I was listening to my favourite talk back radio station a couple of days ago and the morning presenter was talking about the 2 major supermarkets and their duopoly.
He was talking about the fact that 3 or 4 (can't recall the number) major tomato farmers have recently gone bust and he was also talking about how the majors work when it comes to sales and specials.
Essentially, what he was saying was that when the majors decide to run a sale or special it is the farmer, producer, manufacturer that really runs the sale (unbeknownst to us, the consumer).
So, if an apple, for example, costs the supermarket 80c to buy from the farmer, they'll sell it for say $1.40, so a mark-up of 60c. But, if the supermarket decides to run a special and discount the apple by 40c, thus selling it for $1.00 that doesn't mean that the supermarket is being generous; it means that the supermarket is telling the farmer to bend over so they can screw him some more!
It is the poor old farmer that suffers because he will only get paid 40c for that same apple; that same apple that takes just as long to grow, that same apple that takes just as much labour to pick, sort, box and distrubute, yet it is the supermarket that still has his 60c profit!
How on earth does this work?
And more importantly, how has this been allowed to happen, and allowed to continue?
It is such a ridiculous proposition that the margins of the supermarkets are a protected species yet the margins of the farmer are not?
This isn't just isolated to the farming industry.
Take the banks as another example.
The RBA recently lowered the cash rate by 50 basis points yet the banks only passed on a portion of it. Why? Because they need to maintain their margin!
WTF??? What gives them the right to protect their margins, but the farmer can not, or the manufacturer competing with some cheap import can not, or the builder can not.
What makes them so special?
Something has to change, because this is just plain wrong. Companies run by hardworking individuals are going broke because big business are screwing them for the sake of their own margin...for the shareholders, for maximum growth!
Well, what about the shareholders of the companies going broke?
It's just not OK.
Till next time...
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