From media to political circles, the term greedflation is on everyone's lips these days. Rising prices for everyday items and our recent report exposing the profits earned by major retailers and FMCG companies in those inflationary times have raised an important question: Why do consumers feel the pinch while most of these corporate giants remain largely unharmed?
While food prices have certainly increased in the last few months, I want to state that when it comes to how much we pay for food, the real issue isn't that consumers are being ripped off. It's about where that money ends up. Instead of going towards important sustainability investments and aiming for carbon neutrality by 2050, a big chunk of it goes straight into the pockets of shareholders. This is where every player in the industry and government needs to do better.
Over the past couple of decades, there's been cutthroat competition among food retailers to offer the lowest prices. As these companies got bigger and stronger, they used their negotiation power to bring down prices and turn many food items into cheap commodities. In fact, I would say that we, consumers, used to pay too little for our food.
I believe we need to be prepared to pay more for the food we consume.
Sustainable food production comes at a cost, and it's something we all need to understand. However, the money flowing into the system currently isn't being allocated to the right places: it now mostly benefits already-wealthy food retailers and FMCG companies.
These companies, while important in the food value chain, are not directly involved in primary food production. They focus on processing and distribution. That is why the funds never reach the critical parts of the supply chain that require innovation and positive change. And innovation is exactly what we need to reach the targets set by the Green Deal, such as:
- Cutting our pesticide use by half;
- Cutting greenhouse gas emissions to at least 55% below 1990 levels;
- Getting at least 25% of the EU’s agricultural land under organic farming.
We need to take a long-term view and rethink the entire system.
Now, some may argue that we can't fault companies for making money, and I agree to an extent. After all, it's their goal, just like we cannot blame a dolphin because it's swimming in the ocean. CEOs are constantly under pressure to deliver immediate results and satisfy shareholders. After all, this is what our capitalist society values: investors want immediate results and we, consumers, want cheap food. But this short-term mindset holds all of us back, and this is why I don’t want to point fingers at companies only. To put it simply: it's not about greed; it's about a broken system.
To truly transform the food industry, we need to take a long-term view and rethink the entire system. I already see two aspects that need to be addressed now:
- Find a way to allocate more funds to cover the higher costs caused by sustainable agriculture.
- Offer longer-term certainty to drive investments towards this sustainable agriculture.
It’s up to governments to come up with ambitious regulations and incentives to encourage companies to drive meaningful changes. And it’s also up to us, citizens, to elect and hold our politicians accountable to pass these laws. Companies alone cannot change this broken system. Let’s close this chapter on greedflation and open a new, more ambitious one: changing the system to reach our sustainable targets.
Jeroen Lustig, A-INSIGHTS' CEO and co-founder.