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MIDA tells Senate panel ports monopoly, inspection fees and shipping spikes are driving food-price increases
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Summary
Manuel Reyes Alfonso of MIDA told the Senate consumer committee Aug. 4 that supermarkets have thin net margins and that concentrated port and shipping services, a container-inspection fee and rising transport costs are inflating food prices; he urged immediate removal of the inspection charge and other measures to protect consumers.
Manuel Reyes Alfonso, vicepresidente ejecutivo de MIDA, told the Senate Committee on Consumer Affairs on Aug. 4, 2021, that Puerto Rico’s supermarkets operate on very low net margins and cannot absorb the steep increases created upstream in the food supply chain. He said concentrated control of maritime transport and port terminals, a costly container-inspection charge and global shipping-price spikes are the primary drivers of recent food-price increases and urgent shortages ahead of hurricane season.
“De cada dólar que vende el supermercado solo recibe uno punto ocho centavos,” Reyes Alfonso said, summarizing MIDA’s financial studies that put typical supermarket net income at about 1.8 percent after expenses and contributions. He argued that measures aimed exclusively at retailers will not meaningfully lower consumer prices because most cost increases occur earlier in the chain.
Reyes Alfonso pointed to port concentration and terminal consolidation as systemic risks: two companies now control more than about 80 percent of the maritime market, and two firms operate the San Juan terminals, heightening the economic impact of local labor disputes. He cited recent spikes in shipping costs—“el costo de transportar un furgón… ha llegado hasta diecinueve mil dólares”—and recent cyberattacks on producers and large suppliers as compounding scarcity and price volatility.
As immediate steps, MIDA recommended that the legislature and agencies:
• Speed up agricultural inspections and add inspectors to avoid perishable imports being delayed; • Eliminate the container-inspection charge (Reyes Alfonso estimated this would save at least $20 million a year); • Remove the inventory tax and avoid electricity-rate increases that raise refrigeration and operating costs; • Improve transparency on transport costs and port statistics; • Encourage the ports authority to add competition in shipping and terminal operations and consider partial or full exclusions from cabotage laws to allow lower-cost vessels under U.S. registry while preserving worker protections.
Reyes Alfonso also warned of concentrated card-processing costs in Puerto Rico (citing a local provider, Evertech) and the dominance of Visa and Mastercard in the U.S., which together raise transaction costs for low‑margin merchants.
Sen. Rafael Bernabé, who took time to question the witness, said he agreed with some of MIDA’s proposals — including exploring removal from cabotage rules and the possibility of public shipping options — while noting broader disagreements about market solutions. The committee chair asked MIDA to provide prior legislative language and studies, and requested a copy of the U.S. executive order on competition Reyes Alfonso referenced.
Reyes Alfonso emphasized timing: the inspection-fee contract was originally ten years with a potential extension, and he urged the committee to examine the contract promptly to avoid another protracted cost to consumers. The committee left the meeting planning to review MIDA’s documents and legislative suggestions.
