The Real Reason Your Grocery Bill Is Still So High | naked capitalism

Yves here. Readers like to criticize Sonali Kolhatkar for being disengaged from real world issues, but here she focuses on a major pocketbook issue: the cost of food in the US. It takes a while for her to work up to the underlying cause, which is oligopolistic price squeezing by big corporate middlemen. Is there similar grocery price gouging in European countries?

By Sonali Kolhatkar, an award-winning multimedia journalist. She is the founder, host, and executive producer of “Rising Up With Sonali,” a weekly television and radio show that airs on Free Speech TV and Pacifica stations. Her most recent book is Rising Up: The Power of Narrative in Pursuing Racial Justice (City Lights Books, 2023). She is a writing fellow for the Economy for All project at the Independent Media Institute and the racial justice and civil liberties editor at Yes! Magazine. She serves as the co-director of the nonprofit solidarity organization the Afghan Women’s Mission and is a co-author of Bleeding Afghanistan. She also sits on the board of directors of Justice Action Center, an immigrant rights organization. Produced by Economy for All, a project of the Independent Media Institute

Americans have had to weather much in the years since the COVID-19 pandemic first began, including price inflation of basic necessities. Grocery bills, especially, are a drain on household finances. But, as recent reports show, inflation is easing across many industries, and yet food prices overall have remained stubbornly high. Not only is that an indication of a deep rot at the heart of the food industry, agribusinesses, and corporate grocery chains, but it is also a clear sign that we need to repair our entire food system.

Reporting on a new Census Bureau survey, USA Today’s Sara Chernikoff found that “[t]he average American household spends more than $1,000 per month on groceries.” And, while it’s not surprising that those residing in expensive states like California have high grocery bills, there’s little relief for those living in states with lower costs of living. An average California family’s weekly grocery bill is $297.72, but an average North Carolina family’s bill is $266.23—nearly as high.

Attempting to downplay this reality, Paul Donovan, chief economist of UBS Global Wealth Management, wrote in an op-ed in the New York Times that Americans might be overestimating how serious inflation is, feeling the pinch most especially when they buy something as small as a candy bar. “[C]onsumers perceive inflation as higher than it actually is,” wrote Donovan. Further, he claimed, “[h]umans are genetically programmed to emphasize bad news over good news when they make decisions.” Donovan is implying that we’re just imagining high grocery bills.

In fact, inflation in the grocery industry has been higher than in other industries, rising 25 percent over the past four years compared to 19 percent overall, and many have pointed to simple greed as the reason: food prices are high because the companies setting prices think they can get away with padding their profits. Since we all have to eat, naturally this hits lower-income families harder, rather like a regressive tax. A new report by the Groundwork Collaborative found that in 2022, “consumers in the bottom quintile of the income spectrum spent 25 percent of their income on groceries, while those in the highest quintile spent under 3.5 percent.”

Economists have attempted to explain the reasons for grocery-related inflation remaining stubbornly high by pointing fingers at supply chain issues, higher labor costs, and agricultural pests. The Washington Post even admitted—albeit with little additional comment—that “consolidation in the industry gives large chains the ability to keep prices high.” (I’ll return to this critical point below.)

Fearing that voters feeling the pinch every time they shop for food will punish him at the ballot box, President Joe Biden has taken aim at the food industry. At an event in South Carolina on January 27, 2024, the president remarked that, while “inflation is coming down… there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation.”

To be fair, some foods did become cheaper, such as eggs. Remember the nationwide scramble on eggs in the early months of the pandemic with many grocery retailers limiting the number of cartons per customer? But in the years since, prices leveled off. And then they whisked up again. In fact, eggs are a far better indicator of why Americans are upset about food-related inflation than a Snickers bar.

There are plenty of short-term interventions that government can apply to help American families cope with the high cost of groceries, and President Biden has implemented many of them. Groundwork Collaborative’s report cites an increase in Supplemental Nutrition Assistance Program (SNAP) benefits for the lowest-income Americans, as well as the federal government’s initiative in taking food corporations to court over price gouging, and helping to lower the prices of crop fertilizers.

But many of these fixes are workarounds to compensate for the massive monopolistic corporatization of our food industry. Recall the point that the Washington Post made with little additional analysis: “consolidation in the industry gives large chains the ability to keep prices high.” The fact is that only a handful of corporations control the majority of our food system. We are all at the mercy of a small number of big companies. And, unless we make serious systemic changes to our food systems, we will remain so.

When thinking about longer-term fixes that free our foods from corporate profiteering, the humble egg is once more a good example. When eggs were prized items during the early months of the pandemic, small producers and farmers markets became the only reliable suppliers for many Americans. I recall being even more grateful than usual for my membership with the Urban Homestead, a small farm in the heart of Pasadena, California, where I live. Each week, I place an order with them for fresh produce and other locally grown foods to supplement my store-bought groceries. During the COVID-19 lockdowns, Urban Homestead was one of the few sources my family had for eggs and fresh produce.

But such small producers are few and far between. While the lucky ones among us may have access to urban farms, there are simply not enough small-scale growers to feed most Americans. Those farms that do exist operate on razor-thin margins, struggling year after year to remain financially viable. They remain on the outskirts of a massive capitalist playing field that is tilted toward profit-centered, highly subsidized agribusinesses and grocery chains. While small farmers, both urban and rural, are struggling, food trading companies are gobbling up massive profits. And the federal government’s farm subsidy program disproportionately benefits large corporate growers rather than the family farmers they are ostensibly aimed at.

Localizing our food supplies and shortening the chain between food buyers (i.e., all of us) and grocery suppliers ought to be the focus of food-centered government policies. This requires adopting a mindset based on the idea of “food justice,” a topic on which much has been written. We need to make it easier for small-scale farmers to grow food while remaining financially stable, and harder for large-scale corporate agribusinesses to control our food supply. This requires incentivizing small-scale farmers to remain small and sustainable—the opposite of the “growth” ideals of corporate profiteers.

Lawmakers and corporate media outlets are so attached to the idea that food producers and distributors deserve massive profits in exchange for controlling our food supply, that a justice-based approach of de-growth rarely enters their discourse. Rather than the rich eating us (and our wallets), it’s time for us to eat the rich.