The pricing of food is unfair. The state must intervene. Numerous interest groups and representatives of the left-wing political spectrum share this view and have been pushing for the creation of a price observatory for food for years. On Thursday, the Federal Association of Consumer Organizations (VZBV) followed up with a study by the analysis company Agrarmarkt Informations-Gesellschaft. The report is intended to show how an observatory for the pricing of food from the field to the supermarket shelf could be set up. “The high sales of the food industry give rise to the assumption that cash is being made at the expense of consumers,” said Ramona Pop, board member of the Federal Association of Consumer Organizations. The federal government must shed light on the darkness of food pricing. A price observatory could uncover unfair practices and thus protect consumers from prices that are too high at the counter. However, last summer, in response to a request from the Left Party, the Federal Ministry of Economics led by Robert Habeck (Greens) argued why, from the federal government’s point of view, there was no need for a price observatory. Consumers have many opportunities to find out about food retail competitors’ offers and to tailor their consumption accordingly. The ministry points out legal limits: “There are no transparency obligations in the relationship between companies in the food supply chain.” The negotiated prices are subject to freedom of contract and represent trade secrets. Observatory for food possible, but costly Food inflation will be almost double in 2023 at 12.4 percent as high as general inflation at 5.9 percent, writes the VZBV. Increased raw material and processing costs could not fully explain the increase. According to a survey by the association in 2023, 44 percent of consumers would have restricted their food purchases because of the high prices. Compared to the EU, Germans spend little money on food. In 2022, Germany ranked 24th in the EU in terms of food spending with around 10 percent. According to the VZBV study, it is “in the public interest” how prices and costs are distributed among the individual actors in the value chain. This is the only way to find out whether and where “extraordinary profits arise and whether there is therefore a need for correction”. However, examples from other countries show that the establishment of such a body requires “significant financial and human resources”. The observatory should initially focus on the prices of fresh and less processed staple foods and then be expanded. The results should be presented to the Bundestag annually so that the legislature can derive political measures from them if necessary. The position should be located at the Federal Office for Agriculture and Food. Federal Cartel Office President Andreas Mundt said he was “very skeptical” about the move. With tens of thousands of different products in the food sector, implementing the required price monitoring is “extraordinarily complex and error-prone,” Mundt told the F.A.Z. to consider. Industry and commerce could compare competitors’ prices and silently adjust their prices to one another. “Higher prices could be the result.” The Monopoly Commission’s assessment is better. Tomaso Duso, the designated chairman of the Monopolies Commission, told the F.A.Z. that he sees the VZBV’s initiative as “cautiously positive”. However, a price monitoring body can only have a pro-competitive effect if it is designed correctly: “The information benefits for consumers must outweigh the danger of price coordination in retail due to increased transparency.” Economist considers political efforts to be “schizophrenic”. Use the food chain, warns Otto Schlitzer. He is managing director of the AFC Consulting Group, which specializes in agricultural and food economics, and honorary professor of agricultural economics at the University of Bonn. “If large bakeries disclose their calculations and then compare them with each other, this will particularly benefit the most expensive ones. She finds out where others buy cheaper,” he says. “There is competition and antitrust law that prevents such companies from comparing their costs with each other and thereby divulging trade secrets. This would be eliminated with a monitoring agency. There is no mention of this anywhere in the paper.” Consumer advocates focus primarily on the “excessive profits” of retail. Stretcher raises the question the other way around: “How would it be if you make extraordinary losses, would this part of the entrepreneurial risk also have to be cushioned?” That’s part of the entrepreneurial business, he says. And points to the special features of the German market: “Germany is the toughest food market in the world.” As the country of origin of the discount, retailers earned much less money than in all other countries in the world because they worked with lower margins. Stretcher supports the politicians’ efforts for schizophrenics. On the one hand, they want citizens to buy cheaply, thereby promoting the “stinginess is cool” mentality. On the other hand, they want consumers to buy products where the added value is right for everyone involved. That doesn’t add up. In his opinion, a price control body would hardly help consumers. You could access a wealth of pricing information, such as the price per kilogram. There are also offers and advertising brochures. “In the end, the customer does his weekly shopping where it is cheapest overall, and not just where a pound of tomatoes costs the least,” he says. This is different, for example, when refueling. There the product complexity is much lower and comparability is easier – and the customer usually only buys one product, fuel. In the food sector, things are different: the individual companies are hardly comparable with each other in terms of their product range or raw materials. More on the topic Farmers are repeatedly outraged by the “market power” of the food retail sector. But a checkpoint wouldn’t do anything for them either, said Stretcher. “On the contrary, it would be more damaging if its suppliers could switch to the cheapest raw material.” The share of agricultural raw materials in the total price is falling, also because supply chains are becoming increasingly longer and more complex and other costs are added. But that doesn’t mean that farmers earn less. Producer prices for agricultural products were 3.2 percent higher in June 2024 than in June 2023. “Minimum prices” for agricultural products, such as those being debated in France, would lead to overproduction and market imbalances, Warns Rumpf.
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