DOC survey reports show Ofu and Olosega food prices are exorbitant

A separate Commerce Department survey, which shows the high prices of goods sold in stores on Ofu and Olosega in the Manu’a islands, has confirmed the long standing complaints from Manu’a lawmakers that food prices there are twice or even three times higher than on Tutuila.

The survey points out that the higher prices of goods on Ofu and Olosega “can be attributed to either profit margins and/or higher variable costs,” as there are no additional taxes paid by retailers in Luanu’u that are not on Tutuila.

The greatest variable cost to Luanu’u businesses is transportation, including freight fees, and insurance, according to the report.

It notes, “Hypothetically, a Manu’a business that charges 80% more for a product, over Tutuila prices, should be able to maintain at least a 50% profit margin, even after factoring in 30% higher variable costs.”

For example, the selling average price for a case of chicken on Ofu and Olosega is $25 compared to an average $12.85 on Tutuila, according to the Basic Food Index (BFI) of December 2017 report, released last week by DOC.

The report said that in a “special inquiry on Manu’a average retail prices”, DOC staff in Manu’a ran a survey of retail prices of commodities available at 5 retails establishments on Ofu and Olosega — which is also referred to as “Luanu’u” as it is the Samoan traditional reference for the two islands.

“This was a separate report on prices in Manu'a- Luanu'u this time, next report Ta'u island will be included,” DOC director Keniseli Lafaele told Samoa News this week when asked if this is the first time Ofu and Olosega are included in the BFI.

As to the reason DOC decided to conduct a survey of the Manu’a stores, Lafaele said the “people called to complain about the high prices of goods” in the island group.

Asked about the importance of including Manu’a in the food index survey going forward, Lafaele responded, “I don't think it’s a good idea to include food prices in Manu'a in the food index currently taken for Tutuila as that would distort the Tutuila food index.”

“But it is important to know the cost of living in Manu'a and determine whether prices there are within a reasonable range or beyond- exploitative and potentially unethical,” he said.

In general, the report says, retail prices on Ofu and Olosega are approximately 75 to 80 percent higher than Tutuila. And this means a commodity with a $1 price tag on Tutuila is typically sold for roughly $1.75 in Luanu’u.

Additionally, prices for some commodities such as meat products are twice as expensive in Luanu’u than on Tutuila. The report cited three examples:

•     a case of chicken is sold at an average price of $25 in Luanu’u compared to $12.85 on Tutuila.

•     a 16 ounce package of sausages which is priced at $3.85 in Luanu’u, while it’s $1.50 on Tutuila.

•     a dozen eggs sold at an average of $4.08 in Luanu’u versus an average of $1.63 on Tutuila.

“It is important to note that all commodities considered in this inquiry are finished products, or ‘final goods’, that are immediately ready for consumption,” the DOC report says.

OVERALL PRICE INDEX

DOC said the overall BFI for December 2017 registered at 103.3 points a decrease of 0.5% from November. It also says that the December price contraction was due, in part, to a 4.4% decrease in a 22 pound case of chicken, a 2.7% drop in a dozen of eggs and a 1.8% drop in pork spare ribs.

There were a handful of more moderate declines in fresh fish, sugar and ice cream. Other food items, however, showed minor price increases in December. For example, canned tuna had the greatest month-over-month price hike of 2.3%. Other food items that increased in rice include rice, milk, bread, turkey tails, mayonnaise, corned beef and butter.