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Could a screwed up supply chain for food be a symptom of decline?

skippyboxedhero 4y ago
It is the opposite. It is a function of overwhelming levels of competition in the retail business and an obsession with total efficiency. I am not sure what the solution is but this problem has existed since the early 90s when the industry began to consolidate heavily into the large supermarkets. The industry has kept trying to consolidate which may lead to less aggressive action (supermarkets are fully aware of how damaging their behaviour has been), but the govt has been blocking this to keep food prices low. One big change was Aldi/Lidl who have introduced more diversity into the supply chain without compromising on price...but that is only in some verticals, and their general position towards farmers is still quite aggressive. But the pursuit of extremely low prices and consumer value is not a sign of decline.
Spooky23 4y ago
It depends on how you define decline. From the perspective of a modern financial analyst, the consolidation of food supply chains is more efficient. But left without controls, these types of markets tend to devolve into monopolies if allowed and cartels if not. Markets require regulation. That’s why you can get fresher cheaper produce at a farmers market while the supermarket doesn’t be road is selling California Peaches in Georgia and Washington apples in New York. An example I’m familiar with is a local farm that’s been in continuous operation since the 1750s. They built successful long standing relationships with local grocery chains, which allowed them to grow over 20 years. Enter modern finance - the biggest two chains get bought by private equity, who fires the grocery buyers and brings in Accenture and does a strategic sourcing engagement. End of the day, the supermarket went from buying 100 truckloads of onions to 0, having made a deal to source Canadian (subsidized) onions for 1.5% cheaper. It broke their cash flow and almost put the farm out of business. They made mistakes for sure, but this is the pressure exerted on the production and supply chain so long as our current legal thought process persists.

It is the opposite. It is a function of overwhelming levels of competition in the retail business and an obsession with total efficiency. I am not sure what the solution is but this problem has existed since the early 90s when the industry began to consolidate heavily into the large supermarkets. The industry has kept trying to consolidate which may lead to less aggressive action (supermarkets are fully aware of how damaging their behaviour has been), but the govt has been blocking this to keep food prices low. One big change was Aldi/Lidl who have introduced more diversity into the supply chain without compromising on price...but that is only in some verticals, and their general position towards farmers is still quite aggressive. But the pursuit of extremely low prices and consumer value is not a sign of decline.

Spooky23 4y ago

It depends on how you define decline. From the perspective of a modern financial analyst, the consolidation of food supply chains is more efficient. But left without controls, these types of markets tend to devolve into monopolies if allowed and cartels if not. Markets require regulation. That’s why you can get fresher cheaper produce at a farmers market while the supermarket doesn’t be road is selling California Peaches in Georgia and Washington apples in New York. An example I’m familiar with is a local farm that’s been in continuous operation since the 1750s. They built successful long standing relationships with local grocery chains, which allowed them to grow over 20 years. Enter modern finance - the biggest two chains get bought by private equity, who fires the grocery buyers and brings in Accenture and does a strategic sourcing engagement. End of the day, the supermarket went from buying 100 truckloads of onions to 0, having made a deal to source Canadian (subsidized) onions for 1.5% cheaper. It broke their cash flow and almost put the farm out of business. They made mistakes for sure, but this is the pressure exerted on the production and supply chain so long as our current legal thought process persists.