What's the problem?
Supermarkets regularly try to tempt customers with cheap offers. But this is fuelling anger among farmers who say they are already struggling to make ends meet in the face of new climate protection regulations.
Now German ministers want to find a solution to help farmers.
Food and Agriculture Minister Julia Klöckner of the conservative Christian Democrats (CDU) said it was like “David and Goliath when farmers negotiate with retailers”.
On Monday Chancellor Angela Merkel met with representatives of the retail and food industry to discuss cheap offers on food in Germany, as well as other topics concerning producers and consumers.
The table below shows how much Germans spend on groceries compared to other countries.
Compared to other European countries, Germans spend a small percentage of their income on groceries. Graph prepared for The Local by Statista. Photo: DPA
Why are farmers protesting?
Over the past months, farmers across Germany have been causing huge disruption by getting on their tractors and travelling into city centres.
They're protesting government plans for new environmental protection regulations as well as pricing policies at German supermarkets that see the price of meat and other groceries heavily reduced.
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Farmers' President Joachim Rukwied recently told the newspaper Neue Osnabrücker Zeitung that food should not be sold at bargain prices.
“The retail sector must also do its part to make it clear to consumers that higher standards in the stable or on the field require a higher price,” he said. However, advertising low prices in supermarkets has the opposite effect.
“In order to put an end to unfair trading conditions, we will also take regulatory action,” Food Minister Klöckner said on Sunday without going into detail on what the government plans to do.
Klöckner warned that consumers “get used to” low prices, and that results in farmers at the bottom of the chain suffering. They face lower profits even if they have to supply food at higher standards.
To break it down: out of one euro that consumers pay for food, an average of just under 21 cents reaches the producer, according to data for 2018 from the federally owned Thünen Institute. Twenty years ago it was more than 25 cents. For fair prices, trade also needs to be ethical, Klöckner said.
On average a person in Germany eats about 60 kg of meat per year.
A few weeks ago Klöckner told German daily the Tagesspiegel that “chicken legs for 20 cents per 100 grams” was “obscene”. She asked how a farmer could live on these profits and maintain the highest animal welfare standards.
How expensive is food in Germany?
Germany's food prices are around two percentage points above the average of the other EU states, according to reports.
Lionel Souque, boss of supermarket Rewe, pointed out that there needed to be price reductions to help people on low incomes.
“In Germany around 13 million people live in poverty or on the poverty line,” he said. “Cheap food prices enable these people to eat healthy and safe food.”
He said the retail sector wanted to ensure this continued.
Why do supermarkets rely on promotions with low prices?
Despite all the debates, it is clear that many customers love bargains. For almost two thirds (65 percent) of Germans, special offers are important when shopping, the market research company Nielsen found in its study “Consumers 2019”.
In the face of tough competition, retailers feel they have to offer good discounts.
Just a few months ago, discount supermarket Lidl found out how sensitive many consumers are to price. The supermarket only wanted to sell bananas with the Fairtrade seal, which should cost 10 to 20 cents per kilo more. But consumers did not play along and instead bought bananas from the competition. In the end Lidl reversed the move.
What do consumer groups and politicians think about it?
The Association of Consumer Advice Centres says there needs to be a fair negotiation for producers.
The head of the association, Klaus Müller, told DPA: “Price pressure from the trade at the expense of animal welfare and environmental standards is not in the interest of consumers.”
Many customers would like to see high standards of animal welfare, for example, and would be prepared to pay more for this. “At present, however, they are unable to recognize the quality of a product, let alone its price,” he said.
Müller said better conditions and labelling systems for food was needed.
Lower Saxony premier, Stephan Weil, of the Social Democrats, took the side of the farmers in the discussion.
“Lots of foodstuff in Germany is surprisingly cheap compared to neighbouring countries,” he told the Funke Media Group on Sunday.
With the increasing demands on farmers, the prices for food in supermarkets would also have to rise, he said.
Meanwhile, German Retail Association (HDE) President Josef Sanktjohanser slammed the government, saying politicians were “crossing a red line” for trying to dictate prices.
Meat – (das) Fleisch
Customers – (die) Kunden
Bargain – (das) Schnäppchen
Cheap offer – (das) Billigangebot
Animal welfare – (das) Tierwohl
Consumer advice centre (die) Verbraucherzentrale
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