Thursday, December 23, 2010

Farmers and Consumer Groups Fight Consolidation of Food Suppliers

In December, a coalition of consumer and farmer groups urged the U.S. Department of Agriculture (USDA) and Department of Justice (DOJ) to follow up its final competition workshop with concrete actions to address the anti-competitive practices that benefit a few large players in the food system.

At a press conference at the National Press Club, national consumer group Food & Water Watch joined farmers and ranchers to discuss how consolidation in the retail sector has affected the marketplace. Consolidation has given the largest retailers considerable purchasing power that allows them to exert influence over food manufacturers, meat processors, produce shippers and other suppliers to reduce their prices and require specific packaging and manufacturing practices. Suppliers also pressure farmers to lower their prices and workers to lower their wages. This trend leads to a few large companies controlling the entire market, forcing consumers to choose less healthy foods.

"The American food chain is shaped like an hour-glass where a handful of large powerful companies stand between more than 300 million consumers and two million farmers. Thanks to mergers and consolidation, vibrant competition in the retail grocery industry is all but dead," said Wenonah Hauter, Executive Director of Food & Water Watch. "There is an illusion of choice between many different but similar processed foods, but almost all of them are sold by the same few companies."

Food costs have risen considerably over the past decade. Food inflation was especially high during 2007 and 2008. The higher prices are especially difficult for lower-income consumers. According to a 2008 report by the Congressional Research Service, even a 4 or 5 percent increase in the price of food has a significant impact on the purchasing power of lower income families.

A majority of studies reviewed by the USDA found that increased grocery chain consolidation contributed to an increase in consumer grocery prices. As prices increase, families turn to lower cost processed foods over more healthful options.

With 40 percent of American households earning less than $39,000, a small increase in the price of food can dramatically erode family food security. The USDA recently reported that one out of 7 households is suffering from hunger and one out of 4 children do not have enough to eat.

"Children are the ones left out on the margins," said Hauter. "As food has become more consolidated, processed foods have become more prevalent and kids have become more obese. It’s no coincidence that 75 percent of snack chips and 80 percent of kid’s cereals are sold by the top four firms, and the four biggest cookie manufacturers sell two-thirds of all cookies."

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