• Overview: Supermarkets sweep up
• The Cheap Food 'Mantra' - Stack it high! Sell it low!
• Encouraging industrial agriculture and destroying small farms world-wide.
• A spoonful of organo-phosphates - Dangerous chemical usage in food & farming
• Bye-bye High Street - The destruction of communities and jobs
• Apples from Africa and pears from Peru - Food miles and climate change
• Oiling the trolley wheels - Undue influence on government
• Redefining 'safe' - The manipulation of health and safety requirements
• The plastic smile - Shop and farm workers rights
• 'Rip-Off Britain' - The Competition Commission enquiry
• 'Mummy, mummy, can we buy the Barbie spaghetti shapes?' - promoting unhealthy processed food.
• Choice? Convenience? Value?
• And for dessert…What can you do about it?
• Credits
• References

Oiling the trolley wheels - Undue influence on government

The food industry is not short of friends in high places to make sure that its voice is heard more clearly than those of the people it has put out of business.

• Sir Terry Leahy, CEO of Tesco, sits on four government task forces, and Lord Sainsbury, although officially no longer part of Sainsbury Plc, is now Minister for Science and Innovation and a major donor to the Labour Party.

• Corporate interests are well represented on the Policy Commission for Food and Farming set up by the Government to decide the future of farming in Britain. These include Iain Ferguson of Tate & Lyle Plc (formerly of Unilever Plc) and Sir Peter Davies of Sainsbury's.

• Archie Norman, former chief executive of Asda, is currently Conservative MP for Tunbridge Wells. He was a key advisor to William Hague and a member of the shadow cabinet, where he was dubbed the 'Green-belt destroyer'.

• The outspoken Lord Haskins is probably the most influential food industrialist. Former chairman of supermarket own-brand suppliers, Northern Foods and Express Dairies, the UK's largest processed food and liquid milk processors, he also has the ear of Tony Blair on farming matters. He sits on various government task-forces and is rural recovery co-ordinator for areas affected by Foot and Mouth disease.
  

• Tesco and Asda both sponsored fringe meetings at the Labour Party Conference in 2003.

Redefining 'safe' - The manipulation of health and safety requirements

One way in which small food producers have been systematically put out of business is through excessive hygiene regulation only satisfied through costly machinery or processes. See 'The Ecologist 'How Bogus Hygiene Regulation are killing Real Food' in 'Reports and Articles' section.

These regulations were initially drawn up in 1995 by the WTO and were designed to ensure that food production conforms to the Hazard Analysis and Critical Control Limit (HACCP), a standard originally designed by Pillsbury, the multinational food company that markets Haagen Daz and Burger King, at the request of NASA who wanted to ensure the purity of its astronauts' food. It is also the standard used by Codex Alimentarius, the corporate-dominated UN body that regulates food standards.

Thirty years ago, there were slaughterhouses in most small country towns and even some villages. Since joining the EU in 1973, however, more than 70% of licensed red meat abattoirs have been closed due to the overzealous British interpretation of EU regulations. The result, of course, has been higher costs to the farmer and more stress on animals being transported to the few remaining slaughterhouses.

Health and safety regulations have called cheeses made in the farmhouse kitchen and sold directly to the consumer a 'health risk', and two week old processed yoghurt in a supermarket chiller cabinet, 'safe'. In Britain, less than 1% of food poisonings are caused by dairy products, yet some of the most stringent regulations relate to it. The EU suggests keeping cheeses at temperatures that will not endanger human health. Whilst Scotland keeps to that wording, in England this is interpreted as being kept below 8 degrees C. This requires installing costly refrigerators. Such laws have destroyed small artisan cheese makers.

Evidence tells us that the recent increase in food poisonings and animal diseases are the consequence of the industrial farming and processing system, not the practices of small farmers.

In particular, one could note the health risks of contracting human variant CJD from Mechanically Recovered Meat (MRM), the meat slurry made from spraying meat off the bone with a high pressure hose, that goes into cheap burgers.

Other (unlabelled) by-products of the beef industry include vitamin pills encased in gelatine, and bovine serum derived from British cows and used in the polio vaccine at the height of the BSE crisis, as well as in other common vaccines until 1993.

The plastic smile - Shop and farm workers' rights

'The reality is cheap food tends to mean cheap labour and we need to start thinking a lot more about this as we encourage supermarkets to vie with each other over price wars.'

Prof. Tim Lang, Thames Valley University 61

A Panorama documentary screened in June 2000 exposed just how vulnerable migrant workers are to exploitation by 'gangmasters'.62 Gangmasters, who act as an informal employment agency, hire casual labour to work on industrial farms, in packhouses and canning factories to produce much of the food that ends up on supermarket shelves. The film illustrates how migrant workers from Eastern Europe are housed in damp accommodation, moved around so they cannot make friends or learn English and are unable to return home as they are indebted to the gangmasters who pay them next to nothing. As many hvae come to the UK illegally and speak poor English, they have no means of redress and end up trapped in a cycle of work and low pay at the hands of the gangmasters.

MP's from the Environment, food and Rural Affairs Select Committee (2003) were daming of the supermarkets, stating,

"We are convinced that the dominant position of supermarkets in relation to their suppliers is a significant contributory factor in creaing an environment where illegal activities by gangmasters can take root. Intense price competition and short timescales between orders put great pressure on suppliers who have little opprtunity or incentive to check the legality of the labour which helps them meet these orders."

Trade Union researcher, Don Pollard, informally estimates that there are 100,000 gangworkers working on farms and in pack houses in the UK. Of these, around 30,000 could be undocumented migrants.

Despite years of campaigning by trade unions, gangmasters are still unregulated and are free to abuse British and immigrant farm workers at will. The same exploitation of undocumented migrants has been going on in the USA and across Europe for years.

Shop-workers' rights

The major supermarkets employ around three-quarters of a million people in the UK. Over two thirds of employees in food retailing are part-time, the majority are women and many are students and temporary or agency workers.

Most retail checkout operators (84% women)  fall in the bottom ten percent of non-manual occupations with average earnings of £184.70 a week. A significant percentage do not earn enough to pay NI contributions and are thus excluded from pensions and other contribution-based benefits.64

Most retail companies use a starter rate for new employees whilst they undergo 'training' so with the high turn-over rate amongst students and the minimum wage not applying for under 18 year olds, they can get away with extremely low pay.

Although flexible hours suit employees such as mothers and students, the system is not without its problems. Staff can find their hours altered arbitrarily by managers to cover busy periods or staff shortages. Its no wonder that staff turnover on the shop floor at the major grocery chains averages 26% a year. Retailers complain that because of the nature of the job they are often forced to employ staff who lack the skills they require. 'Dedication, enthusiasm and motivation were among the attributes seen as lacking in shopfloor staff'.65

When the Sunday Trading Act became law in 1994 there was protection for those who didn't want to work Sundays. That right is being removed for all new starters as many have Sunday only contracts or contracts that stipulate Sunday as one of the possible working days. Formerly, in order to entice workers to work weekends overtime premium payments were made usually at the rate of up to time and one half for Saturday and double time for Sundays. At the time of the Act, USDAW met with the major retailers in the Shopping Hours Reform Council where a 'gentleman's agreement' was made to protect weekend premiums.66 According to USDAW, weekend premia have now largely disappeared.

Many supermarkets have been looking at ways to cut back on the need for the check-out till. Asda has been working on technology to scan the whole trolley at once using radio tagging. Tesco is very keen on similar Radio Frequency Identification (RFID) tags which it has trialed in some of its stores, and provoked local protests. Campaigners claim that the tags may not be de-activated when shoppers leave the store with purchased items, which will mean that a shopper can then be tracked by the store, or whoever, by the tagged products. Safeway has also pioneered customers using hand held scanners.67 These technological changes would ultimately reduce the number of jobs for shop-workers.

Many feared the potential impact on labour rights of Wal-Mart's entry into the UK market as cut backs in this area is one way in which Wal-Mart has achieved its low prices. In the USA, Wal-Mart's wages are well below the American average for the industry with many of their employees able to claim the equivalent of UK income support.

Wal-Mart are famously anti-union and practice the hiring of part-time, temporary and casual labour to try to get around employment legislation, usually dismissing workers before they are entitled to claim redundancy and unfair dismissal.68

Wal-Mart is also facing the largest employment discrimination class action in American history, after being charged with discriminating against female employees in pay, promotion and training, and with retaliating against women workers who complained about the alleged abuse. This involves all 700,000 women who worked for the company in 1996-2001.

Wal-Mart is also renowned for putting pressure on its suppliers to reduce costs which invariably leads to cuts in jobs and wages, and worsening working conditions in the USA. This also encourages suppliers to source from free-trade zones with no labour protection and where underage labour can be exploited. Many claims have been made against Wal-Mart for exploiting underage labour in Bangladesh and Guatemala. A recent Oxfam report showed that the other UK supermarkets are equally guilty.69

GMB representatives have found that since the merger, Asda has undermined their position by not inviting them to the induction of new recruits, and not making membership information widely available to employees.70

'Rip-off Britain' - The Competition Commission enquiry

In 1998, government ministers turned on the supermarkets, echoing a public perception that consumers in the UK were being 'ripped-off'. This was partly due to the perception that European supermarkets are cheaper and partly because of the evident disparity between farm gate and retail price. Why, it was asked, were potato farmers losing between £17 and £27 on every ton of potatoes they take out of the ground?71 Why is there a mark up of as much as 198% on apples and 439% on eggs in some superstores?72

In April 1999, the government launched a £20 million enquiry through the Competition Commission of the Department of Trade and Industry (DTI).

The 16-month enquiry received thousands of submissions highlighting the overwhelming power of big retailers. These amount to three volumes, over 1100 pages.

• Lutterworth and District Dairy wrote that it was seeing the most alarming changes in its 100-year history due to the fierce activities of the multiples in undercutting doorstep milkmen.
• The Federation of Bakers claimed that by selling loaves for as little as 17p, the chains were making massive losses, but doing small bakers out of business.
• The Commission received complaints from both sides - some claiming that the supermarkets charged too much, ripping off consumers, and others that they charged too little, driving smaller rivals into the ground.

Despite listing 52 practices that illustrate a complex monopoly situation, and concluding that 27 of these practices work against the public interest, the report amazingly gave the supermarkets a clean bill of health. It concluded that they do not hold a monopoly in grocery retailing and that they do not charge more than their European counterparts, taking into account exchange rate differences and the high value of the pound.

Critics claim that the Commission was asking the wrong questions. Whilst nationally none of the supermarkets have a monopoly (more than 25% of the market share), they have been found to have extensive local monopolies. (see section 4). This means that there isn't a genuine local market to keep the prices down.  Many also felt that the Competition Commission should also have investigated the social, environmental and health effects of supermarkets. These are also surely in the consumer's interest as well as price - which is the only monopoly effect that the Commission investigated.

Others argue that whilst no one supermarket has a monopoly over grocery retailing in the UK, the supermarkets together have an 'oligopoly', i.e. several superarmetks control the whole market and this situation constitutes a market failure and should be investigated. See section on ' Co-operation and Cartels'.

The report did admit to four situations where competition is broadly distorted and operates against the public interest:73

1) The relationship between big supermarkets and their suppliers.
The Commission called for an enforceable code of practice to ban practices such as demanding payments from suppliers for buyer's visits, charging them for the cost of refurbishing stores and changing agreed prices retrospectively or without notice. (See section on 'Encouraging Industrial Agriculture')

To the fury of the NFU and other supplier organisations, the DTI let the supermarkets draw up their own voluntary code of practice and dispute settling mechanisms. The only supermarkets included were those with over 8% market share, in effect 'the Big Four'.

This came up for review in March 2003, by which time only one supplier, Express Dairies, had complained to the OFT, after Safeway dropped from three to two milk suppliers. Express were previously supplying 15% of Safeway's milk. However, it was decided that Express was not eligible as the contract with Safeway was signed before the Code came into practice.

After taking a year to review the failings of the code, something that was surely very self-evident, the OFT decided that all it could do was to send auditors into the big four supermarkets to look for examples of malpractice. There is now a concerted call from suppliers large and small as well as development, environmental and farming groups for a binding code of conduct, independent dispute mechanisms and a retail regulator.74 Meanwhile, farmers and other suppliers continue to suffer exploitation at the hands of the supermarkets.

2) Selling below cost price i.e. the use of loss leaders

3) Changing prices according to local competition i.e. price flexing. The Report found that in the South East, East Anglia and the West Midlands, shoppers pay more for their shopping. Tesco's prices varied as much as nine per cent regionally.   

The Commission, however, took the unprecedented step of making the recommendation to do nothing on the grounds that putting up the price would harm the disadvantaged. This was despite the finding that by undercutting small grocers and putting them out of business, supermarkets also restrict the choice of vulnerable consumers, such as the disabled, people on low incomes and the elderly with no cars.

4) There is limited choice of supermarkets in some areas. The Report found that in some places the giants have massive market shares: over fifty per cent for Tesco in Uxbridge, Milton Keynes, Cambridge, Twickenham and Salisbury. The same goes for Sainsbury in south-west London and Safeway in Dumfries. The Commission recommended that new planning legislation was be required generate competition and to give consumers more choice. It proposed that in areas where supermarkets were already strong, they should be required to obtain approval for new stores over 1000sq metres (around 10,800sq ft) from the Office of Fair Trading. The Commission was also concerned that certain chains are stifling competition by snapping up land on which rivals could build. Of 408 sites held in 'land banks', 190 are owned by Tesco.75

Are we being 'ripped-off'?

As a recent article in the Observer claims, 'supermarket pricing is a spectacular black art'.76 From ensuring that the store layout leads you past expensive and 'fresh' items first, to making price comparisons difficult, the supermarkets know how to fleece the pockets of the unsuspecting shopper. Next time you are in a supermarket ponder this, what's at eye level? The cheapest or most expensive item?

In October 2001, it emerged that Tesco had, in fact, raised its prices in the weeks before it began its new one hundred million pound price cutting campaign, so as to maintain its profits.77 Only half of these price cuts were published on its web-site where it was shown that more than 10 per cent had only fallen by a penny and a further 5 per cent by 2p. Safeway lodged a successful complaint with the Advertising Standards Authority (ASA) contesting Tesco's claim to be 14 per cent cheaper. It believes that Tesco's claim to be have cut prices by a billion pounds over five years has been offset by price rises on other ranges. The ASA also deemed the 'Pocket the difference at ASDA, always' ad campaign misleading.

In Asda's case, it had only been a couple of months since they it was fined for misleading customers over price cuts at a superstore in Hellesdon, Norwich. This complaint was brought by Tesco. Who else, after all, but the supermarkets would have the resources to monitor these price changes?78

In January 2002, Tesco was again accused by the Observer of a 'price cutting' scam. The Observer claimed that Tesco's website showed price increases on 1,750 popular items since Christmas. Tesco claimed these were special offers ending.79

Co-operation and Cartels

Despite the posturing, the supermarkets have often worked together to prevent new entrants to the market. In 1993, Sainsbury, Tesco and Safeway jointly hired a PR agency and planning consultancy to prevent US discounter, Costco, from operating in the UK.80

In 1996, the major supermarkets and twelve major food manufacturers drew up a pact to co-operate on promotions, launches and distribution.81

In March 2000, Tesco, M&S and other international food retailers announced they were setting up a 'Worldwide Retail Exchange' - essentially a global buying club to purchase products more cheaply. This came just weeks after Sainsbury announced the formation of 'GlobalNetXchange' a joint venture with US corporation, Sears and French food giant, Carrefour.82

In January 2002, a former senior director of Sainsbury, accused Tesco and Sainsbury of having an "understanding" not to undercut each other's prices on the most popular products. The anonymous whistleblower told the Sunday Times "If you look at the prices charged for these items, they are identical, which is no coincidence. Senior staff constantly move between the supermarkets, which helps perpetuate the understanding."83

These allegations cast serious doubt on the clean bill of health given to the supermarkets on the cartel issue in the Competition Commission report (see section on 'Rip-off' Britain).

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