The corporations that dominate the global food commodities market and the large supermarket chains in the UK are leading the way in greedflation, that is, raising prices under the guise of inflation to boost profits. The phenomenon is reported by a group of researchers from UNITE, Britain’s largest private sector union.
Shrinkflation and greedflation
Shrinkflation-that is, disguised price increases, achieved by reducing the quantity of product for the same price-is one of the strategies adopted by the agribusiness industry to increase profits when general price increases occur, as we have seen. (1)
Greedflation is a less visible strategy in the eyes of consumers because it is embedded in a context of generalized price increases that is being exploited by some corporations to boost profits regardless of increases in production costs.
UNITE’s analysis
UNITE researchers analyzed the performance of the top 350 companies listed on the London Stock Exchange. And they found that the average profit margin increased by 89 percent in the first half of 2022 compared to the first half of 2019. (2)
The beneficiaries of the maxi profits include British food retail giants Tesco, Sainsbury’s and Asda (a subsidiary of Wal-Mart). They alone made profits of 3.2 bn pounds (3.65 bn euros), nearly double pre-pandemic levels.
For Tesco and Sainsbury, which together hold 43 percent of the food market, the trend is unchanged. For this financial year, Tesco expects to make profits of up to 2.5 billion pounds and Sainsbury’s nearly 700 million pounds.
Same trend for global giants such as Nestlé.
The grain business
The flare-up in grain prices is part of this logic. The supply slowdown caused by the Russian-Ukrainian conflict has provided an opportunity to fatten the coffers of large global traders of these commodities. (3)
Le Corporation that manage 60-70% of the global grain market – ‘ABCD’, meaning Archer-Daniels Midland, Bunge, Cargill and Dreyfus – made $10.4 billion in profits in 2021, +225%.
This confirms, numbers in hand, what was already inferred in the iPES Food (2022) report about their attitude to speculate on food security. (4)
Profits vs. growth
UNITE had already denounced the greedflation phenomenon, highlighting the growth of corporate profits while inflation soared and economic growth slowed to a standstill in the planet’s West.
‘The profit crisis is not just a couple of bad apples, it is systemic throughout our failing economy. Entire industries are choosing to take advantage of a crisis, resulting in skyrocketing prices for goods we all need’, comments Sharon Graham, general secretary of UNITE.
UNITE
‘UNITE is a union that stands up for equality and advances members’ interests on a political and national level. It is also active on a global scale, building ever stronger links with trade unions around the world to confront the challenges of our globalised economy.’
#Égalité
Marta Strinati and Dario Dongo
Notes
(1) Marta Strinati. Consumers against shrinkflation and other disguised price increases. GIFT (Great Italian Food Trade). 22.9.22
(2) Philip Inman. ‘Global greedflation: Big firms ‘driving shopping bills to record highs’. The Guardian. 12.3.23 https://www.theguardian.com/business/2023/mar/12/global-greedflation-big-firms-drive-shopping-bills-to-record-highs
(3) Dario Dongo. Food security, disaster in the making. Regardless of the Ukrainian grain. GIFT (Great Italian Food Trade). 3.8.22
(4) Marta Strinati. Rising prices and food crisis in wartime. Background in iPES FOOD report. GIFT (Great Italian Food Trade). 10.5.22
Professional journalist since January 1995, he has worked for newspapers (Il Messaggero, Paese Sera, La Stampa) and periodicals (NumeroUno, Il Salvagente). She is the author of journalistic surveys on food, she has published the book "Reading labels to know what we eat".
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
