We don’t have a supermarket duopoly – we have a double-headed cartel
There are tens of thousands of New Zealanders involved in food production and millions of us are food consumers. Yet between the large numbers of producers and even larger numbers of consumers is a narrow bottleneck of just two companies – Foodstuffs and Countdown – which control the supply, and the price of our food.
Yes, we have farmers’ markets and some small independent food retailing companies but these are niche food suppliers. The vast bulk of food consumed in Aotearoa New Zealand passes through the grasping hands of just two food companies which, incidentally, use every means available to them to keep out competitors. Why wouldn’t they?
These two profit-hungry corporates control food pricing at every step. They decide what price they will pay suppliers of food and what price they will charge us to buy the food. Don’t think for a moment these prices are negotiable. The supermarkets decide how much they will pay suppliers, and when they will pay them, and there is no way they would tolerate any customer trying to negotiate their grocery bill at the checkout. Total control of pricing at each stage lies with the supermarket duo.
In theory, because there are two companies competing, those magical “market forces” we hear so much about should be keeping prices under control but the so-called market is almost a complete fiction.
Human beings are creatures of habit. Only a miniscule number of people will examine prices across supermarkets before they go grocery shopping. We fall into habits of shopping when it’s convenient for us – fitting it into our day on the way to and from work or at times in the week most convenient for us. Human nature means we will never be the rational beings in the fairytale free markets of neo-liberal economists.
Human behaviour and the rapacious behaviour of the corporate food giants mean that for all practical purposes we are the hapless victims in the hands of a ruthless, two-headed corporate cartel.
Government attempts to regulate food supply and food prices are woeful. Treasury says we could chop billions off our food bills by forcing the supermarket giants to sell part of their businesses to allow a third company to enter the market and so increase competition. I think this is wrong headed. How long would it be before we are being screwed by a cartel of three companies rather than the double headed hydra we face at the moment?
The government should step into the bottleneck space between producers and consumers and nationalise the supermarket chains. Why should food, an essential for life itself, be left in the hands of private corporate profiteers?
Leaving it to the supermarkets and “light-handed regulation” has got us to the point where only drastic action can get the changes we need. And for those of you who think this might be a step too far, ask someone struggling to put food on the table if they are happy for corporate investors to be fleecing them every time they walk through a supermarket door.
And on a related note there were protests against our supermarket giants across the country yesterday and while I was unable to attend the Christchurch protest, I’m told that of all the signs out on Moorhouse Avenue the most “toots of support” were not for placards calling for affordable food but for a large placard saying “Tax Corporate Profits”.
Amen to that.
While I have not been to Australia for many years now I would have thought that Aldi was a good example of competition helping lower food prices although their larger population obviously helps. While nationalisation of the existing stores might seem wise I suspect that the same public service attitude that destroys social services would also arise so you would get food unsuitable for consumption, 9 am to 4 pm shopping hours on 4 days a week only, etc.
When I lived in North Sydney I went into Aldi a couple of times. It was pretty mediocre “own brand” fare with products in cardboard boxes like Pak-n-Save over here in the old days. I preferred to shop at Coles and Woolies as they had a better range of products at reasonable prices.
The problem we have in NZ due, in part, to weather events and supply chain disruptions is a much more limited range of products at unreasonable prices.
I am happy for corporate investors to be fleecing me every time I walk through a supermarket door.
The very best of the nationalised retail foodmarkets are in Cuba.
New Zealanders just wouldn’t tolerate the beauracratic difficulties involved in accessing cheap food.
Rather than nationalisation I’d like to see the government capitalise a cooperative alternative. The biggest supermarket chain in Italy is owned by its consumers. Similar chains exist throughout Europe. If a cooperative chain finds itself making excess profits at the end of the financial year the money is returned to customers based on their annual spend.
Covered municipal markets like those in Melbourne, Barcelona etc would also be good. The weekly farmers markets could become a daily thing. There is real competition with multiple stalls selling, say, olives and bread.
Fantastic stuff Jeremy, lets do this… oh no that was the neo liberal labour government’s slogan some while back.
It looks like The Warehouse is slowly but surely moving into to grocery shopping.
It might make more sense to assist them to become a full fledge supermarket chain.
Yes The Warehouse has the real estate already and I hope it still is NZ owned and runs a good business.
Regulation of monopolies in local retail appears to be woeful in general.
Why haven’t James Pascoe’s been forced to sell stores, when they have a near-monopoly on department stores (running out of town the far superior David Jones, Myer’s and H.J. Smith’s), and have also nearly destroyed all their competitors in the bookselling business (Dymocks, W.H. Smith)?
How about the department discounters? Woolworths’ had to give up on local branches of the Big W variety division, as did other competitors, because nobody dares to break up Tindall’s Warehouse Group (who have limited the expansion of even Wesfarmers, the other half of the duopoly).
And why were Ampol-Caltex allowed to gobble up the Royal Dutch Shell retail branches, and briefly even the Puma-Gull gas stations as well?
We have to be easy, the best in the world for easily setting up businesses, minimum regulation. Doggies with tongues hanging out for big money to come into NZ supposedly to start, improve, enhance, boost new business. Talk about the Beauty and the Beast fairy story. And we trust these people in top positions who are supposed to be working for the good of the country. Funny how many of the management come from overseas or have been to Harvard etc.
What we know is so little, and what we know we don’t know the same, and then there is the rest of info that is accessable that we don’t bother to find out, have no time to find out, or get to understand the ways and means, and then there is the secret stuff and the stuff in jargon or other languages. Oh just give up we are surrounded, let’s go out and shoot someone? Is that how the system operates?
http://www.ketokiwis.com. Beat the Rich Sugar Saturated ” sellers of junk
food”
Bugger me with burn broom stick – two things I agree with John on – state housing and the supermarket friendship.