Supermarkets: Super profits and hidden costs

Supermarket corporations continue to make extremely high profits through exorbitant mark ups on the price of food, especially fresh fruit and vegetables. At the same time international charities are stepping in to feed children in schools around the country.

  • Supermarkets make extremely high profits for their owners - Foodstuffs South Island, a co-operative of 582 supermarket owners in one year (2012-2013) distributed $237.4 million in profits to the supermarket owners. An average yearly profit for each supermarket owner of $407,000. 
  • Two corporations control the market - Accounting for ninety-five percent of the grocery market are two corporations - Progressive Enterprises and Foodstuffs. 
  • Fruit and vegetable prices are too high - An organic vegetable grower told Campbell Live in February 2013 he sold a 1.5kg bag of potatoes to his supplier for $1.50, these were then sold in an Auckland supermarket for $7.99. Beetroot sold for $1.50 was resold at $9.50. In 2010 a Green Party survey of 75 New Zealand fruit and vegetable growers reported that 75% of growers thought the supermarket mark-ups on fresh produce were ‘far too high’. 
  • Food prices in NZ are rising quicker than the rest of the developed world - According to the Organisation for Economic Development and Co-operation, New Zealand consumers are paying 42.5 percent more for groceries than they were 10 years ago. This was the second fastest grocery price rise out of 30 OECD countries. 
  • Hungry children are a hidden cost of high prices - A 2006 survey of school children found that one in seven kids (Aged 5-14) were not eating breakfast before school.
  • Charities are having to deal with the problem - Large numbers of school children are fed by charities. In 2010 Red Cross provided food to 60 decile 1 schools in New Zealand. A CPAG survey of 17 decile 1 and 2 schools in Auckland found that most schools saw the need for food in schools as “high” or “very high”.
Government funded food in schools programmes are a short term solution to the problems in the grocery and food system. The main problem is that two giant capitalist companies are using their excessive size to rob New Zealand consumers and producers in order to inflate their profits.

A socialist alternative 
Hugo Chavez, Venezuela’s leftist President between 1999 and 2013 confronted the same problem New Zealand faces – excessive profits for supermarket bosses and growing levels of hungry children – by nationalising several supermarket chains and bringing in price controls. The average saving for shoppers was around 30%.

Venezuela also operates the Mercal network of ‘subsidized food markets, selling high-quality food at discounts averaging 40 percent off standard prices. These markets are open to people of all income levels, with particular emphasis on communities with limited food access. With 16,532 Mercal outlets throughout the country distributing more than 1.5 million tons of food to over 13 million people, Mercal has become Latin America's largest food distribution network, according to the Venezuelan government.’ Taking control of the food system has helped Venezuela to drastically reduce hunger.

According to Venezuela Analysis, ‘The 29.8% of people living in extreme poverty in 2003 was drastically reduced to 9.4% in the first half of 2007, and then to 6.8% in 2011, while the overall poverty index fell from 49% in 1998 to 24.2% by the end of 2009.’

Academics and unions need to stop their endless hand wringing over the plight of hungry children and start arguing for the nationalisation of New Zealand’s supermarket duopoly under the joint control of communities and workers. We cannot continue to live in a country where the luxury of supermarket bosses comes at the cost of hungry children.



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