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The Power of the Supermarkets

"There are two hundred thousand farmers, dealing with, basically speaking, three supermarkets, two grain merchants, four fertiliser companies. Not a chance....they've got power, real power."

Charles Peers, Oxfordshire farmer

Over the past couple of years, the UK food retail sector has seen unprecedented consolidation with Morrison’s takeover of Safeway and the takeover of a range of convenience store chains by the four major retailers. With Wal-Mart overtaking the struggling Sainsbury’s as the UK’s number two retailer (Tesco is by far the largest with a runaway 30% market share) a fierce competition between retailers is raging. Whilst this may keep prices down for consumers, the major effect of this competition is increased pressure being put on suppliers.

It is important to set the UK picture within the global context of a consolidating global food system. Mergers and acquisitions among American and European transnational firms has created major corporate conglomerates whose market share affects international food prices, and whose political influence shapes government and WTO positions on key food policy issues.

And it is governments and global trade agreements that have created this system. Over the last 20-30 years, the liberalising agenda of the most industrialised countries has essentially created a hyper-competitive market where millions of producers and farmers are forced into competition with each other to sell their produce to an ever concentrating number of food corporations.

Because of this near monopoly (or more technically, an oligopsony) of food corporations over suppliers, the prices paid to producers often fall below their costs of production. Its no wonder, therefore, that we hear stories of the exploitation of labour, animals and the environment from around the world. The squeezing of suppliers, especially small farmers who are often the weakest link in the food production chain, has even wider impacts on society. For example in the UK, over 100,000 farmers have left the land over the last ten years transforming the rural economy and land use towards industrial estates, golf courses and suburban sprawl.

In the UK, the big four supermarket chains control 80% of our food market. They deal with a handful of major food processors. This has huge implications not only for producers but also for other retailers struggling to compete – turning our high streets into ghost towns and clone towns.

Corporate Watch is committed to the transformation of the current damaging and highly exploitative food system, and to the creation of a pattern of food production based on the needs of local communities rather than exploitation and greed.

For more information about our analysis, see Corporate Watch's briefing 'A Rough Guide to the UK Farming Crisis' (2004) and 'What's Wrong with Supermarkets?'(Updated 2004)