By Jordan Chester

Vice President Kamala Harris, the Democratic nominee for president, announced an economic proposal during a speech in my adopted hometown of Raleigh, North Carolina last month in which she pledged to empower federal agencies to crack down on alleged anti-competitive practices and price-gouging in the food industry. 

There is no question that there has been consolidation in the grocery market space in recent decades. My parents and grandmothers discuss how they utilized independently owned butcher shops, bakeries, and fresh seafood stores during my parents’ formative years. Growing up in suburban New Jersey in the 1990s and 2000s, I used to love accompanying my parents or grandparents when they shopped at one such establishment specializing in produce and more, Corrado’s Family Affair. While each of us has our favorite local, independently-owned specialty food store, non-chain supermarkets have become increasingly difficult to find in recent decades.

In 1977, an article in the Beaver County Times described concern over grocery market consolidation due to the top 17-20 chains accounted for half of all food stores sales across the nation. Today, just four national chains account for roughly half of grocery market sales. 

A 2021 report by Nina Lakhani, Aliya Uteuova, and Alvin Chang for Guardian and Water Watch provides an in-depth analysis of just how concentrated the food industry has become. As the authors noted:

“In fact, a few powerful transnational companies dominate every link of the food supply chain: from seeds and fertilizers to slaughterhouses and supermarkets to cereals and beers.

The size, power and profits of these mega companies have expanded thanks to political lobbying and weak regulation which enabled a wave of unchecked mergers and acquisitions. This matters because the size and influence of these mega-companies enables them to largely dictate what America’s 2 million farmers grow and how much they are paid, as well as what consumers eat and how much our groceries cost.

It also means those who harvest, pack and sell us our food have the least power: at least half of the 10 lowest-paid jobs are in the food industry. Farms and meat processing plants are among the most dangerous and exploitative workplaces in the country.

Overall, only 15 cents of every dollar we spend in the supermarket goes to farmers. The rest goes to processing and marketing our food.

The Guardian and Food and Water Watch investigation into 61 popular grocery items reveals that the top companies control an average of 64% of sales.”

The 1970s marked the end of a three-decade regime of strong anti-trust enforcement. That isn’t to say that there haven’t been high-profile instances of the federal government stepping in to stop alleged cases of anti-competitive behaviors. Famously, AT&T was forced to break up its monopoly in the telecommunications industry in the 1980s. Microsoft was also sued by the Department of Justice for alleged anti-competitive activities in 1998. Yet, until recently, anti-trust enforcement was lax relative to prior eras. 

With the federal government now taking on alleged anti-competitive behaviors by big tech and the proposed merger of grocery giants Kroger and Albertsons, it seems anti-trust enforcement is back in favor. Elected officials across the political spectrum have concluded that competition makes for good policy and good politics. In addition to Vice President Harris’ proposal, Republican Senator Josh Hawley of Missouri has proposed taking on consolidation in the meatpacking industry, Democratic Governor Jared Polis of Colorado recently signed legislation strengthening anti-trust law at the state level for the first time in decades, and progressive Congresswoman Alexandria Ocasio-Cortez called for breaking up Facebook in 2021. 

In a market economy, businesses charge as much as they can without losing customers, and customers pay as little as they can without losing the ability to buy a given service or good. This system can only work if consumers are given a chance to choose between multiple businesses, and businesses have the chance to compete for customers. 

Food is a basic necessity of life. Yet, each consumer makes value judgments about the kind of food they want to buy and how much they’re willing to pay for it. If two individuals are given $100 to spend on food, they’ll likely make different purchasing decisions. Perhaps one person will opt to buy a larger quantity of items, while the other will focus on specialty items that cost more. In society, people have differing priorities before we even consider budgetary constraints. 

Part of the Harris economic plan is to crack down on alleged price-gouging. A majority of states have laws against price-gouging, and these laws are often enforced during times of emergency. At present, there is proposed legislation that would create the first federal price-gouging statute. While price-gauging is a relatively rare phenomenon in the United States, it is extraordinarily damaging when it does occur. 

In addition to the immorality of increasing prices by exorbitant amounts during times of crisis, there is an economic reason why this should be avoided. It is expected that supply chains will be disrupted during an emergency, and therefore firms along the supply chain have to increase prices to maintain their margins. Eventually, these price increases are passed along to the consumer. 

For example, if it costs me $1 to acquire a chocolate bar that I sell to customers at my store for $2.50, and my cost increases by $0.50, it is perfectly acceptable for me to raise the price to $3.00 so that I can pay my vendors and employees. But if I were to charge $10 instead, I’d be gouging them. During normal times, a customer would simply find a comparable or substitute product for less. But what if during a crisis, I’m the only store in town that sells chocolate bars? Or, what if the chocolate bar I sell is the only food available within a 50-mile radius? In this scenario, people are likely to pay the $10, which reduces their ability to spend money in the economy, depriving other businesses of profit. 

Some have argued that cracking down on price-gouging amounts to price controls. This is a misconception. A price control consists of the government mandating that private actors sell a given product or service at a set price, or regulate price changes based on a numerical amount. Cracking down on price-gouging simply consists of stopping excessive increases in price in captive markets, or markets where people’s choices are extraordinarily limited. 

Despite consolidation and price-gouging adversely impacting consumers, particularly those who can least afford higher prices, there is reason to be optimistic that the era of such anti-competitive phenomenon could be behind us.

Stores such as Trader Joe’s and Whole Foods have found extraordinary success in attracting loyal customers, and their parent companies haven’t engaged in extensive consolidation like other national grocery chains. Personally, Trader Joe’s is my favorite grocery store – I’m there once a week and many of their extraordinarily upbeat, friendly, helpful and intelligent staff members know me by name or face. I learned a great deal about their brand and the food industry in general by reading Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys by Joe Coulombe, the store’s late founder. I highly recommend reading this book. 

Additionally, an increasing number of consumers have displayed a disdain for established food brands available in stores – with challengers to incumbent brands finding more and more success. A growing number of shoppers are opting to purchase cage-free eggs, organic apples, soy milk, meat substitutes, and other products that were rare or not available on shelves a generation ago. Additionally, after decades of increasing food waste, Americans surveyed have shown a willingness to pay more at the store to increase sustainability. 

Even large chains, including those that have grown through consolidation, are becoming increasingly sensitive to what their customers want. Sophisticated market research programs have revealed customers preferences, and private label products have increased competition with certain products. Walmart just announced that they will be focused on lowering prices, and Albertsons is partnering with Uber to deliver food to local food banks to help those struggling with food insecurity.

Food inequality, climate change, anti-competitive activities, and food industry consolidation pose enormous challenges to our ability to buy nutritious foods at prices we can afford. While these challenges are likely to remain prevalent throughout society, what should give us hope is that more and more people are waking up to the reality that addressing them is imperative if we want to build a more just, equal, sustainable, and prosperous society for all.