Food suppliers blame inflation for price increases. Lawmakers say they are padding the bill.


Government levers are poised to step up against excessive food price inflation, which the Biden-Harris administration and its congressional allies say is in part the result of overconcentration and a lack of competition in the food and food supply chain.

With inflation at its highest level in nearly 40 years, American families are faced with higher prices at the checkout and are content with leaner meals. Once considered essential, grocery store workers now say they feel expendable and have only been rewarded with marginal wage increases that they say leave them unable to meet their own growing food costs.

Meanwhile, growers and grocers are exploiting the pandemic to raise prices more than necessary to pass the increased costs on to consumers, Senator Elizabeth Warren, D-Mass. Lambasted in a new letter sent to chiefs of Kroger, Albertson’s and Publix and shared exclusively with NBC News.

“Your business, and the other major grocers who reaped the benefits of a turbulent 2020, appear to pass the costs on to consumers to preserve your pandemic earnings, and even take advantage of inflation to add heavier burdens,” he said. writes Warren.

In 2020, supermarkets saw their sales increase 11% from the previous year, to an average of $ 63 billion per month, according to the Census Bureau Monthly Retail Report. This is a trend that continued in 2021.

But instead of reinvesting the record profits to raise wages and improve working conditions, these companies have launched share buybacks and increased executive compensation, the letter notes.

In June 2021, Kroger announced a $ 1 billion share buyback program, at the end of 2020 Albertsons a $ 300 million share buyback program, and Publix increased its quarterly dividends in the first nine months of 2021 of more than $ 70 million.

“Your companies had a choice: they could have kept prices lower for consumers and properly protected and compensated their workers, or made massive payments to senior executives and investors,” Warren wrote to Rodney McMullen, chief executive officer. by Kroger. “It’s disappointing that you have chosen not to put your customers and your workers first. “

Stores did not immediately respond to an NBC News request for comment.

Supply chain grunts, labor shortages, spurts and shifts in consumer demand have strained production and distribution channels over the past 18 months, driving up costs for producers and retailers. But critics accuse it of having also created an opportunity.

“The real culprits of the cash price hikes are private extractive players who have created advanced supply chains ill-equipped to handle fluctuating demand,” said Rakeen Mabud, chief policy officer and economist in leader at Groundwork Collaborative, a Washington, DC-based progressive think tank. The group advocated for policymakers to use their tools to intervene, such as enforcement action, taxation, competitive investments, increased labor rights and the relaxation of antitrust laws to bring down prices.

The argument is that if there was stronger competition then any retailer who tried to raise prices above costs would lose business to cheaper competitors.

The White House says it is using the tools at its disposal to “crack down on some of the bad behavior,” citing “a lot of evidence” that meat processors, who sit between farmers and grocery retailers, “are enforcing increases prices that are well above the costs they incur “due to inflation, according to a senior White House official.

“Antitrust law provides remedies to prevent extreme concentration or abuse of market power,” said Bharat Ramamurti, deputy director of the National Economic Council. One thing the administration can and has done is “appoint people who intend to enforce antitrust laws in a robust manner,” he said, noting that pricing investigations had been carried out in similar cases in the past.

This week, President Joe Biden called for hearings to investigate the meat industry, which has seen extreme price hikes during the pandemic.

“I urge Congress to hold hearings on the concentration of power in the few hands controlling the food processing side of the equation,” he said. said on Tuesday in an interview with local television station WHIO-TV of Dayton, Ohio.

The administration has already taken several steps to start tackling concentration in the meat packaging industry, such as stricter enforcement of the Packers and Stockyards Act, which establishes competition and fair trading practices in livestock, meat and poultry markets; price reports from beef processors; and providing subsidies to small processors to increase their capacity.

Leading beef processor Cargill has denied that the White House claims there is not enough competition in the market.

“It’s a supply and demand driven market, and so to suggest that there is manipulation or an advantage, I just don’t agree with that,” CEO Dave MacLennan says Bloomberg this week.

End of november, the Federal Trade Commission has announced a major investigation into the grocery industry, asking nine key players to provide “in-depth information to help the FTC shed light on the causes of ongoing supply chain disruptions and how these disruptions cause serious and ongoing hardship for consumers and harm competition in the US economy ”. The agency sent the orders to Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble, Tyson Foods and Kraft Heinz.

The alleged anti-competitive behavior of large supermarkets has also increased the cost of gasoline and lengthened commute times for especially rural and low-income customers who have to search further for essential and sometimes hard-to-find items like bags. paper products and meat. that “powerful buyers” have moved away from small shops, local and regional grocery stores described in comments submitted to the FTC end of September.

Members of the National Grocers Association, an industry trade group, say the big chains have indeed accumulated hard-to-find items, demanding that manufacturers and wholesalers supply them first. Small stores must accept smaller allowances, if any.

“While many independent grocers have struggled throughout the pandemic to stock essentials, dominant retailers have received preferential treatment,” the trade association said.

“Suppliers often apply arbitrary minimums on certain products to make them effectively exclusive to powerful buyers. Others brazenly deny independents access to entire product lines without justification while the same products fill the shelves of their competitors with the chain, “he continued.

Jimmy Wright, president of Wright’s Market, an independent grocer in Opelika, Ala., Told NBC News that although his business doubled overnight when the pandemic hit, he struggled to keep articles on them. shelves.

It always ends up at the back of the pack when items are scarce, he said. As the big chains get their orders, Wright says he only gets a small allowance. And when the shortages are such that the big chains only get smaller allocations, then their orders are not fulfilled.

When Mason jars became a hot item with consumers who dabbled in canning during the pandemic, his supplier sent him a letter telling him that due to “unprecedented levels of demand,” they were using it. would cut for five months “to allow our production team to build up inventory.”

But Wright said as he walked into a department store across town, he saw the jars were displayed in a prominent, hooded display.

“Power buyers have so much influence over manufacturers, and small retailers like me can’t get ahead,” Wright said.

“There’s nothing more disappointing for me than in the midst of this crisis, when you’re always the first to take care of the community, to look people in the face and say that I can’t help you because that I did not produce in store.

CORRECTION (December 17, 10:25 p.m. ET): An earlier version of this article was in error when Albertsons announced a share buyback program. The announcement came in late 2020, not 2002.


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