Buying Power

This month I will take a look at the buying power of consumers at both the local and international level.  We should never underestimate that power and use it to ensure you consume ethically produced and healthy products.  Consumers falling prey to market manipulation will ultimately be worse off in terms of choice and price.

At the local level I will look at market control.  It’s not every day I find myself agreeing with the Member for Kennedy, Bob Katter, but when it comes to the adverse impacts from the buying power of Australia’s two big grocery/liquor/fuel chains, Bob’s right on the money.  Bob says “…two buyers (Woolworths and Coles) controlling 85 per cent of Australia’s food market, there would not be an economic book in world history that would not describe that as an oligopoly – anything but a free market”.  The Queensland syntax is a little difficult for us in the west, but I’m sure you get the message.  The big two are successfully manipulating the Australian grocery market with their buying muscle, at the moment focused on milk.  Who wins when milk is sold cheaper than water at $1 a litre?  Not the producers because this market manipulation is based solely on driving the farm gate price down and if some independent producers like Banister Downs Farm go broke in the process Coles and Woolie’s  won’t be shedding a tear.  Not the consumers either, because the short term low price of milk is well covered by higher profits on other commodities in our shopping trolleys.  A second blow to the consumer is the inevitable reduction in choice, my local supermarket already has less choice in the milk fridge to make space for their home branded $1 cartons.  I assure you throughout this price war I am buying my milk from independent producers as they are essential to a vibrant value market in the future, if they do fall it is us the consumers who will ultimately suffer the most.  The other important issue an oligopoly seems to create is excess food miles. Just last week I heard (ABC Late Night Live) of a Tasmanian cheese farmer who sold their product to a supermarket chain, if they went to the local shop to buy that cheese, it had been shipped to Melbourne for packaging and back to Tasmania to sell, a distance of over 900 km.  Or consider the 2006 Nullarbor floods situation, as the trucks waited for the floods to clear and the road reopen their produce spoiled, on the one side was a truck full of WA tomatoes going east for packaging and on the other was a truck load of tomatoes coming west to sell!  This is lunacy, in the name of economies of scale.

Internationally the global markets are subject to similar manipulation for profit, especially where products and labour from emerging nations is involved.  However there is a story of hope and inspiration, that is Fair Trade.  We are in the middle of Fair Trade Fortnight“, a time to celebrate the great successes of the Fair Trade movement and brand.  We can be confident that products bearing the Fair Trade logo is helping the people in the villages and towns at the point of production, because the chain of custody is very strong.  The Fair Trade logo can be found on tea, coffee, chocolate, cotton, sugar, bananas and sporting good, all products that have seen the poorest people manipulated for profits in appalling ways.  Workers on some plantations are treated as slaves, artisans have been ripped off for years by international marketers and the sporting goods sweatshops are notorious.  So how does fair trade work?  It works in two ways, firstly it ensures a larger slice of profits returns to farmers and artisans, affording them self sufficiency, security and dignity.  Secondly, the Fair Trade premium is returned to the villages to build infrastructure such as health clinics, schools and also for investment in their farms.  Over time villages can be changed from being labour camps to vibrant communities that are self sufficient with real futures.  Returning dignity and human rights to remote villages in places such as PNG, Sri Lanka, Ghana, India, Costa Rica, Ecuador, Bangladesh and Pakistan is a major commitment and in the 6 years since Fair Trade has been available in Australia success has been truly remarkable.  But there is still a long road ahead and it needs our support.

As consumers we do have power, the power to make social, ethical and commercial decisions when buying.  For example, we can choose not to get sucked into cheap milk which will ultimately destroy small producers who offer quality and variety; we can shun fresh produce which has travelled excessive food miles and support Fair Trade and be happier and healthier for just a few cents more.

Published in Fremantle Herald 21-5-2011

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