Sunday, January 28, 2007

Big Supermarkets Likely to Escape Punishment

With the release of the interim report by the Competition Commission, it would appear that once again the supermarkets are going to escape censure. Despite the evidence to the contrary, it looks likely that it will be business as usual for the big four. Meanwhile, the workers at the bottom of the chain, will continue to be hurt by the tactics of Tesco, Sainsbury's, Asda and Morrisons.

According to The Guardian, the report claimed that

there was little evidence that the grocers were using their muscle to squeeze suppliers' profits and that food and drink manufacturers, and wholesalers, were in "reasonable shape".

And yet, it is clear that the policies of companies like Tesco, are really hurting the food producers, as well as damaging the high street. By developing out-of-town sites, the big supermarkets are doing a great deal of damage to town centres all over the country. With their huge, free car parks enticing shoppers away from the fee charging car parks in the town centres, it is little wonder that shoppers have turned in droves to these monolithic, temples of consumerism. And now, with the introduction of mini versions of these stores appearing in high streets, small, independent traders are really starting to feel the squeeze.

As I said at the top of the post, those at the bottom of the chain get hurt the most. Perhaps the best example of how the producers are being squeezed, is in the dairy sector. In 1995, the proceeds from milk sales were divided as follows:

Figures taken from the Milk Development Council As you can see, the farmer received a large chunk of the sales from milk, approximately 24.5p from an average selling price of 42.1p. The retailers, on the other hand, received a pretty small amount of income in comparison. However, there is a massive shift in the figures for 2005:
Figures taken from the Milk Development Council Although still receiving the largest chunk, the farmers have seen their share drop from 58% in 1995, to 36% in 2005, a drop of 22%. Meanwhile, the retailers have seen their share jump from 3% in 1995, to 31% in 2005, a massive 28% increase. The processors have, however, remained pretty static in their share, hovering around the 33-39% mark. As you can see, it is the farmers at the bottom of the chain who are clearly being squeezed. In fact, the NFU dairy chairman Gwyn Jones claims that:

farmers are losing an average of 2p a pint.

Furthermore, Sir Stuart Hampson, chairman of Waitrose owners the John Lewis Partnership, has claimed that if the trends are not reversed, the UK could be importing milk by 2011. This would, naturally, be disastrous for farming in the UK (not to mention the subsequent impact on the environment). And it is not only the farmers who are being hurt by the actions of the giant supermarkets.

Only last month, War on Want reported that Tesco, Primark and Asda were guilty of exploiting the workforce in Bangladesh. The workers producing the garments for these corporations work 80 hours per week in dangerous conditions, all to enable the 'savings' to be passed onto the consumer. War on Want also reported that starting wages at the factories were as little as £8 a month, barely one third of the living wage in Bangladesh. Without this exploitation of the workforce, the large corporations would not be able to maintain their competitive edge. They need to squeeze costs wherever possible, and the savings normally hit the workforce rather than those that sit on the board.

The Capitalist System
In such circumstances, it is hard to blame the consumer. After all, there are many low income families out there who rely on Tesco's prices to ensure meals are on the table. However, there is always a price attached to anything that is purchased. That price is felt by those who work in the factories, or plough the fields, to enable those that control the capital to continue their growth. Furthermore, the situation may seem harmless to some, but imagine if this situation is taken to its logical conclusion. If we allow ourselves to sleep walk into a society that is dominated by one retailer what would that look like? There would be nothing to stop a solitary retailer raising prices and squeezing the consumer. Why would have nowhere else to turn to to provide for our needs. We would have no choice but to accept the prices the supermarket sets. And, in such circumstances, it would not be unrealistic to expect the supermarket to mark up it's prices as high as possible. In short, we would all be losers.

Unfortunately, no matter how many enquiries are instigated, it is unlikely that the picture will ever change. The government is totally enthrall to their capitalist masters, and they are hardly likely to bite the hand that feeds them. It is up to the workers to unite against those that control the capital and force change. We cannot, and must not, rely on the politicians to force this change, they have too much to lose. The continued exploitation of the proletariat must end, the consequences of their continued dominance are too frightening to contemplate.