Here in Australia, there’s a proposed bill currently under debate that would force supermarkets to display the price they pay to farmers for produce alongside the retail prices. The bill was introduced by senator Nick Xenophon and is being pushed by Independent MP Bob Katter.
While it’s a laudable initiative–supermarket chains post yearly profits in the multi-billion dollar range, but to pick just one example, pay farmers around 35¢ a kilo for potatoes that retail for $3 a kilo–I do question whether it’s the right approach.
The underlying assumption seems to be that if grocery stores are forced to display the prices they pay to farmers, consumers will shame them into being a bit more generous in their dealings. I’m not sure this is entirely true, for a couple of reasons.
First off, the bill would give consumers information without simultaneously providing them with courses of action or viable alternatives to act on that information. Many people in urban centres have access to frequent farmers’ markets, but not all of them know they exist, and suburban and rural populations are often not so lucky.
Secondly, a lot of the discrepancy in price between what’s paid to farmers and what’s on the sticker in the store comes from the cost of a national (and sometimes international) supply chain of distributors, wharehousers, and transporters, not to mention the operational costs of a supermarket itself, with all of the marketing and administrative costs that go along with it. This industrial supply chain is a great way of supplying food at a very low cost with a maximum of convenience–and year-round availability of seasonal produce. But it’s definitely not the best way to get farmers the best deal, and it’s also not the best way to encourage consumers to care about the well-being of said farmers.
Supermarket chains are corporations, and while they clearly have an interest in not losing customers by being seen to be treating farmers unfairly, they also have to maintain high profits for shareholders by keeping costs low and margins high. Even with full disclosure, supermarkets still have incentive to pay farmers as little as they can get away with. So overall, it’s unclear how much real impact the bill would have.
I’m not saying this bill is a bad idea, and I’m also not saying it shouldn’t be supported or made into law. It certainly can’t hurt, and might even help–even if it does’t have a huge impact on consumer behaviour, it might bring about an increase in awareness. But I feel that there are other avenues that might be a better way of giving farmers a fair shake, and which might also benefit local communities and public health.
For instance, the government could invest in providing infrastructure and assistance to farmers markets to make them available to a wider range of the population, which would make it easier for farmers who choose to do so to sell directly to consumers, and likewise give more consumers the option of purchasing direct from farmers. If every consumer and every farmer had access to this kind of market, price disclosure legislation might have a greater and farther reaching impact. And buying directly from farmers means that not just a chunk of corporate profit, but also a lot of the costs involved in a big food supply chain, can be shifted into revenue for farmers.
It’s certainly always interesting to see food issues in the political spotlight, and I look forward to seeing how this plays out.
What do you think?
Feature image by Flickr user Francois Schnell, used under Creative Commons.
Should Supermarkets be Made to Disclose Prices Paid to Farmers?
Here in Australia, there’s a proposed bill currently under debate that would force supermarkets to display the price they pay to farmers for produce alongside the retail prices. The bill was introduced by senator Nick Xenophon and is being pushed by Independent MP Bob Katter.
While it’s a laudable initiative–supermarket chains post yearly profits in the multi-billion dollar range, but to pick just one example, pay farmers around 35¢ a kilo for potatoes that retail for $3 a kilo–I do question whether it’s the right approach.
The underlying assumption seems to be that if grocery stores are forced to display the prices they pay to farmers, consumers will shame them into being a bit more generous in their dealings. I’m not sure this is entirely true, for a couple of reasons.
First off, the bill would give consumers information without simultaneously providing them with courses of action or viable alternatives to act on that information. Many people in urban centres have access to frequent farmers’ markets, but not all of them know they exist, and suburban and rural populations are often not so lucky.
Secondly, a lot of the discrepancy in price between what’s paid to farmers and what’s on the sticker in the store comes from the cost of a national (and sometimes international) supply chain of distributors, wharehousers, and transporters, not to mention the operational costs of a supermarket itself, with all of the marketing and administrative costs that go along with it. This industrial supply chain is a great way of supplying food at a very low cost with a maximum of convenience–and year-round availability of seasonal produce. But it’s definitely not the best way to get farmers the best deal, and it’s also not the best way to encourage consumers to care about the well-being of said farmers.
Supermarket chains are corporations, and while they clearly have an interest in not losing customers by being seen to be treating farmers unfairly, they also have to maintain high profits for shareholders by keeping costs low and margins high. Even with full disclosure, supermarkets still have incentive to pay farmers as little as they can get away with. So overall, it’s unclear how much real impact the bill would have.
I’m not saying this bill is a bad idea, and I’m also not saying it shouldn’t be supported or made into law. It certainly can’t hurt, and might even help–even if it does’t have a huge impact on consumer behaviour, it might bring about an increase in awareness. But I feel that there are other avenues that might be a better way of giving farmers a fair shake, and which might also benefit local communities and public health.
For instance, the government could invest in providing infrastructure and assistance to farmers markets to make them available to a wider range of the population, which would make it easier for farmers who choose to do so to sell directly to consumers, and likewise give more consumers the option of purchasing direct from farmers. If every consumer and every farmer had access to this kind of market, price disclosure legislation might have a greater and farther reaching impact. And buying directly from farmers means that not just a chunk of corporate profit, but also a lot of the costs involved in a big food supply chain, can be shifted into revenue for farmers.
It’s certainly always interesting to see food issues in the political spotlight, and I look forward to seeing how this plays out.
What do you think?
Feature image by Flickr user Francois Schnell, used under Creative Commons.