Why UK supermarkets are rationing fruit and vegetables | Hacker News Reader

Why UK supermarkets are rationing fruit and vegetables

cnn.com

32 pointsLinuxBender61 comments

Let's not ignore the voices of UK farmers too, who are switching off greenhouses because supermarkets are paying below cost prices, don't negotiate, and don't pass on profits. If supermarkets increase prices by more than 50%, they can't continue to pay producers the same prices (or only marginally more).

Easy to put blame onto farmers but we've all known for a long time how much supermarkets gouge from the whole market. Time for UK & EU fair trade.

Farming as a whole is probably just going to have to become a sunk cost center for economies. Sure, no one will make a profit and we take money from high margin industries and move it into farming, but you also won't have food shortages.

Do you say that there's some kind of market inefficiency where supermarkets are pocketing large profits or do you advocate for price increases?

Well, you can produce more, or have higher prices at the grocery store, or you can have empty shelves, or you can ration, or some combination of those. But that's about it.

Of those, producing more sounds nice, but it takes more effort to do so, and you also need the correct pricing signals to make their way to the producers for that to happen. E.g. "Wow, we're getting twice the normal price for our tomatoes - let's grow more of them!" But then this requires a period of socially-uncomfortable profits for businesses along the way.

The other three non-production options don't sound very nice, and our social aversion to profit discourages price increases, so we're left with empty shelves and/or rationing fairly often.

In this case the grocery store chose to ration rather than raise prices or allow a few customers to buy up all the stock. But then there's no reason to pay upstream providers more, and therefore no incentive for those upstream providers to produce more.

I've read arguments that food prices are unsustainably low, largely because of the pressure supermarkets put on their suppliers (the farmers). It seems that higher food prices are just something we're going to have to accept, which isn't so bad if it results in less waste and a fairer environment for food producers.

This is the key issue, the same has been happening with eggs. The prices supermarkets pay have to start reflecting fair value for farmers, if that means food goes up so be it, people should grow more at home. There should also be more competition in food growth, something that doesn't really seem to happen at all. Monoculture, where we remove the countryside and plant only one crop in a whole field, which then needs hundreds of tonnes of water and tonnes of pesticides spread all over it is inefficient, and killing our environment + natural diversity.

We should grow food closer to where it's consumed, and people should grow their own veg.

While I agree with you, I'm fairly sure the average UK household's veg requirements are larger than the average UK household garden. I'd love to see some affordable vertical farms small enough to keep at home.

Something like this would grow a good portion of needed vegetables with a little training and minimal work.

https://www.etsy.com/uk/listing/1398989330/

> Monoculture, where we remove the countryside and plant only one crop in a whole field, which then needs hundreds of tonnes of water and tonnes of pesticides spread all over it is inefficient, and killing our environment + natural diversity.

Industrial farming (single-plant fields, though hopefully with crop rotation) is actually much more efficient[0]. Pesticides, (artificial) fertilizers, and irrigation drastically increase yield, both per unit land and per unit labor. It's generally worse for ecosystems and long-term sustainability, but that doesn't mean it's inefficient.

As far as growing things locally - I don't see why this would matter much. Transporting food usually accounts for <10% of its carbon footprint, while for foods like beef it's more like 0.5%[1]. Local food makes the supply more resilient to foreign political/environmental issues (for obvious reasons), but I doubt it's the biggest issue or should be a priority.

Trying to switch to local organic food is mostly just going to serve to make food less affordable to the average person. Alternatively, we could change what we eat and subsidize, and therefore make more meaningful changes while also keeping core nutrients affordable.

[0] https://en.wikipedia.org/wiki/Monoculture#Benefits

[1] https://ourworldindata.org/food-choice-vs-eating-local

Hydroponics produces much higher yields given the same area of land, according to this study [0] yields of tomatoes are at least 6x higher given the same growing area as soil, so if less land is needed growers could be local - the benefits of this aren't only environmental but there are communal benefits too.

Ripping out hedgerows to create bigger fields in the name of 'efficiency' is driving down bird populations across the continent [1][2] - and I'm sure birds aren't the only type of animal affected.

So why don't farmers switch to something like hydroponics? People can effectively operate small systems from home, which wouldn't cover all of their needs but a not insignificant portion. Fresher, better food with less impact on the environment.

[0] https://scienceinhydroponics.com/2020/06/average-yields-per-...

[1] https://www.theguardian.com/environment/2012/may/26/eu-farmi...

[2] https://www.rspb.org.uk/birds-and-wildlife/advice/how-you-ca...

Interesting! Thank you for the links. I was thinking of intercropping; hadn't properly considered hydroponics.

It does seem like hydroponics is drastically superior for space and water efficiency, though the comparison study I'm looking at claims it takes 82x the electricity[0] (though it's from a different climate).

No disagreements on birds. Industrial farming may be efficient, but it's extraordinarily destructive to the local system.

In a reclaimed farm I volunteered at, the heavy machinery compacted the soil so thoroughly that "regular" plants couldn't grow there until after years of dedicated soil-rejuvenation projects (and therefore it was difficult to get local flora/fauna to return, even when making an active effort). A lot of the effects of industrial agriculture last longer than I naively expected.

[0] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4483736/

> In a reclaimed farm I volunteered at, the heavy machinery compacted the soil so thoroughly that "regular" plants couldn't grow there until after years of dedicated soil-rejuvenation projects

The effect you may be referring to here is the "plough pan," and it's not just a result of heavy machinery, but also specifically of plough design which features a mouldboard, which drags along the ground creating a layer of heavily compacted soil. Heavy machinery can cause this, too, but ploughing is much more effective at ruining land!

This is being somewhat mitigated recently by the increasing use of chisel ploughs, fortunately!

That first link seems dodgy, in the sense of having something to sell. The yield increases are hard to believe also: one ton of peas per acre turning into nine tons, hmm. And how much would it cost to hydroponic-ify an acre of land, how much to run it, and what about issues such as sterilisation etc

also if you want to maximise yields then you probably head towards monoculture again, and I guess we both agree that's a bad thing.

As far as I know the only thing worth growing at home with hydroponics this actually makes commercial sense is Mary Jane, and that uses a lot of electricity. And radiates a lot of heat that can easily be picked up by helicopter with a thermal camera.

British politicians have been very keen to say this isn't the fault of Brexit because a) energy costs, and b) weather issues affecting production. But those things still don't necessarily lead to shortages if retailers can rapidly move produce around or make temporary orders with different suppliers to plug the gaps, like they can on the continent. That's what Brexit has made a lot harder. So it can be "Brexit's fault" or not "Brexit's fault" depending on what side of the fence you sit on.

Brexit won't have helped, but I'm sure supermarkets price gouging through inflation is a worse contributor to this. When they're stonewalling farmers with low ball pricing, there's no incentive to produce.

That as well! It boggled my mind when I learnt about how a lot of agricultural output is priced. You'd expect the folks producing milk or selling eggs to, well, determine the prices, but no, no no..

It's what happens when there is a de facto monopsony. Farmers can sell goods for whatever the supermarkets demand, or their produce can rot.

Is there a monopsony in the UK? It seems like there are at least 6 or 7 supermarket companies in the UK, presumably they are not all buying from farmers as 1 entity?

https://en.wikipedia.org/wiki/List_of_supermarket_chains_in_...

I don't know about UK, but in mainland Europe our supermarket chain created Alidis (ex-Agecore). And are in a monopsony situation, effectively, and strongarmed Nestlé into accepting their demands.

I don't know why it isn't regulated yet.

Unfortunately it's often both - farmers have to grow way more than they need to make sure there's enough to meet supermarket demand after adverse weather, pests etc.

Tesco profit margin is 1.51%.

https://markets.ft.com/data/equities/tearsheet/financials?s=...

The publicly listed supermarkets all have pitiful profit margins:

https://markets.ft.com/data/equities/tearsheet/profile?s=SBR...

How can a business be price gouging and barely making money at the same time?

I think you need Finance 101. A supermarket turns over its inventory 50 times a year. And the items suitable for gouging are probably less than 1% of their volume.

Are you suggesting that there is a maximum allowable profit margin per item after which a business can be described to be price gouging? If so, what is that profit margin?

What does inventory turnover have to do with price gouging?

I would think that the reason a grocery store increases prices, regardless of which items and by how much, is that they themselves are experiencing increasing costs, hence the lack of substantial increase in profit margins.

you said:

>How can a business be price gouging and barely making money at the same time?

and I explained it. The profit margin of the store is driven by (1) gross margins, and (2) inventory turnover.

no one's alleging that they're gouging on every item. So gouging on a few produce items has almost zero effect on the overall margin.

I see. I would not describe increased profit margins on some items as an indication that a business is price gouging. Having different profit margins on different items has long been an accepted business model across the world.

The business needs to earn a profit to survive, and one that is earning 1% to 2% profit margins is already on the edge. If the profit margin on items that are moving need to be increased to maintain the 1% to 2% profit margins, then that is just a business trying to survive.

I don't actually know if Tesco or any supermarket chain is "on the edge." The inventory-turns thing is relevant because if you have $1M in capital but you gross 1% on it every week, that can still be pretty good annually. If you're an appliance dealer that turns over its inventory once a month, a 1% gross margin would mean you're out of business.

By definition, I would think 1% to 2% profit (net) margin is doing business on the edge, regardless of gross figures. 0% is a charity.

The slightest changes in your costs or revenue can be devastating if not immediately made up for with price increases and cost cutting. Grocery stores can usually do this, which is why they continue to survive at single low digit profit margins.

Are there businesses that reliably operate on less than that?

From what I can tell, the big reason that supermarkets in mainland Europe can work around this by ordering from different suppliers is that they're willing to pay their suppliers more and pass the cost increase on to their customers, whereas UK supermarkets aren't so willing to do this. That is, the main contributing factor seems to be precisely our supermarkets' unwillingness to engage in "price gouging" - and if they had put prices up, you can bet that would've been blamed on Brexit as well.

I don't think that raising your price because your cost increase is price gouging. Gouging occurs when the price increase do not relate to the cost increase and the difference is being pocketed by the intermediary, here the supermarket.

What you describe mainland european supermarket doing is just what happens in a free market. Not price gouging at all.

Charging more because your costs are higher is not really gouging. Obviously there's no precise definition -- it's a social judgement -- but generally it's taking more profit than is "fair" for a situation, like tripling the price of your bottled water after a natural disaster.

If any UK politician openly admits that Brexit has had any adverse effect on anything at all, it is effectively game over for them.

I think you missed a word out. If any UK Conservative politician openly admits that Brexit has had adverse effects...

Although Labour are earning their title of "Red Tories" by continuing to support Brexit too. Keir Starmer is basically the same as Boris Johnson but with better hair products.

meanwhile Ireland has the same problem

It's similarly detached from the continent, and while there are now more boats making the direct trip, Brexit has had an impact on supply chains between Ireland and the continent (though not the level of trade – just how long it takes to move stuff around since a lot of stuff used to flow seamlessly by truck through the UK).

and Denmark

I don't understand why it's only UK supermarkets having problems? Germany and France each import more than twice as much Spanish vegetables as Britain, and they aren't complaining about shortages. https://wits.worldbank.org/CountryProfile/en/Country/ESP/Yea...

I highly suspect this press release is not capturing all of the drivers involved. For example, is it really better for a company to have a failed crop than it is to keep the lights on and raise the price of the produce? In Britain already we've seen food inflation blamed on rising energy prices. So I don't get why they are letting crops fail. Seems like a false economy? Spains greenhouses are so massive they can be seen from space. https://maps.app.goo.gl/VYWDhmvzeLF8Ldns9

Foreign vegetables and fruit are actually more expensive in other countries as well because of a disappointing harvest. Prices also go up as greenhouses, usually a safe fallback for countries which can't grow vegetables all year in their climate, are turned off because of natural gas prices (they can't go electric because they use the CO2 burning it off produces). This leads to more competition on the international market.

Here in the Netherlands, some vegetables and fruits are also rationed. I haven't seen any empty shelves, but you can't buy too many bell peppers at once because there just aren't that many available for the listed price.

Importing food hasn't exactly been made easy after Brexit either. I imagine that plays a role in jacking up the prices and restricting availability compared to the rest of western Europe as well.

I struggle to understand how the UK time after time has shortages on food while the EU countries are fully stocked - yet it has nothing to do with Brexit?

Out of season produce in Netherlands has greatly increased in price

Saying it has nothing to do with Brexit is like saying the wind has nothing to do with the weather. They're 100% linked.

Hopefully this will remind people how much of a delicate and magical thing it is to have fresh tomatoes in February in Britain

Americans are used to getting fresh fruit and veggies year round from California and Texas by truck no matter the distance. The trucks take 3-5 days to arrive even if you live in Maine.

The ability of (some) Americans to make everything about them never fails to astonish me.

A lot of it comes from Mexico and Central/South America.

Yep a lot of debate even here focus only on tariffs and benefits splits where the principal issue is that fruits and vegetables have a seasonality and as a civilisation we should be more cognizant of that.

Production is lower but EU/EEA single market countries aren't seeing these shortages.

Many Brits seem quick to blame the EU for this, saying it's an artificial shortage but they'd do well to remember that bringing in fruit and veg now carries a duty tariff. Spanish tomatoes are available all over the EU but not in Tesco because it costs somebody 8.8%-14.4% extra to bring them into the UK. Thanks Brexit.

It is fair to say domestic production of non-seasonal items is in the toilet because they rely on heated greenhouses and it'd be fair to blame Russia for ridiculous fuel prices. The market won't afford lettuce at three times normal price. But we wouldn't normally be eating domestic-grown salads over winter anyway.

In our local supermarkets this week there have been no tomatoes/peppers/salad to ration.

Same here. Hardly any veg on the shelves at all.

Well at least it's lent so some people will have an easy sacrifice to make this year if they observe that.

Where is local?

Cornwall - last stop on the line...

Sainsbury’s were completely out, but M&S are getting a reduced daily delivery.

What I’ve found odd is that the market trader greengrocer stall hasn’t been on the high street for about two weeks - don’t know if that’s a widespread thing.

Interestingly, Spanish farmers say they have enough to go around and Brexit is to blame: https://www.theguardian.com/business/2023/feb/23/uk--fresh-f...

The UK is going "back to the roots" after the Brexit. Such as sauerkraut, potatoes and carrots ;-)

All the supermarkets near me don't have peppers. However all the small shops selling fruit and veg have plenty. I think it's partly due to the supermarkets demanding a specific size/shape/grade.

Is there any chance this is exacerbated by the Netherlands shutting down a ton of their farming?

Wasn't this "just" livestock, due to nitrogen pollution of water?

How many Dutch farmers sold their properties and moved to Germany after this fiasco?

I can't find any statistics about farmers selling their properties. I see an article about 25 farmers volunteering to be bought out and move on in one province, dated 2022-12-22. An article from 2022-11-10 lists a total of 31 farms nation wide. In practice, very little has happened after the last few years.

Farmers don't want to leave to Germany. That'd solve the Dutch problem quite effectively, but you'll need someone to buy the land, and who would buy a farm ready to house 30.000 chickens if you can't keep get the license because of economic impact?

This is why the government is offering to buy out farmers on the condition they don't use the money to start a farm elsewhere in the country, but very few farmers are budging.

Give it a few years and I expect meat imports in other countries will become more expensive. The problems you're seeing right now are more likely to be the result of greenhouses shutting down because of entirely unrelated reasons.

Not a lot of traditional farming has been shut down (that's still supposed to happen) and I expect those measures to mostly impact cheap meat production. You won't see the Netherlands farming bell peppers in the fields any time soon, despite the current state of global warming. Not year round, anyway.

The greenhouses are closing down because of unrelated reasons; they're not profitable with the current prices of natural gas. It's cheaper to import from the (disappointing) harvest in the south than it is to grow these foods despite the price increase, so there's no reason to waste money on greenhouses at the moment. The fruits and vegetables listed do typically come from greenhouses, so there's a good chance it has something to do with that.

My village shops don't have this problem in the south of the UK here.

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