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Deadlock in powdered milk conflict
Retailers may have found the ultimate way of putting pressure on the government… They have announced they will soon stop selling powdered milk. The threat on this essential commodity in Mauritian houses might well force the government to review its position on the mark-up - so much criticised by the retailers since its implementation a year ago. But minister of Trade, Rajesh Jeetah, doesn’t look ready to give in and he has already stated that such a move by retailers would be illegal. The trial of strength seems to be on again between the two parties…
The conflict goes back to August 2005 when the minister of Trade took the decision to control the price of powdered milk by reducing the profit margin of the operators. The government said the mark-up could not go beyond 14%. But the latter have always been against such a measure, considered unfair, and have always made it clear that their profit margin was not so high and they would not be able to face a price control by the state. The new price would not even be enough to cover the packaging costs.
Reached a point of no return</B>
According to retailers who met on the initiative of the Group for the promotion of trade, the ministry is the only one to be blamed if they have reached this point of no return. The promise to set up a joint working group made by Jeetah in January has never come to fruition, just as their letter sent to the ministry of Trade with copy to the ministry of Finance to “rectify the anomaly of mark-up” has remained unanswered so far. They even warned the ministry, “after 15th June 2006, the group should not be held responsible if the sale of powdered milk is stopped”. Faced with such incomprehension and indifference, operators felt they had no other alternative than to take action to force the authorities to react.
Even though the ministry reviewed the mark-up to 24% in December 2005, retailers only make a 2.5% profit. Such a small profit is not worth the effort, according to operators. They are asking the government to raise their profit margin from 2.5% to 8% as for Corned Beef or Pilchards.
However, the first reaction of minister Jeetah doesn’t seem to be very positive for them. “Retailers do not have the right to behave in such a way because the law prohibits such moves…” So be warned, he could have added…
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