While Pennsylvania retailers continue to face challenges such as inflation and labor issues, the overall economy in the state is seeing some improvements, according to Alex Baloga, president and CEO, Pennsylvania Food Merchants Association.
“There certainly are signs that are positive,” he said. “…Our overall tax receipts came in considerably higher this fiscal year than the estimate, so there was a substantial surplus in the budget, which I think speaks well for the future. The ‘rainy day’ fund saw another infusion of cash from the state budget, so that’s a positive.”
For Baloga, a definite positive – and the biggest takeaway – from the past fiscal year was the passage of legislation to lower the corporate net income tax rate. This was the first time in about 25 years that has happened.
“That’s a huge boost going forward to the economy,” he said. “Pennsylvania, historically, has been challenging with its high corporate net income tax rate. But this is a huge step forward.”
The state may be trending in the right direction, but there are still some headwinds to face.
“We’re trying to make progress, track more business and obviously grow jobs and benefits for everybody and improve community,” Baloga said.
The competition to retain and attract workers is as high as Baloga has seen. Businesses are raising wages on a regular basis, in some cases two to three times a year to try to retain talent.
“It’s a very competitive marketplace,” he said.
Known as the Keystone State, Pennsylvania has “an immense amount of warehouses and truck traffic,” Baloga said, noting that the shortage of CDL drivers is a huge issue. Price inflation and shortages getting and shipping product are also concerns.
Pennsylvania has a very robust and strong snack food industry. PFMA members such as Utz, Hershey’s and Herr’s, along with others, are facing some challenges in “just trying to get product. They’ve been holding steady, but it’s certainly a challenge,” Baloga said. “We’re fortunate to have the retailers, wholesalers and the CPG suppliers that we have, but it certainly presents a challenge.”
Inflation and how to tackle it is mostly out of the control of the retailers, wholesalers and suppliers, according to Baloga.
“When you talk about the supply chain issues and being able to get product, they’re trying to hold steady as best as they can with prices,” he said. “But it’s such a small margin business, that’s hard to do.
“They’re trying to address that, but unfortunately, it’s just a challenge everybody’s dealing with, and prices are going up. So that’s just the nature of things at this point. We’re hoping that they subside here, at least in the calendar year.”
PFMA offers education to its members on a variety of topics. Baloga said education is “a huge part of what we do, and we do that in a number of different ways.”
Internal committees meet regularly and deal with issues such as food protection, loss prevention, sustainability, COVID-19, WIC, SNAP and transportation issues. Those committees are comprised of experts inside and outside the industry. They provide updates and information that troubleshoot issues and try to find best practices to spearhead and to attack some of those issues, he said.
PFMA is reaching members through its two weekly email updates. One deals with Philadelphia issues, while the other deals with state and federal matters. Those may include regulations, legislation updates, asking for member feedback or just looking at what’s happening around the country.
PFMA also puts out a bi-monthly magazine, Spectrum, where its members are featured. Baloga said it also does an industry podcast that features PFMA members talking about “hot button issues, topics that folks would be interested in and ways to get information.”
The association is available to answer member questions, help with research and help with other member needs. PFMA staff members have standing meetings and calls with various departments and areas within state, federal and local governments to troubleshoot on issues.
“We have regular conversations with Department of Revenue; we have regular conversations with the Department of Human Services talking about SNAP,” Baloga said. “We are on the WIC Advisory Committee…we participate in a lot of those different areas, as well as Department of Transportation, we have a standing meeting with them,” he said.
The association also gets information through its national partners. Baloga said he sits on the legislative committee of the National Association of Convenience Stores and on the board of directors for the Food Industry Association Executives. PFMA is a member of the Convenience Distributors Association, the U.S. Chamber, National Grocers Association and Food Marketing Institute, among others.
“That’s a sampling of just all the different ways that we keep folks informed and we work on their behalf…there’s a lot going on,” Baloga said.
He added that PFMA is continuing to grow and improve the industry’s position and strengthen its voice in Pennsylvania. “That’s a result of our members and continuing to diversify the membership. I think that’s really helped us serve the members well.”
In addition to lowering the corporate net income tax rate, the state legislature addressed several other bills of interest to the PFMA.
According to Baloga, legislation that dealt with privatizing the alcohol wholesale and retail system in the state made some headway. A bill that would allow ready-to-drink beverages in food retailers passed the state senate.
PFMA also supported legislation that allowed for the continued immunization for flu and COVID vaccinations in pharmacies.
“We have grocer members that have pharmacies, so that was a big win,” Baloga said.
There were several pieces of legislation that passed that PFMA supported and others that it made progress on, one in particular dealing with the state’s SNAP, Food Stamps distribution schedule. That legislation passed in committee in the House and Senate, Baloga said.
Progress also was made on several different legislative regulatory issues.
PFMA opposed any legislation that would limit SNAP options, that would place limits on an owner’s ability to operate a business, that would ban plastic and paper bags outright all across the Commonwealth and in various municipalities, according to Baloga.
Also opposed was legislation that would restrict PFMA members’ ability to determine pricing or to set prices with regard to fuel and other items – “really just any kind of legislation getting into the running of the business itself. There’s always lots of legislation dealing with that, and we have strong opposition to doing that.”
He added that none of the major pieces of legislation opposed by PFMA ultimately passed.
For more information, visit pfma.org.
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