Supermarkets slammed for trying Fair Trade.
Recently the results of a review into price fixing by the supermarkets was released. The anti-supermarket brigade celebrated, now they could point to how the evil supermarkets were raising prices! (whilst ignoring recommendations that the planning process should be relaxed to allow more supermarkets and greater competition…).
Except, what the supermarkets claim they were doing was reacting to consumer demand for British farmers to be given higher prices. So, in the way most anti-supermarket types tend to approve of elsewhere, they added a premium to try and raise prices at the farm gate, in other words, they unilaterally adopted so called fair trade.
Of course, the difference is that they didn’t offer an alternative, but why should they? After all, most Fair Trade types want it to become compulsory anyway, they’re always going on about making ‘Councils Fair Trade’ and similar initiatives.
So what are supermarkets to do? They were wrong to collude, but now farm campaigners (often the same people as the critics) will start saying how evil supermarkets are for charging low prices…
It reminds me of a joke:
In Soviet Russia three men were in prison, for not supporting the revolution. They asked each other why they were in prison:
The first was there because he was late to work so wasn’t pulling his weight to support the revolution.
The second was there because he was early to work - so he was guilty of trying to gain advantage over his comrades and therefore undermine the revolution.
The third was in prison for always being on time to work. The others looked astonished. That was until the explanation was given - being on time meant he must be undermining the revolution by having a western watch.
Supermarkets are in the same position. Charge too much they’re gouging the consumer, charge to little, they’re gouging the producer, charging the ‘right’ amount just isn’t possible…
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December 19th, 2007 at 7:10 pm
I take it you refer to the OFT’s finding that the big four supermarkets and some processors have colluded to keep the price of dairy products artificially high and the subsequent payment by some of them of over £116 million in fines.
As you say, the supermarkets claim they were raising prices to help farmers. Well they would, wouldn’t they? Being caught out running a cartel is potentially a public relations disaster.
The big problem for them is that there is no evidence that the higher prices actually reached the farmers. Never mind; the supermarkets are past masters at spin so, crocodile tears flowing freely, they ‘discovered’ they had only done it to try and help.
As a matter of interest, retailers’ gross margins on milk have soared over the last few years – up by nearly 400% in just over a decade – providing strong prima facie evidence that the supermarket sector is not nearly as competitive as they want the public to believe.
January 2nd, 2008 at 8:59 am
Funny thing, everyone will buy Fair Trade produce, but again, there’s little evidence that this extra cost actually reaches the producers.
I do think what they did was wrong, but I think that part of what they were doing was trying to respond to public demand for a ‘fair deal’ for farmers.
Of course, if we want that we should scrap all subsidies and tariffs. That’s as fair as you can get.