Food Company Monopolies

Back in December, the organization Food & Water Watch published a report entitled Grocery Goliaths: How Food Monopolies Impact Consumers. As this is an issue that’s near and dear to my heart, I immediately downloaded it for a little light weekend reading (ha, ha). Since you took the pop quiz already, you probably have some sense of how consolidation impacts the American food system. What I’ll do here is give you a few of the highlights of the F&WW report, so that you can get a better idea of why this should matter to you as a consumer.

Cost

More retro clipart at http://www.clipartof.com/

This is perhaps the most obvious – and enraging – issue for most consumers. Let’s take a look at some statistics and impacts. In 2012, Americans spent $603 billion on groceries. This is obviously a lucrative market for producers, and it has been getting more lucrative in recent years. Between 2010 and 2012, food prices rose twice as fast as wages and inflation. Why did this occur? When big companies buy up smaller competitors, they increase their market share and decrease competition. As a result, they have a big incentive to raise prices. The F&WW report states that the “link between grocery consolidation and retail grocery prices has been studied extensively, and the vast majority of studies have found that food prices rise when retail concentration increases.” A research economist with the USDA agrees.

Lower wages all the way down the food chain

The trouble with having one or two major suppliers for a given food item (such as, say, tortilla chips) is that less of the money filters down the chain. Consolidation means that farmers receive a shrinking percentage of consumers’ food dollars. Small suppliers, too, suffer. Retailers often charge companies a “slotting fee” for having prime shelf space at a supermarket. While large companies can afford to pay these considerable fees, the Federal Trade Commission has concluded that small suppliers are being “squeezed off the shelves.” In fact, larger producers pay the fees not just in an effort to promote their products, but to keep others’ out.

Predatory advertising

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Larger food companies have more money to spend on advertising. There is overwhelming evidence that food marketing to children has a huge influence on their food preferences (Questions? Ask me! I wrote my thesis about this). The other thing that large food companies do with their advertising is market specifically to low-income populations. The report states that food companies like Unilever, ConAgra, and Hormel track advertising (and sales) according to the “paycheck cycle.” One industry publication encouraged supermarkets to ensure that processed foods be “available and merchandised at the right time of the month” for food stamp (SNAP) recipients. If you feel like this doesn’t apply to you because you don’t fall into the low-income category, think again. You’re a taxpayer, and the health of the nation impacts your wallet.

Consumer choice

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Do you feel overwhelmed when you walk down the cereal aisle? Me too. But what, exactly, are you choosing between? Food & Water Watch reports that “many firms sell multiple brands of the same product, which leads consumers to believe that they are choosing among competitors when they are actually just choosing among products made by the same firm that may have been made at the same factory.” If you took yesterday’s quiz, you saw this in the yogurt question. Even many organic/health-food brands are purchased by large companies, but continue to be marketed separately and even have their own websites, making it difficult for the consumer to really know what the parent company is.

Did the food monopoly matter to you before? Does it matter to you now? I’d love to hear your thoughts!

Movie Review: Black Gold

Last weekend, I sat down and watched a movie that I’d been wanting to watch for quite some time: Black Gold. This movie is about coffee: the second most profitable commodity, only after petroleum. The film follows the work of Tadesse Meskela, who runs a coffee cooperative in Ethiopia and fights to get his growers higher prices for their beans. One scene in the film shows Meskela talking to a group of his growers about the price of a cup of coffee in the United States. The farmers literally laugh when they hear the number – they can’t even imagine it. If you purchase a cup of coffee for $3 at Starbucks, the amount that gets back to the farmer is 1/100th of that – $0.03.

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There is definitely a human aspect to this film and you do get to see the journey of a group of farmers and cooperatives as they engage in their trade. What I learned the most about, however, is how coffee prices are set in the US (and, ultimately, around the world). Essentially, the New York “C” market, a futures commodity trading market, sets the global price of coffee. Because there are so many levels to coffee production, the high price set by the New York Board of Trade for coffee doesn’t really filter down to the grower.

coffee beans

On a broader scale, the film does much to enlighten the viewer about global trade in general. Meskela and the filmmakers attend the 2003 World Trade Organization (WTO) summit in Mexico, where you can see that it is nearly impossible for underdeveloped nations to have their voices heard. The number of delegates that they are able to send to the meeting – sometimes as low as 3 per country – pales in comparison to the 650 delegates present from the European Union. Since most or all of the negotiations occur behind closed doors between 2 or more countries, it is impossible for underdeveloped nations to have a delegate in each negotiation session. In this, my favorite segment of the film, I learned several surprising things:

  • Africa is the only continent in the world to have gotten poorer over the last 20 years.
  • Through the Structural Adjustment Program, the IMF and the World Bank have effectively forced African countries to stop subsidizing their crops in order to spend more of their GDP on repaying debt to rich countries. Meanwhile, US farmers receive $300bn in subsidies each year.
  • The food subsidies received by US farmers allow for an overproduction of staple crops, which the US government then sends to Africa as food aid.
  • Africa is now more dependent on food aid than ever. Seven million people in Ethiopia rely on emergency food aid each year.
  • The African continent’s share of world trade has fallen to 1% over the last 20 years. An increase to 2% would generate an additional $70bn/year – 5 times the amount the continent currently receives in aid.

While these global financial issues are too much for any one of us to tackle on our own, there’s one thing we can easily do: drink Fair Trade coffee, which cuts out the middle men and ensures that growers get a fair price for their labor. Cheers to that!

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Speaking of the South

My post about Southern food yesterday reminded me of this great text-message conversation I had with my family recently.

Dad (foodie):
hoppinjohn
Dinner tonight, hoppin’ John made with Anasazi beans. Oh yeah!
Sister #1 (literature teacher / history buff): Anasazi or Ashkenazi? 🙂 Either way, I’m jealous!
Me: Yum! Enjoy! I’m cooking up some beer-braised collards… Maybe we should join forces? They’d pair well.
Dad: Perfect combo. Low country gourmet.
Sister #2 (super-busy attorney): I had Chipotle.

Then, later, an email from dad: Note that collard greens are a traditional accompaniment to Hoppin’ John.
Me: We must be in a Southern State of Mind. 🙂

It’s true, guys. I had my one-year anniversary in Arizona last month and I think it made me a little homesick. Thankfully, my good friend Lauren is getting married in North Carolina in April, so I have a very good excuse to make a trip home. And believe me… I will be doing lots of eating.