Mad About Grocery Prices - Put The Blame Where It Belongs

 

Grocery Store Prices – Who is Responsible

Lots of people have been talking about the cost of groceries and the impact it has had on the household budgets for most of us regular folks. It has been popular to place the blame on one or more politicians. I am going to join that chorus and in my humble opinion the blame lies squarely on the members of both major political parties. Especially those serving in the houses of Congress that take Corporate money in large amounts.

I am not alone in this belief. I have the indirect support of the Federal Trade Commission to back me up. The FTC was founded in 1914 with this as its mission: “The Federal Trade Commission is an independent agency of the United States government whose principal mission is the enforcement of civil antitrust law and the promotion of consumer protection. “The FTC does on a national basis what the Attorneys General do on a state by state basis in that they watch out for companies who seek to take unfair advantage of consumers. In my view, “antitrust” means keeping an eye out for companies and corporations who monopolize a particular market and maximize their profits at the expense of the consumer.

Once upon a time we had elected officials from both major political parties who took the matter of Corporate greed seriously and took bold action to bring it to an end. Teddy Roosevelt was a Republican president who was referred to as a “Trust Buster” when he took on railroad monopolies. He made it clear that his concern was not stifling free trade, but rather protecting the average citizen from monopolistic practices. There was another Roosevelt who belonged to the other political party who shared those same feelings.
Fast forward to modern times and you will find very few elected members of the House or Senate who speak out against the insane amount of power wielded in our country by Corporations. The reason is simple: most of them are beholden to the ever increasing donations they take from said Corporations. The exceptions are the few who refuse to take Corporate and/or PAC monies. (PACs are Political Action Committees that are nice ways for money to get funneled to candidates on both sides of the aisle.)

Back to the grocery store. The FTC released the results of a rather exhaustive study they undertook regarding prices we encounter when filling up out carts, real or virtual, with our daily bread. We all heard the songs about “supply chain” issues during the pandemic as they were played to explain rising prices. Those songs continue to play in addition to the popular method of blaming the president for the price of milk. According to the FTC, neither one of those tunes is worth singing.

“As the pandemic illustrated, a major shock to the supply chain can have cascading effects on consumers, including the prices they pay for groceries,” said FTC Chair Lina M. Khan. “The FTC’s report examining US. grocery supply chains finds that dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve.”

The report highlights several key insights regarding market structure and business conduct among grocery retailers, wholesalers, and producers, as well as their effects on consumers. These insights include: Grocery retailer profits rose and remain elevated. Food and beverage retailer revenues increased to more than 6% over total costs in 2021, higher than their most recent peak in 2015 of 5.6%. In the first three-quarters of 2023, retailer profits rose even more, with revenue reaching 7% over total costs, casting doubt on the assertions of some companies that rising prices at the grocery store are the result of retailers’ own rising costs.

What that means is that the smokescreen behind the defense of “we are just passing along increased costs” from major grocery providers is a lot of smoke and mirrors. The FTC started looking into this in 2021 and they focused their study on some big players: Walmart Inc., Amazon.com, Inc., Kroger Co., C&S Wholesale Grocers, Inc., Associated Wholesale Grocers, Inc., McLane Co, Inc. Procter & Gamble Co., Tyson Foods, Inc., and Kraft Heinz Co. The findings also draw from publicly available data on industry costs and revenues.
Most folks are familiar with several of the named Corporations and no doubt appreciate how easy it is for them to impact millions of people with their pricing practices. I had never heard of C&S Wholesale Grocers, so I spent some time trying to figure out how they could be screwing people on a national basis when it comes to grocery prices.

From C& S website: “C&S Wholesale Grocers, LLC is an industry leader in supply chain solutions and wholesale grocery supply in the United States. Founded in 1918 as a supplier to independent grocery stores, C&S now services customers of all sizes, supplying more than 7,500 independent supermarkets, chain stores, military bases and institutions with over 100,000 different products. C&S also proudly operates and supports corporate grocery stores and services independent franchisees under a chain-style model throughout the Midwest, South and Northeast.”

Further research told me that C&S is the eighth largest privately held company in the US. Once that fact settled in, it was easier to understand how C&S fell into the FTC investigation. They cover all the grocery bases – from operating entire stores to sell over 100,000 different products to 7,500 other stores. In the opinion of the FTC, C&S and other Corporate giants are not only misdirecting our attention from the real source of rising costs, but at the same time they are putting more and more small retailers out of business and buying them up, thereby increasing their power even more.

I would encourage you to look into the FTC study yourself. Don’t listen to your favorite talking head, or even this column. The study has been getting some traction, but no where near what it should be getting. We should be less concerned with football players dating singers and more concerned about what the unfettered and under regulated growth of a giant like C&S truly has on our day to day economic life.

Corporations exist for one reason – to make money for their owners and share holders. I am a business owner and have no problem with turning a profit. But I am right there with the Roosevelt cousins when it comes down to Corporations gaining a monopolistic hold on our collective wallets. We do not need more politicians blaming “the other party” for grocery store prices. We need some trust busting elected officials who will tell us the truth about where the problem lies and do something about it.