Farmers under price pressure: What power comes from supermarkets

Retailers, who use their market power to dictate prices, are said to be to blame for the farmers' misery. But is that really true?

Rand around the farmers' protests, politicians quickly identified those to blame for the crisis in German agriculture. Mecklenburg-Western Pomerania's Agriculture Minister Till Backhaus (SPD) called on the federal government to use antitrust law to take action against retail chains. The calls are loud in the traffic light coalition: SPD chairman Lars Klingbeil spoke about the “market power of discounters”, and the Green parliamentary group even wants to tighten the competition rules for supermarkets. The market power of supermarket chains is one reason why farms are dying, said parliamentary group leader Katharina Dröge in Berlin on Tuesday.

But how big is the bargaining market between supermarkets and farmers? Rainer Lademann is an honorary professor at the University of Göttingen and has been studying the buyer power of retailers for decades. “Only a few farmers negotiate directly with supermarkets, but rather – if they do not sell through their cooperative – with wholesalers or suppliers,” he tells the FAZ. Nevertheless, from his point of view, supermarkets exercise the greatest market power in the entire value chain. The four largest supermarket chains Edeka (with Netto), Rewe (with Penny), Aldi and the Schwarz Group with Lidl and Kaufland share 85 percent of the total food trade. According to Lademann, they have recently been able to further expand their negotiating power.