Menu
Posted on March 8, 2012 | 5 Comments
Yesterday I went to an equipment sale of an organic grower who’s closing down. I picked up one or two bargains, which was nice – but not nice enough to compensate for the sadness I felt. It wasn’t just the uncomfortable feeling that at the next sale I attend it might very well be me doing the selling, but also the feeling that each of these occasions is one more small example of how badly wrong we’re getting our food system.
If you believe certain ideologues then yesterday’s event was a necessary evil – the tough love of the free market in action, ensuring that only the most innovative and efficient producers get to stay in business, thereby helping to reduce prices and ratchet up productivity. If I’d been around two hundred years ago I might have been one of those ideologues myself, because back then they were probably right. Most of the land was in the hands of the gentry and there was little of the so called ‘market discipline’ around to ensure that prices weren’t inflated to suit the interests of the landholding class. So when the founding fathers of economics such as Adam Smith and David Ricardo formulated their theories of how markets ought to work – with the market’s ‘invisible hand’ finding an equilibrium between competing consumers bidding the price up and competing producers bidding the price down – it must have seemed a revolutionary doctrine for revolutionary times.
Things turn full circle. Nowadays food markets – most markets, actually – are dominated by a few retail behemoths, the new gentry of our age. For although it may be in the interests of society as a whole to have healthy competition between numerous firms, it’s in the interests of any particular firm to eliminate their competitors – which is what the retail giants have done, very ruthlessly.
Well, doesn’t that just go to prove that the big retailers are the best competitors in town? I’m not so sure. Maybe it did once, but in each cycle of market loss and gain financial advantage accumulates in the hands of the victors until sheer market dominance and financial speculation replace resource efficiency and technical innovation as the main route to business development. When I studied economics I was taught that for markets to work efficiently it was necessary to have ‘innumerable’ producers to prevent excessive rent-taking. Currently four companies control 75% of the retail food market in the UK. The Office of Fair Trading – whose job it is to prevent monopolies in order to ensure market discipline – believes that ideally there ought to be another five. Ah well, I suppose nine is a better approximation to ‘innumerable’ than four. But the truth is that the retail giants don’t dominate because they’re more supple and innovative. They dominate because they displace as many costs as possible onto others – taxpayers and farmers, for example. They dominate because they create low-cost food out of ecological rent. And they dominate because they use capital and market control as a weapon.
The way this plays out on farms around the world is this: anyone wishing to invest in the long-term ecological or social wellbeing of their farm or their community loses; anyone seeking to replace cheap but polluting inputs such as fossil fuel with costlier but more sustainable ones such as human labour or site ecological services loses; anyone who refuses to shave margins by investing in larger and newer plant loses. And a lot of people who do none of those things lose too. Our research shows that at Vallis Veg we produce food with much greater energy and carbon efficiency than large-scale farmers and supermarket retailers – but those aren’t the grounds on which market efficiency is judged. And this, ultimately, is why farm concentration continues apace and the farm sales go on.
Defenders of the status quo often point out that the big operators usually started out as small concerns, the implication being that somebody starting a smallholding or a corner shop now can aspire to replicating the same business success if they’re good enough. But when Jack Cohen started the market stall in East London in 1919 that was to become Tesco, I wonder what share of the national food market the four biggest grocery retailers had – I’d be willing to lay a bet that it was a whole lot less than 75%. Anyone starting out in food retail today is looking at a ladder swiftly receding into the sky.
I always find it intriguing to think of parallels between the natural and the social world. Is retail monopoly just like ecological succession? A bare patch of earth is initially colonised by a riotous multitude of pioneer plants, which have evolved good strategies for spotting an opportunity and quickly moving in. But as time goes on they fall by the wayside, replaced by a smaller number of strongly competitive plants such as forest trees, which block the light and strangle out the competition. I can think of two main differences between ecological succession and market succession. First, although the climax ecological community may be dominated by a smaller number of main species there are still innumerable niches for other species to find their place (way more than nine, at any rate) – like bluebells flowering in the spring woods before the big trees have gained their leaves. I like to think of local veg box schemes as the bluebells of the retail world. Unfortunately, the retail giants can do what no forest tree has ever managed and turn themselves into bluebells too. Hey, you want fresh locally grown food delivered to your door? Well, we can provide that too, and provide it cheaper! It’s not so local, it’s not so ecological, it’s not so socially beneficial, but who’s asking?
Second, the ecology of patch dynamics shows that ecological dominance is always provisional. The forest trees may dominate for now but it’s a dangerous world – a storm blows the trees down, or they’re laid low by a fungal disease, or a lumberjack, or an elephant. In nature, there are endless opportunities for renewal. The climax community of the forest has never managed to do what the climax community of the retail world has done, and create governments or Offices of Unfair Trading to police its interests for it and vigilantly crush any signs of retail renewal. One advantage of the ecological community is that it builds in redundancy and resilience, so that when the forest giants fall there are other organisms ready and waiting to take their place. Will anyone be ready if the retail giants fall?
I apologise if this post sounds angry. I do feel angry that good farmers are going to the wall for no good reason. But I don’t know what to do about it other than rant on my blog. If you’ve got some better ideas please post them below!
If you like my writing, please help me keep the blog going by donating!
Subscribe via RSS
[…] this week’s blog (March click here This entry was posted in Farmers Talking. Bookmark the permalink. ← Employing people is […]
I imagine that many of your readers will be sad about the closure of organic farms and mad about the control exerted by retail giants. Some of the same readers may be visiting one of the retail giants this weekend with a empty boot ready to receive the weekly shop. I am sure there is a good psychological reason for the ease with which these double standards are applied and the perpetrators will claim to be time and cash poor, sucked in by the cogs of the machine. You asked for alternative to ranting on a blog. How about NEVER GO IN A SUPERMARKET! At least then you would have the small luxury of feeling sad and mad but not guilty.
You are right of course Chris and the jit principles that the big retailers use are based on the assumption that the chain will supply 24×7. Keeping them
going is now of national strategic significance, I am old so I have a larder which would keep me going for a couple of weeks at least but some many people assume that everything works as normal all the time belies the fact that the food supply chain is very fragile. The truckers fuel protest a few years ago was potentially so serious that it necessitated a COBRA meeting and direct intervention from the PM. When floods affected Gloucester a few years ago and when substation failed, ironically there was no drinking water for part of the inner city. ASDA became the official distribution point for the supplies of bottled water that were made available. To be fair to them, the retail chain stepped up to the plate and there was enough water for all. The police had to maintain a presence to stop people fighting over water. The floods receded and normality was restored quickly. I cite this as an example of what happens at a local level when the chain stops flowing briefly. The emergency plans were brought into action and the situation was managed by a co-ordination of the emergency services and food suppliers. But what if there had been a similar emergency at the same time in say Bristol?
The ecological damage caused by the dominance of big retail is very wrong but it is also potentially very dangerous. But then perhaps that’s part of the plan, to have the state so scared of the effects of any disruption that it always complies with the retailers’ needs? Solution? I wish there was an easy one but i t must be the state to start limiting the retailers’ power. Bring back Sunday closing or at least impose swingeing taxes on it so that it stops. 24 hour opening an extra service for the public? No, the stores are burning electricity all the time open or shut, the staff that are there at night shelf filling might as well be able to operate tills when needed.
One final observation – the increase in 24 hour opening happened at about the same time as the introduction of student fees…
If agricultural commodities are treated as exactly that — identical commodities — irrespective of the production method or husbandry – then the small organic farmer or high welfare meat producer faces an insurmountable barrier. They must accept the market price for their produce irrespective of the quality of their input, putting high welfare or high input cost producers at a seemingly insuperable disadvantage to their intensive rivals.
Over the last few months I’ve been meeting small growers and high welfare meat farmers and it’s been very encouraging to see solutions to this dilemma. For example, Dingley Dell have built a high welfare, single farm pork brand, by opening up to chefs, caterers and the press and taking every opportunity to bring potential buyers to the farm to see first hand why their meat is superior to the unidentifiable, questionable welfare commodity meat that is so often the alternative. We’ve also seen artisanal cheese makers; rare breed farmers and organic vegetable growers achieving similar results along similar lines. Differentiation seems to be key — communicating why your product is better than the market alternative, and hence why it warrants a premium.
But they are the exception and replicating their success is hard – building a brand is a long, slow, and expensive process. But it can be done. And farmers markets, direct distribution, delivery box companies, foodservice providers, pub chains, regional suppliers, contract caterers, in aggregate present a meaningful alternative to the big supermarkets even for large independent producers. A more fruitful goal for smaller producers might for instance be to attain a listing in Abel & Cole rather than a small shelf space in Tesco.
Supermarkets are here to stay. And rightly so – for as much as those reading this article may take issue with their practices, they have transformed the average Briton’s access to interesting food and ingredients. 15 years ago, living in the UK, you’d have to go to a chemist to get Olive Oil. Today, for instance, my local Tesco sells a broader range of Parma Ham than Italian supermarkets near Parma.
So the answer for us independent producers and retailers is not simply wishing that the supermarkets will go away – which they won’t. Rather we must consider how to capitalise on the immense growth in interest and ambition towards food currently present in the UK. And there are many many ways we can do that. Not least by providing things that the supermarkets can’t or don’t do – traceable, authentic produce, for example, or eclectic recipes and equipment.
Demand exists for interesting alternatives. It’s down to us to create them.
Nick, I agree with some of what you say. Certainly I agree that a good way forward for small producers is to emphasise the distinctiveness of our products – but it would be nice if central and local government could help level the playing field a bit so that all the costs of doing so aren’t borne by the producers and the customers who are far-sighted enough to see that checkout prices conceal the true social costs of the food system.
But explaining and retaining agroecological distinctiveness is difficult in the face of the colonising logic of big business (including the large commercial box schemes), which has the muscle to invade any new model, dilute it and then repackage it as a niche product. This is where I think the organic movement has gone badly wrong.
I don’t agree with you that supermarkets are necessarily here to stay or that they’ve transformed food access for the better. They’re dependent on a tenuous high energy infrastructure and involve such high levels of pollution and waste that I suspect they won’t be sustainable in the long run. And if it’s true that you can get a wider variety of Parma ham in your local Tesco than you can in Parma itself then I’d ask you to reflect on what that’s telling you about the global political economy of food, on who is winning and who is losing globally from the food system, and on what the prospects are for small producers to engage with their communities in creating local food cultures.
You’re no doubt right that small producers have to create interesting alternatives – it’s just a shame that governments and large producers erect such enormous obstacles to achieving it, largely to their own benefit rather than to society at large.