Defense officials confirmed Feb. 24 what you've been hearing -- that the commissary is about to see a budget cut so major that it will be forced to raise prices.
The commissary system will be given less than a third of its current budget by 2017. To stay open it will have to make some major changes in how it operates.
And industry insiders say those changes will likely include higher prices for products.
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For example, right now the commissary, by law, has to sell food at-cost. It works like this: the Defense Commissary Agency's (DeCA) buyers negotiate a price tag for food. When the purchase price changes, the price on the shelf changes, too. For example, rather than keep the price tag for a box of cereal static at $3.00 the way, say, Wal-Mart might, DeCA gets it and then resells it for $1.75 this week and $2.50 next month. Commissary officials say right now shopping in their stores will save just over an average of 30 percent each year.
But with such a major cut on the table, DeCA is going to have to figure out a way to operate at way, way below its current operating budget. And one of the only reasonable ways to do that, industry insiders said, is to charge patrons more money.
“What DoD is expecting DeCA to do is to offset a billion in cuts by raising prices,” said Thomas Gordy, president of the Armed Forces Marketing Council, which represents brokers doing business with military stores. “That means military families will have to pay a billion more per year in order to keep their commissary.”
So instead of that low fluctuating price, you may be more likely to see a price closer to that of Wal-Mart's. And instead of a 5 percent surcharge on every purchase, you may be seeing more like 10 percent tacked onto the end of every bill.
Read more about the budget proposal in my Military.com story.
Selling food above cost and/or putting in place a higher surcharge will literally require an act of Congress, since the current way the agency works is mandated by law. We'll know more about how the DoD thinks DeCA can find these savings March 4 when the entire budget is released.
DoD officials insist that they have no existing plans to shutter stores. So if DeCA is going to keep all the doors open and all the lights on they are going to have to figure out a new way of doing business.
The problem is that for the majority of commissary users, without a cost savings there is no reason to shop there. Most bases have a civilian grocery store within a few miles from the gate. Most commissary users are making a special trip onto base to shop. At what price point does the drive become no longer worth it?
Of course, don't expect to see major price changes any time soon. This budget is only just a proposal -- and one fresh off the presses at that. Any major changes probably won't be in play for a years. And anything that does happen this year first has to be approved by Congress, something that isn't likely to happen until late fall at the earliest.
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