Dutch agricultural economist: 'No, supermarkets don't get rich off the backs of farmers'

Farmers blame the big chains for getting too little for their produce, but the supermarkets refute this. A Dutch agricultural economist nuances the discussion. “Nobody in the chain earns excessively,” states Willy Baltussen of Wageningen University.

No Covid-bonus for farmers

It is no coincidence that this topic now surfaces in the Netherlands. After a long period of debate, consultations between farmers and supermarket groups are taking place this week. The farmers argue that supermarket chains made good profits in 2020 thanks to hoarders, but those profits did not trickle down to the producers.

Of course, this is not a new discussion. Confrontations between angry farmers and final sellers of the products are a regular occurrence. In Germany, recently, a heated conflict took place between pig farmers and Lidl. After weeks of protest – including tractor blockades – the latter caved and raised its purchase prices for several pork products.

“It is complicated”

In the Netherlands, tempers are getting frayed. Since October 2019, farmers have been taking regular action to address a range of frustrations. Initially, the main focus was on the government’s measures in connection with new nitrogen legislation. But gradually, the issue of the purchase prices of supermarket chains also came up. Further negotiations will take place on Thursday at the Central Food Trade Office, the Dutch supermarket umbrella organisation.

However, the chances of farmers getting their money’s worth are small. The supermarkets resist the idea that they got rich from the coronavirus crisis. They also argue they have limited impact on what farmers get for their products as they are at the other end of the chain. “The solution is more complicated,” CEO of Jumbo Frits van Eerd said earlier. Baltussen agrees with that statement.

Profit is reasonably distributed

“Every party involved in the chain incurs costs and makes profits on certain products, but it seems that those profits are reasonably distributed,” Baltussen told Dutch newspaper De Gelderlander. “There is no party earning excessively from it. Not even the supermarkets.” Baltussen points mainly to the gap between supply and demand. “We have been in this situation for quite some time. Supermarkets can sit back and buy products. They will get the necessary products anyway and can wait for the lowest price.”

Farmers Defence Force, an advocacy organisation that saw the light of day in 2019 during the protest’s build-up, suggested introducing a certification mark for supermarket chains that explicitly buy from Dutch farmers, but it finds little favour. The CBL, the Dutch association for supermarkets, notices that a big chunk of Dutch agricultural production gets exported anyway. And, Baltussen calls the ‘Farmer Friendly’ label lopsided. “The farmers say: ‘This was produced in the Netherlands’. That’s it, nothing more. And supermarkets have to pay for that?”

The chances of an agreement being reached on Thursday are small. The structural issues remain: oversupply and a complex supply chain in which each party tries to make a profit. And perhaps above all: a Dutch consumer who attaches great importance to price when shopping at the supermarket.