I’ll be the first to admit that I’m not a fundi on agricultural economics and marketing, but this piece in Bishop Alan’s blog makes a lot of sense to me, and I suspect that the behaviour of supermarket chains in South Africa is not all that much different.
Let’s zoom in on the dirty truth about dairy. The Blue is the farm gate price [click on the link to Bishop Alan’s blog to see the graphs]. The Purple is the distributor/ processor element. The Cream, in every sense, is Lord Tesco’s Cut. In 1995, the farmer got about 24 pence a litre, the distributors got about 18, and Lord Tesco and chums got 1 and a bit. That may sound low, but of course he sold many litres compared to the farmer, so he wasn’t exactly short of a few bob. Can you believe it, but these days the farmer gets a bit less, and the distributor much the same, whilst UK supermarkets are taking a huge cut — 10 times as much as back then! The argument for going local is to try and bring some of that margin back to the people who actually do the work. Otherwise some are actually being paid less than 10 years ago. Cut out supermarket Shareholders and for roughly the same price, the farmer gets a living wage.
There’s been quite a bit of talk about land reform in South Africa, but with the example of Zimbabwe’s utterly botched attempt (because its concern was not with the land or the people, but with the political fortunes of ZANU-PF and its leader, Mad Bob Mugabe) many people are understandably somewhat nervous about it. But it goes beyond land and agriculture and political gain, and Bishop Alan’s comments seem to be applicable, mutatis mutandis, to our situation too.