Farmers Should Stop Moaning About 'Being Held To Ransom' By The Big Supermarkets.
Farmers voice their distaste at not being paid a fair price for milk etc by the big supermarkets. They and we live in a free market economy.
When a farmer wants to buy a TV do they give a thought to the wages paid to those who made it or the profits of those who sold it? Probably not as long as they got it at a good price.
Farmers want their cake and eat it.
Even free market ideologues recognise the possibility of market failure through a company achieving
a monopolistic position or a group of companies achieving something similar (an oligopoly). In these
cases, it is quite possible that the companies involved will unreasonably extort money from
suppliers or consumers and the overall economic welfare of society will be diminished.
The question then is does such a situation exist in Britain now? Many people believe it does.
Retailing is essentially a form of arbitrage. A retailer buys a product from a supplier and sells it
at a higher price to a consumer. It is the simplest form of business activity possible. As such, its
profits should also be the lowest. High profits should bring new entrants into the market to compete
away those high profits and reduce them to almost zero. Retailing in Britain is very profitable,
however. In fact, I remember hearing some years ago that it was the most profitable business sector.
That alone is a sign that something is wrong. There are strong barriers to entry to this market
arising in part from lack of available land to build new shops on and regulations governing the use
of what land is available. It has also been shown that the main British supermarkets own large
tranches of land around the country which are completely undeveloped and which they have no
intention of developing. Clearly, their purpose can only be to stop a potential competitor from
acquiring the land and building a supermarket in that area. This is clearly an anti-competitive
measure.
It's time there was a serious investigation into Britain's big supermarkets. They are ripping off
suppliers, ripping off consumers, and laughing all the way to the bank.
What about the farmers who are ripping off the European taxpayers through the overly generous, unnecessary and discriminatory Common Agricultural Policy?
03 May 2008 17:13
Sign In
For and Against Recent Activity
