DAILY TRIFECTA: Gaming The Food System
Do not pass "Go"
THE SET-UP: Presidential politicking does the heavy lifting here with Trump handing out hundred-dollar bills in Pennsylvania supermarket and his truth-optional sidekick JD Vance at yet another market bemoaning Kamala’s Harris’s $4 eggs … in front of refrigerator case of eggs with a displayed price of $2.99. Oops.
Alas, their bad political marketing pales in comparison to supermarketing. - jp
TITLE: Inside the “very, very guarded” agreements that dictate what’s sold in grocery stores — and the cost
https://www.salon.com/2024/09/23/inside-the-very-very-guarded-agreements-dictating-whats-sold-in-grocery-stores/
EXCERPTS: Many consumers are unaware of the clandestine cooperative marketing agreements between supermarkets and food conglomerates that influence how food is stocked, how aisles are arranged, what products are highly promoted and, ultimately, what foods consumers get to choose from, and how much we pay.
“Manufacturers are able to really control and dictate the retail environment, to the detriment of consumers and consumers’ health,” Sara John, deputy director at the Center for Science in the Public Interest, told Salon.
Those systems are particularly harmful to small food brands; a best-case success scenario for those brands often ends in acquisition. And those structures stand to potentially blossom under a proposed $24.6 billion megamerger between Kroger and Albertsons, America’s two largest supermarket brands, that the Federal Trade Commission is suing to block over concerns the deal would create a monopoly.
“Absent antitrust enforcement and fair competition enforcement, it's really hard to imagine how these companies at the top ever get knocked off, or how three companies controlling 80% of the mayonnaise ever actually changes,” Claire Kelloway, program manager for fair food and farming systems at the Open Markets Institute, told Salon.
Supermarkets’ cooperative marketing agreements are often “very, very tightly guarded documents,” John said. Outside of a handful of public data points, little is known about them.
One example of such an agreement is slotting fees, which have existed for decades but are shrouded in secrecy – a reality put on full display in 1999, when two small-business owners testified in a Senate hearing on slotting fees “in black hoods,” their voices electronically disguised for fear of retaliation.
Grocery stores charge slotting fees to brands for favorable shelf space, as well as for things like end-of-aisle placements and special displays. Often, these fees can amount to millions of dollars in extra payments and “effectively elbows out smaller brands,” according to a 2021 report from Food & Water Watch. In 2016, the owner of a small condiments brand said he was charged between $5,000 and $20,000 per item in slotting fees, according to a CSPI investigation into the practice.
Bemoaning the power imbalance between conglomerates and their competitors, the owner of a small canned tomatoes brand said the biggest canned vegetable companies can pay those fees “just to keep us off the shelf,” per a Federal Trade Commission report on grocery industry marketing practices, published in 2001. (Despite its long shelf life, the report remains one of the more comprehensive sources on the subject.)
The FTC report found that, at the time, slotting fees typically ranged between $75 and $300 per item, per store, and could be “likely to increase the wholesale price of a product, because the manufacturer must raise its price to cover the expense.” Bedrock Analytics, a consumer goods data company, offered an updated estimate in 2019, describing slotting fees in a report as “typically ranging from $250 to $1,000 per item per store.”
Another common pricing arrangement between supermarkets and food brands? Category captain arrangements, in which the top-selling food manufacturers dictate where their products – and their competitors’ – are placed on the shelves.
“A captain that is able to control decisions about product placement and promotions could hinder the entry or expansion of rivals, leading to less variety and possibly higher prices,” states a 2018 report on grocery captain agreements from the American Antitrust Institute.
In the 2016 CSPI investigation, an owner of a small ice cream brand said he feared his products being relegated out of customers’ sight by category captains, “behind a hinge . . . so you can barely see it.”
Nestlé, he said, was the category captain in frozen desserts in 22 of the country’s largest 25 supermarkets. Nestlé did not return a request for comment.
Such arrangements – slotting fees, category captains and perhaps other structures publicly unknown – creates a food ecosystem in which the best business move for a smaller brand is getting gobbled up by a larger one, experts say, further shrinking the number of companies controlling the food on our grocery shelves in an already consolidated system.
TITLE: GRAPHIC: Dairy farmer profits sink as industry continues to consolidate
https://investigatemidwest.org/2024/09/18/graphic-dairy-farmer-profits-sink-as-industry-continues-to-consolidate/
EXCERPT: The average American dairy turned a profit only three times in the past 20 years. In one of those instances, dairy farmers made just one penny of profit after expenses per 100 pounds of milk produced, according to the U.S. Department of Agriculture.
In the past two decades, the U.S. has lost more than half of its dairy farms – 61% – even while milk production has grown. The industry has experienced a dramatic shift in production practices as farms got larger, with more concentrated in fewer counties throughout the U.S.
The rate of decline accelerated in 2018 and 2019, according to a U.S. Department of Agriculture report on U.S. dairy farming consolidation.
In the past 20 years, the average number of cows on dairy farms has increased 160%. Changes in cow genetics and farm practices have increased the amount of milk produced per cow by more than100% since 1980, according to a report and analysis of USDA data from the nonprofit organization Food and Water Watch.
According to a U.S. Department of Agriculture consolidation report, 80% of large farms with more than 500 heads of cattle made a profit in 2016, but 84% of farms with 10 to 49 cows and 76% of those with 50 to 99 cows did not.
TITLE: New data show increasing consolidation in Iowa's ag industry
https://www.publicnewsservice.org/2024-09-23/rural-farming/new-data-show-increasing-consolidation-in-iowas-ag-industry/a92492-1
EXCERPT: Farm Action's report shows nearly 90% of the corn seed in Iowa is controlled by Corteva and Bayer. AgReliant and Syngenta control the rest.
Farm Action President Angela Huffman said that kind of control and concentration is happening all the way from seeds to the consumer's plate, and she warns it makes market conditions ripe for abuse.
"This is the scenario in almost every sector of the food supply chain," said Huffman. "Seeds, fertilizer, farm equipment - beef, pork, and poultry processing - and retail groceries. Every one of those sectors I just named has upwards of 60%, to even 85%, of those markets controlled by four corporations."
The same type of consolidation is happening in ag operations where livestock are raised in large confinements - and manure runoff is known to damage the air, ground, and surface water in rural Iowa.
Operators have said they're always looking for more efficient and environmentally friendly ways to raise livestock.
Huffman argued that monopolies like this can lead to collusion, price fixing, and other types of market manipulation.
She and other advocates have called on lawmakers in Congress to address the issue in the pending Farm Bill.
"We're calling on the government to reclaim its role as an enforcer of our antitrust laws, and break up these dominant corporations," said Huffman, "in order to free our economy to start working for the people who are producing, processing and distributing our food."
The current Farm Bill, which was supposed to expire in September of last year, has been extended - but debate still hasn't started on a new version.
SEE ALSO:
Local farms at danger of shutting down if new federal farm bill isn’t passed
https://www.ktre.com/video/2024/09/24/local-farms-danger-shutting-down-if-new-federal-farm-bill-isnt-passed/
Farm groups hit the Hill to let Congress know the importance of a new Farm Bill
https://www.rfdtv.com/farm-groups-hit-the-hill-to-let-congress-know-the-importance-of-a-new-farm-bill
Farm Bill Discussions Continue, Though Same Issues Remain
https://farmpolicynews.illinois.edu/2024/09/farm-bill-discussions-continue-though-same-issues-remain/
Republicans are holding up Farm Bill. That's bad news for Illinois.
https://chicago.suntimes.com/other-views/2024/09/24/congressional-republicans-hold-up-farm-bill-illinois-snap-gov-jb-pritzker-reps-budzinski-jackson