How 'lack of competition' and 'the decline of independent grocers' jacked up food prices: columnist

29 May 2023

MAGA Republicans and right-wing media outlets have had a lot to say about inflation, often claiming that President Joe Biden's economic policies are to blame.

But inflation is a problem all around the world; many other developed countries have higher inflation rates than the United States. Sen. Bernie Sanders (I-Vermont) has cited corporate price-gouging and the COVID-19 pandemic as key causes of inflation.

In an op-ed/essay published by the New York Times on May 29, Stacy Mitchell — executive director of the Institute for Local Self-Reliance — focuses on the ever-rising cost of groceries. And she points to a "lack of competition" as a major cause.

"To understand why grocery prices are way up," Mitchell explains, "we need to look past the headlines about inflation and reconsider long-held ideas about the benefits of corporate bigness…. Major grocery suppliers, including Kraft Heinz, General Mills and Clorox, rely on Walmart for more than 20 percent of their sales. So when Walmart demands special deals, suppliers can't say no."

Mitchell continues, "And as suppliers cut special deals for Walmart and other large chains, they make up for the lost revenue by charging smaller retailers even more — something economists refer to as the waterbed effect. This isn't competition. It's big retailers exploiting their financial control over suppliers to hobble smaller competitors."

Liberal Sen. Elizabeth Warren (D-Massachusetts) has repeatedly stressed that corporate mega-mergers and inadequate competition are terrible for consumers. And she has called for breaking up everything from banks to tech companies.

Similarly, Mitchell argues that failing to enforce antitrust policies has made groceries increasingly unaffordable.

"From 1954 to 1965," Mitchell points out, "the (Federal Trade Commission) issued 81 cease-and-desist orders to stop suppliers of milk, tea, oatmeal, candy and other foods from giving preferential prices to the largest grocery chains. As a result, the grocery retailing sector was enviable by today's standards. Independent grocery stores flourished, accounting for more than half of food sales in 1958."

But in 2023, Mitchell laments, Walmart "captures one in four dollars Americans spend on groceries."

"As a system dominated by a few retailers lifts prices across the board — even at Walmart — consumers head to those retailers because of their ability to wrest relatively lower prices or simply because they're the only options left," according to Mitchell. "Walmart's share of grocery sales swelled last year as more people flocked to its stores. Meanwhile, the decline of independent grocers, which disproportionately serve rural small towns and Black and Latino neighborhoods, has left debilitating gaps in our food system."

Find the New York Times' entire report at this link (subscription required).

From Your Site Articles