Strip lights, endless queues of strangers and shelves of packets, fake smiles from bored checkout assistants - Isn't there a better way to get our food?
Supermarkets wield immense power over the way we grow, buy and eat our food. They are shaping our environment, our health and the way we interact socially. These changes have gone unchallenged because consumers have been sucked into superstore lifestyles, persuaded that the opportunity to select from six different brands of cut-price oven chips at three in the morning represents choice and value.
But the tide may be turning. Unease at the true cost of supermarket food is spreading among consumers, who are beginning to join forces with the farmers and workers who have always know that supermarket 'choice' is a bad deal. This booklet aims to help campaigners get to grips with the reality of supermarket domination and argues why we must start looking for alternatives.
The Cheap Food 'Mantra' - Stack it high! Sell it low!
As a prelude to this critique of supermarkets, we must acknowledge that they have achieved an awesome and audacious feat of logistics.
They have created for themselves a supply chain that moves with synchronicity and efficiency to transport millions of tonnes of 'cheap food' onto the shelves each day (known in the jargon as 'Efficient Consumer Response'), and to make a healthy profit for themselves and their shareholders.
What is the truth behind cheap food? Supermarkets claim that this is what the consumer wants, and a recent survey by the Food Standards Agency in September 2001 supports this. It showed that 46% responded that price was the key determinant for choosing their food; 18% chose taste, 17% chose quality, and only 12% put health first.
But supermarkets are not a good deal for the consumer. While certain key items, such as bread and milk, are cheap, this is because supermarkets use them as 'loss leaders' to entice the customer in with the impression that the whole store is cheap. Bread and milk are known value items (KVIs). Customers will find that products that they are less familiar with the price of can often be obtained more cheaply in local independent shops. This is especially true of fresh fruit and vegetables.
But more than this, the 'cheap food' that the supermarkets peddle also comes at a very high price to taxpayers, small manufacturers, small farmers and the environment. We deserve affordable food, yes, but also healthy food, healthy communities, healthy small businesses and a healthy countryside.
We can't let the supermarkets get away with blaming consumers for demanding 'cheap food', when it is essentially only they who benefit.
Encouraging industrial agriculture and destroying small farms worldwide
To provide customers with the huge variety of inexpensive food that they promise, supermarkets ruthlessly exploit their effective monopoly as the biggest buyers of food. They can dictate how, where, when and for how much their food is produced, packaged, stored and delivered. This is monitored by a sophisticated system of specifications and tight managerial control, including direct contracts with selected farmers rather than tradtitional competitive markets and the use of favoured slaughterhouses, processing and packing companies.
Producers are merely assembly-line workers producing standardised products, designed by technicians. Supermarkets employ researchers to discover precisely what the average cost of production is for a particular crop worldwide, then conduct blind auctions over the internet, buying only when the price has reached the lowest level.Farmers do not know what price has been tendered by other producers and this forces them to offer their produce at a low price to ensure a sale. Producers of perishable foods are especially vulnerable. Only multinational food corporations and companies with successful brands have any leverage with the big suppliers.
The recent Competition Commission Report on Supermarkets (2000) cited 30 alleged exploitative supermarket practices over suppliers, including not paying suppliers on time, changing specifications at the last minute on quality, quantity and packaging and charging suppliers for supermarket errors. At the heart of this is the supermarkets' refusal to enter into binding contractual agreements with suppliers, thus leaving them with no redress against supermarket exploitation.
All of the supermarkets admitted to the Competition Commission that they requested suppliers 'to make a payment for better positioning of products in the stores', and demanding 'non-cost related payments' i.e. payments to ensure the continuation of business. These are sometimes charged retrospectively. They admitted 'to imposing charges and making changes to agreements without adequate notice; and unreasonably transferring risks to the supplier.'
Farmers are forced to invest a huge amount into meeting supermarket needs, and then can be dropped at a whim, wiping out their entire business and the businesses and rural communities that rely on them. It's the same story across the globe as farmers around the world are forced to compete with each other to produce a better quality product, more efficiently at the price the supermarket demands.
One farmer sellling cauliflowers to the supermarkets had his entire crop rejected due to excessive quality standards. He had initially asked the supermarket in question whether he could use a pesticide to eliminate caterpillars, and they had refused. He successfully eliminated them using a bio-pest control, the Encarsia wasp. This caused no damage to the cauliflower, although it left the occasional dead wasp that could easily be washed off by the consumer. The supermarket in question, however, refused the cauliflowers anyway.
The Commission report is full of testimonies from farmers and other suppliers about their treatment by the supermarkets. You may wonder why you hadn't heard about this shocking exploitation before; most are too afraid to raise their voices as they are at risk of being blacklisted by supermarket buyers. These buyers are regularly switched between product ranges making it hard for suppliers to build up a personal relationship.
One of the most shocking forms of exploitation is that farmers are frequently paid less than the cost of production for their goods. The UK dairy industry, for example, has been heavily hit by supermarkets who have used the oversupply of milk to their own advantage. It costs a small dairy farmer anything from 18p to 22p to produce a litre of milk. Until the Milk Marketing Board was abolished in 1994, they were being paid 24p per litre. Farmers are currently being paid 19p per litre, for what sells in the supermarket for 72.2p.
In some sectors (arable, sheep and beef), the difference is made up by the taxpayer through subsidies. While farmers are often blamed in the media for being 'subsidy junkies' the truth is that in some cases the farmgate price is so low, that even with the subsidy, farmers cannot cover their costs.
The supermarkets and big processors are increasing their share of the profit margin by squeezing the whole supply chain, and the farmers at the end of the chain are in the weakest position. Agricultural subsidies essentially go straight into supermarket profits.
These are clear examples of the supermarkets exploiting their monopoly position. Farmers and even the bigger food manufacturers and processors are reliant on selling to a few retailers and thus vulnerable to exploitation. The Competition Commission found that as a result, suppliers were not able to innovate and develop new markets and were living in fear of being arbitrarily de-listed. See section on 'Rip-off Britain'.
When confronted over this blatant exploitation, supermarkets cast the blame elsewhere. Either it's the free market and we can import milk more cheaply from Eastern Europe or New Zealand. Or, we'd like to pay you properly, but the WTO will clamp down on us for price-fixing (i.e. paying a fair price). Or, it's the middlemen creaming off all the profits not us. Or, the quality of UK milk isn't up to it.
The truth is that our global economic system may well be at fault, but it is the supermarkets, through lobbying governments and the WTO, who have manipulated the system to suit them, with total disregard for the little guy.
As for laying the blame at the feet of the 'middlemen' - there are seven large processors in the dairy industry, and, although not blameless, they were also affected by the drop in the price paid for milk by the supermarkets.
Farmers are in an extremely weak negotiating position. They used to have some bargaining power on the basis of seasonality, but imports and glasshouses have destroyed this advantage. Now farmers are squeezed by a limited number of buyers, big suppliers and global oversupply.
To make a living, farmers have adopted more intensive methods to produce more to sell, and have invested their savings. This may make sense on an individual level, but ultimately works against their interests, creating over-production and a further decrease in prices.
Farmers on the Continent have formed co-operatives so that with more to sell they can demand a better price. It is ironic that the Competition Commission broke up the large UK dairy farmers co-operative, Milk Marque, in 1999 whilst allowing supermarkets to continue with their monopoly.
To make a profit, the supermarkets and processors prefer to deal in bulk with a standardised product. To achieve the blemish-free perfect 7.4 inch carrot, pesticides, fertilizers, and factory farming methods are necessary. Up to 40% of a perfectly good product will be discarded to meet the cosmetic perfection apparently demanded by UK consumers, and taste is undoubtedly sacrificed. It is not surprising that most major food manufacturers support the logical conclusion of uniform food: genetic engineering.
Intensive farming in the UK has not reached the proportions of the USA where the corporate control of agriculture is most keenly felt in the food processing and manufacturing sector. There, 70 million acres have been planted with GM soya, maize, oilseed rape and cotton and most meat is produced in feedlots or CAFO's (Confined Animal Feeding Operations).
The big players in US food production; Iowa Beef Processors and Cargill (beef), Smithfield and Premium Standard Farms (pork) and Tyson and Perdue (chicken) all have fairly similar production methods. Huge feedlots are sited in states where regulations are lenient, often in poor communities where people are less likely to object to the stench of excrement and pollution.
Animals are packed in as tightly as possible, gorged on high-protein feed (such as bonemeal) and dosed with hormones and antibiotics before being shipped to equally huge slaughterhouses where speed and quantity count for more than sanitation.
Processors may cut costs through mass production and using waste products from the food industry such as maize starch, sugar beet fibre and whey powder, but their cost is hugely increased through packaging, transportation and presentation. For example, Northern Foods' Dalepak lamb grills cost £8.45 a kilo; almost twice the price of genuine lamb chops from a local butcher.
It seems that consumers are happy to believe the hype: that they are getting the best deal with the 'convenience' of processed foods and shopping in supermarkets.
The Cheap Food Myth
Cheap food is a myth. The consumer pays three times: once in the shop, twice through direct subsidies to farmers, and finally indirectly in taxes cleaning up the mess left by industrial agriculture and subsidising transport infrastructure.
It has, for example, cost the government over a billion pounds to install the equipment necessary to remove nitrates and pesticides from our water.
The consumer also pays the price in ill health and increased risk of disease. The drive for cheap food has been behind every major food catastrophe of the past decade. Feeding ground-up animals to cattle - who are natural herbivores - as a cheap source of protein is generally recognised as the initial cause of BSE. Salmonella is endemic in chickens and their eggs because the broiler system delivers cheaper poultry products. E. coli is a by-product of intensive livestock practices. Infectious Salmon Anaemia virus (ISA) in salmon is caused by the broiler system being applied to fish.
The costs of BSE and Foot and Mouth disease could well average £4 billion each and then there are the costs of our unhealthy diets on the National Health Service (see 'Selling unhealthy food' section).
Further liberalisation of markets through the Agreement on Agriculture, part of the World Trade Organisation, will mean that our cheap food will continue to be subsidised by environmental and social destruction as well as animal exploitation in poorer countries and the UK. Opening up markets to 'developing countries' will not benefit poor plantation workers, rather the multinational corporations who own the infrastructure by which food is transported around the world, such as international grain traders, Cargill and ADM who control 80% of the world's grain trade.
The current pattern of supermarket consolidation will not help matters. At a recent seminar help by the Grocer, ex-CEO of Somerfield, David Simon, claimed that the proposed takeover of Safeway will be a 'killing ground' for weak brand and private-label suppliers, and hence the farmers who supply them. They will face crippling reductions in margins and the possibility of losing their entire business.
You can read the rest of the report by downloading the pdf here.