Boomerang for “Perestroika”: a shortage of food in stores has begun in the USA

MOSCOW, 03 Dec 2021, RUSSTRAT Institute.

In the near future, a global food shortage may hit the residents of the United States. This conclusion follows from a study carried out by the American non-governmental organisation Food & Water Watch.

Despite the record profits of US grocery chains in the conditions of the coronavirus, caused by the fact that people began to eat more at home during lockdown, Americans faced a wild increase in food prices and a widespread shortage of basic foods, according to the November report of the organisation.

It turned out that today every sixth American (53.6 million people, or 17.4% of the population) lives in conditions of reduced access to food. And the reasons do not lie in one pandemic. The root of the problem lies in the monopolistic nature of the American food market, divided between several cartels. COVID-19 has only helped to get rid of the stereotype that the current US food system provides abundance, efficiency and sustainability.

It seems that America is about to fall victim to the eternal companion of political turbulence and economic adversity – a partial, and in some places, total trade deficit. It may turn out to be the main attribute of Joe Biden’s presidency — as it was in the last years of the USSR under Mikhail Gorbachev.

But is it worth being surprised by the boomerang that has arrived? After all, the real “Perestroika” is not complete without empty shelves in stores. However, even when the shelves are full of goods, not everyone in America can afford to buy enough food not to starve.

This is not a broken system, this is its essence

Over the years, the American food industry has managed to create a great illusion of choice that impresses immature brains. However, today it only masks the collusion of monopolies that profit from the consumer, controlling most of what he eats and drinks, according to Food & Water Watch.

Here are the simple numbers. About two-thirds of all retail food sales in the United States in the pre-2019 year accounted for only four major retailers: Walmart, Kroger, Costco and Albertson’s Companies. Moreover, the first of them already occupied 34.8% of the market, and in some communities its “piece of cake” was 95%. And the share of monopolistic giants is only growing: in the 25 years preceding the pandemic, the number of grocery stores in the US has decreased by almost a third.

The same state of affairs is observed among food manufacturers. Only 8 out of 55 product categories in the USA represent the arena of competitive struggle of manufacturers, while the rest have long been divided between the “owners of the market”.

“Supermarkets might present a façade of variety and choice, but chances are you are choosing between just a handful of companies for each supermarket item,” the organisation’s report says.

There is no need to go far for examples. Let’s take a typical example of “supermarket variety” – the shop window of yoghurts. The number of brands, flavours and formulations is amazing and often raises the question: “Why are there so many of them?” However, three-quarters of all yogurt sales in the United States come from just four companies.

Another illustrative example is baby food. In this category, three manufacturers captured 85% of sales of liquid mixtures and 95% of powder mixtures. In other categories, one world-famous brand can control over 80% of the market. All this leads to predictable consequences: from fixing and gradual price increases to direct imposition of their products on customers.

“This is not a broken system,” notes Food & Water Watch. “It is functioning as it was designed: to funnel wealth from local communities into the hands of corporate shareholders and executives.”

In a word, there is no market competition here. And the notorious “one hundred varieties of sausage” in the USA today are possible only as a fruit of the maniacal imagination of marketers who come up with all new names for the same variety.

“They don’t have enough normal food”

The problem, however, is that this American system worked relatively steadily only before the coronavirus. Of course, not counting the annoying exceptions, when during natural disasters or riots, respectable citizens instantly emptied the shelves of stores, often without paying for the goods.

But the pandemic broke the established patterns. Tens of thousands of unplanned infections among workers at processing plants and store employees in the United States have led to a serious shortage of labour. And lockdowns and other restrictions have brought down important distribution chains even in vertically integrated retail companies.

So, just one outbreak of COVID-19 at a meat processing plant in South Dakota, owned by the world’s largest pork producer Smithfield Foods, led to the shutdown of 5% of the processing capacity of this type of meat in the United States. At the same time, properly working farms were forced to destroy freshly produced products that were previously intended for closed restaurants and educational institutions. The fact is that they could not reorient themselves to new sales lines in time — or they were simply not allowed there.

In turn, the explosive growth of online trade with home delivery in the conditions of the coronavirus turned out to be beneficial only to large players who are able to go even to a negative margin to conquer the market. This ruins many small chains, not to mention individual shops like “Papa Joe’s Shops”.

At the same time, prices for many categories of food products rose sharply in the United States. And not only because of high gasoline or soaring inflation, but also because of the excessive greed of the food giants, who preferred not to invest in production, but to buy their own shares.

In economics, this leads to textbook imbalances. When, for example, the cost of meat in retail has increased sharply, but livestock producers are forced to sell their products to retail chains at reduced prices. And in the social sphere, the main consequence is the natural hunger of millions of Americans, which even charitable food banks cannot cope with. It is no coincidence that 53% of American citizens, according to the US Food Industry Association for October 2021, are concerned about rising food prices, and 43% are concerned about its absence in stores.

All of this makes researchers from Food & Water Watch sound the alarm. Moreover, their recommendations on how to restore the food trade system in the United States “from scratch” create a depressing impression. There is “increase state financing”, and “create food cooperatives”, and “build food hubs”, and “ensure the food security of the country”… There was a direct whiff of Yeltsin’s 1990s and the main hole in the national economy at that time — the agro-industry.

And while the good wishes have not come true, Americans are wondering whether the viral video “Great Nations Eat” is fake. In it, an alarmed woman embraces an American girl with a teddy bear and addresses the audience in German:

“She lives with little access to nutritious food. Her poor diet could lead to diabetes and heart disease. 49 million Americans are struggling with food insecurity. They are hungry for more than a meal, they are hungry for change. America needs German help. Right now.”

Institute for International Political and Economic Strategies – RUSSTRAT

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