Share via Email


* Email To: (Separate multiple addresses with a semicolon)
* Your Name:
* Email From: (Your IP Address is 44.200.74.241)
* Email Subject: (personalize your message)


Email Content:

National Grocers’ Association Calling for Federal Control Over Large Buyers-Implications for Egg Producers

03/23/2021

The National Grocers’ Association (NGA) representing small independent food stores is calling for federal legislation to limit the ability of major chains and club stores to engage in anticompetitive behavior. The NGA has stated that their membership is at a disadvantage in sourcing products and package sizes when competing with chains including Walmart, Amazon, Costco, Target, and the ‘Dollar’ stores.  The NGA maintain that the large chains by virtue of their power obtain lower pricing and preferential supply.  The plight of independent grocers was evidenced during the COVID outbreak when restocking problems occurred.

 

The president of the NGA, Greg Ferrara, noted “Our members compete in markets that are increasingly dominated by a handful of national and international chains who will tremendous economic power to the detriment of America’s food supply.”  He added, “Independent grocers are increasingly struggling in the face of the growing influence of so-called power buyers who act as gatekeepers to grocery shelf space and control terms of trade in our industry.”

It is difficult to see how the federal government could intervene and establish either policies or legislation that could benefit a specific class of retailer.  Obviously if there was collusion between major chains constituting anticompetitive behavior, the Department of Justice could act if specific laws were broken. 

 

The situation regarding the NGA could find a parallel in the egg industry where fewer buyers are responsible for an increasingly higher proportion of the shell egg market.  The situation is compounded by the self-fulfilling prophecy of the Urner-Barry quotation. This benchmark           frequently places the egg industry in a difficult position since commercial transactions based on the Urner-Barry price discovery service amplifies both extreme rises and significant falls in price distorting markets.  The same can be said of machine trading that can markedly affect specific indexes, sectors or even individual equities.  At least with respect to the major stock markets, there are circuit breakers that can limit extreme moves.  A CME futures contract based on Midwest large would be preferable and more equitable than the current Urner-Barry quotation.