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Legislators Discuss Targetting Supermarkets That Jack Up Food Prices

By | [email protected] | July 28, 2016 5:50pm

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In light of the upcoming increases in cooking oil prices — a result of the Macri administration’s decision to remove oil subsidies — supermarkets have been accused once again of taking advantage of inflation to jack up prices to make a profit.

In an interview with Radio 10, the owner of wholesale supermarket Maxiconsumo, Víctor Fera, said big supermarket chains are economically abusing people by setting up prices that are “above the inflation rate”: “There are 10 large companies that want to take over the country and that are destroying the smaller ones,” he added.

This is nothing new. Ever since food prices started soaring as a result of the Macri administration’s decision to lift currency controls collectively known as the “cepo,” government officials, food producers and consumers have been constantly pointing their fingers at supermarkets for doing exactly this.

In fact, back in February, the Macri administration implemented a new system to control price increases to ensure that prices were not indiscriminately jacked up. How does it work? Basically, there’s an index on which all supermarkets in the country update their prices on a daily basis to allow consumers to compare prices and buy accordingly.

But that hasn’t stopped prices from remaining high. In fact, consumers boycotted supermarkets on two different occasions in April and May to protest inflated prices under the hashtag #SuperVacíos (#EmptySupermarkets).

According to a report presented by the Argentine Chamber of Small- and Medium-Sized Businesses (CAME) on July 17, by the time farm products make it to a store’s aisle, their prices are five times more than what they started out on the farm. Although the report shows a slight improvement compared to May’s numbers, CAME pointed out that producers only got 25.2 percent of the final price paid by consumers.

CAME

CAME’s study. Photo via Ámbito

That’s why, in an attempt to look after producers and consumers, María del Huerto Ratto, a Renewal Front (FR) deputy in Buenos Aires Province, presented a bill to legally control supermarkets. The initiative would create a so-called “food price formation observatory” that would be tasked with making sure there’s no shady business during the process of transporting food from farms to supermarkets. This would only apply to Buenos Aires Province, though.

“We want to know how much every link in the price formation chain contributes and for that it is vital to sit down with producers, people in charge of logistics, industries, consumers and supermarkets, as the latter usually takes advantage,” Ratto said when introducing the bill.

“The government has to fix this situation because supermarkets jack up fruit, milk, meat and vegetable prices. For example, they buy milk from the producer at AR $4 the liter, but they charge it five times that number. What they pay for apples doesn’t cover production prices for farmers. However, most families can’t afford to buy them,” she added.

In contrast, supermarket representatives have always denied any wrongdoing, and warned that bringing down prices would be the equivalent of inflating a bubble that would later burst, greatly increasing prices. When discussing oil increases in an interview with Radio 10, Fernando Aguirre, the spokesperson for the Argentine supermarkets chamber, said that, “Freezing prices, in this case oil, altered what needs to happen normally in the market. They [the Macri administration] have to let go.”

Natural market process or not, food prices have increased drastically during the last months and people are taking the hit. The National Statistics and Census Bureau (INDEC) published a report on July 19  that showed that supermarkets in May billed on average 24.7 more than during the same time period last year. However, this increase actually indicates a significant drop in consumerism if we take into account the fact that inflation has risen about 20 percent compared to that time last year.