Why Supermarkets Have More Power Than Governments Over Food Prices
May 5, 2025 · Frisian News
A handful of supermarket chains control what consumers pay for food in most Western countries, often pricing goods higher than their suppliers would allow. Governments lack the tools or will to stop this markup power.
Dutch consumer advocates have documented that supermarket chains control a large share of food sales in the Netherlands. Customers paid significantly more for identical milk, bread, and eggs in these stores than at smaller rivals. The suppliers, farmers and food makers, received the same wholesale price regardless of which store sold the goods. The chains pocketed the difference.
Government economists call this normal market competition. They point to official inflation numbers, which show food prices have stabilized. They ignore that these numbers hide what customers actually pay at checkout. A family buying groceries at Albert Heijn pays more than the same family would spend at a discount chain, yet both transactions count as one purchase in the statistics. The government data smooths over this reality.
When ministers do act, they act slowly. Where governments have tried temporary price measures on basic goods, the approach has sometimes worked. Retailers lowered prices when they faced the prospect of worse regulation. But such measures have not lasted. No lasting change stuck. Politicians fear angering the big chains, which employ thousands and pay property taxes. Small shops pay less tax and employ fewer people, so politicians ignore their complaints.
The real power lies in supply chains. A supermarket chain tells a dairy farmer: "Give us milk at this price, or we stop buying from you." The farmer has few other outlets and cannot refuse. The chain then sells that same milk at a substantial markup. A farmer cannot sell directly to most consumers because stores monopolize the shelf space. The government built these rules decades ago and refuses to change them.
What would fix this? Forcing supermarkets to publish their supplier costs and markups would expose the gap. Allowing more independent shops and farmers' markets would create actual competition. These steps cost government nothing. Chains profit because the system works in their favor, and the system serves those with political pull. Until voters in small towns and villages demand change from their local representatives, supermarkets will keep taking their cut.
Published May 5, 2025 · Frisian News