issues, retailers, service providers and even Government must ensure that goods and services are not priced out of the reach of consumers.
Barbados recorded economic growth in 2023, driven primarily by a recovery in tourism. However, concerns persist about the country’s small size, high dependence on specific tourism markets, and susceptibility to external shocks. Many argue that this economic growth is not felt in the lived experiences of the average consumer.
Inflation reached a historic high of 9.2 percent last year due to rising food and oil prices, impacting the purchasing power of businesses and households, particularly the most vulnerable. This was compounded by the taxes imposed on fuel at the pump, which media reports suggest netted the Government revenue of over $400 million during the last five years. The consumer has therefore paid more in fuel tax than road tax during the period.
Additionally, the agriculture sector faced difficulties due to adverse weather conditions and the rising costs of inputs. The Barbados Economic Recovery and Transformation (BERT) plan, with its focus on transitioning to green energy, addressing climate change & reducing gas emissions, and diversifying the economy, proposes solutions to these challenges.
While the BERT plan is being rolled out and considering the volatility of food prices and Barbados’ high import bill, greater effort is needed to improve the availability of affordable goods and services to the consumer to avoid any decline in the standard of living of citizens.
One area that may be a low hanging fruit is the local agricultural sector. This sector demonstrated significant resilience and growth potential during the COVID-19 period.
The challenges faced by the agricultural sector have implications for consumerism and overall economic development. Work done by the UNCTAD (United Nations Conference on Trade and Development) underscored Barbados’ limited land and water resources, and constraints including vulnerability to natural disasters, high reliance on imports, dominance of a single commodity (sugar) in the agricultural sector, and high-cost production systems. The study proffers that limited land availability for commercial farming hinders economies of scale, and scarcity of water poses further challenges, especially for farmers outside Government-managed schemes.
The limited domestic production capacity, high reliance on imports, and constraints on large-scale farming operations lead to higher prices for locally produced goods. This, in turn, affects consumers' purchasing power and access to affordable, locally sourced food items. Additionally, the impact of trade liberalisation on domestic production of key commodities like poultry, vegetables, and pork, influences the availability and affordability of these products for consumers.
Furthermore, the Government's initiatives to enhance competitiveness through non-price factors can potentially impact the variety, quality, and affordability of agricultural products available to consumers. Needless to say, a blueprint to strategically develop the agricultural sector is required as a viable solution to provide affordable commodities to the market.
On the issue of the regulatory regime for consumer protection, several pieces of legislation exist. These include, the Consumer Protection Act Cap. 326D and the Consumer Guarantees Act Cap. The Fair Trading Commission administers and enforces these laws, addressing unfair trade practices, guaranteeing product quality and safety, and protecting consumers against misleading conduct.
Legal provisions also govern electronic commerce through various laws providing specific rights and commitments for consumers in electronic transactions.
Consumers also benefit from ‘Recall’ legislation, which prescribes requirements for product recalls, including mandatory action for unsafe goods, notifying consumers, and providing necessary information to affected parties.
A critical area not yet regulated and should be addressed, is cryptocurrency. Considering the emergence of cryptocurrencies in the mix of finance and investment instruments, a regulatory regime is needed to protect the consumer in this area.
Given a relatively enabling environment, the next step for stakeholders is the access to affordable goods and services, and the reduction in the cost of living for the average consumer.
