How is the price of peppers, pasta or pudding in the shop determined? Who gets how much from the farmer to the retailer? Consumer advocates are calling for more clarity on this.
Because food in supermarkets continues to be expensive, consumer associations are pushing for more transparency through a price monitoring agency. The head of the federal association, Ramona Pop, said: “Food prices are like a black box.” No one knows where in the chain from farmers to retailers unjustified price increases and profits may arise. The farmers’ association reacted cautiously, but there was criticism from retailers.
Specifically, the consumer centers propose setting up an observatory at the Federal Office for Agriculture and Food. It already collects data on prices and costs for food and product groups, but this has not yet been processed in a structured manner. The observation should start with basic foods that are not or only slightly processed, such as fruit and vegetables. Findings should be presented to the Bundestag once a year and put up for debate. Organic products should be considered separately because of different conditions.
Transparency should uncover unfair practices
“The federal government must finally shed light on the pricing of foodstuffs,” demanded Pop when presenting a feasibility study commissioned by the Agricultural Market Information Company. Transparency can reveal unfair practices and protect against excessively high prices. Complaints to consumer centers about this have recently increased. It is worrying that shopping has become a burden for many people on low incomes.
Food prices rose sharply in 2022 and 2023 in the face of tense agricultural markets and high energy prices as a result of Russia’s war against Ukraine and had long been a driver of inflation in Germany. This has weakened. In August, food was 1.5 percent more expensive than a year earlier – with a general inflation rate of 1.9 percent, according to preliminary data from the Federal Statistical Office. Prices have settled at a high level, said Pop.
Different reactions from retailers and farmers
The trade association explained that there are already extensive reporting obligations along the food chain – and many opportunities for price comparison. The consumer centers’ proposal follows the outdated theory that there is a “fair” price from the outset. However, competition works and freedom of competition also requires the protection of business secrets. More transparency would therefore limit competition and lead not to low, but rather to higher consumer prices.
The farmers’ association explained that more transparency is generally positive, but that a price monitoring center alone does not bring about any improvement. “Really new insights into prices and trading margins are not to be expected,” said Deputy Secretary General Gerald Dohme to the German Press Agency. “What is crucial is that in the end, much more will depend on the companies.” At present, there is no problem with knowledge, but rather with implementation.
In the feasibility analysis, the Agricultural Market Information Company explains that examples from other countries show that setting up a price observatory in Germany is possible. Money and personnel are needed for this. In addition, all relevant groups and actors should be involved in this controversial topic in order to ensure the necessary acceptance.
Expert Hans-Christian Behr explained which cost factors determine the retail price of vine tomatoes from Germany, for example: from costs for plant protection, labor and transport for farmers, to costs for packaging at wholesalers or processors, to the margin and VAT in retail.
Source: Stern
