Yves here. There has been some debate over the “greed” thesis, that companies raise their prices because they can, not because they need to. The food industry offers some support for this claim.
By Jessica Corbett. Originally posted on Common dreams
While the US government on Wednesday released its latest inflation report, watchdog Accountable.US has released a new analysis detailing how Americans are coping with food insecurity as big food companies boost profits with price hikes.
“Big Food’s staggering increase in profits shows they didn’t need to raise prices so high for consumers, but they did it anyway to maximize record profits,” Liz said. Zelnick, director of economic security and corporate power at Accountable.US, in a statement.
“It is shameful that Americans find themselves food insecure and having to skip meals as corporations and their wealthy shareholders reap the spoils of supersized profits through unwarranted price hikes,” she added. “It is clear that the food industry will not be held responsible. It’s time Congress did more to curb corporate greed, one of the biggest factors driving up costs for families right now.
“It’s time for Congress to do more to curb corporate greed, one of the biggest factors driving up costs for families right now.”
The Accountable.US report targets General Mills, Kraft Heinz and Mondelez, three of the top “at home” food companies in the United States according to market capitalization– focusing on January to March, the first quarter of this calendar year.
General Mills is one of the few companies which dominate the US breakfast cereal market, with brands such as Cocoa Puffs, Cookie Crisp and Lucky Charms. Kraft Heinz is known not only for ketchup and macaroni and cheese, but also for Jell-O, Kool-Aid and Philadelphia Cream Cheese. Mondelez’s top brands include Chips Ahoy! and beautiful Vita.
The companies’ combined net income for the quarter increased 51% year-over-year (YoY) to a total of $3.47 billion, and the trio collectively spent more than $1.3 billion. dollars in dividends for shareholders, Accountable.US found. Of the three, only General Mills saw profits fall from the first three months of 2022 to the same period in 2023, although the company still spent more on dividends this year compared to last year.
The first three months of this calendar year corresponded to the third quarter of General Mills’ fiscal year 2023. Accountable.US quoted Reuters‘ March 23 report that the company “raised its full-year 2023 guidance for the fourth time after beating quarterly earnings estimates, helped by price increases and continued demand for its packaged food products.”
The watchdog also pointed out that General Mills “saw its net income increase by nearly $2 billion year-over-year for the first nine months of fiscal 2023, as the company spent more than $2.16 billion for its shareholders through a combination of dividends and share buybacks”.
For Kraft Heinz, the referenced watchdog Reutersreports earlier this month that it “raised its full-year earnings forecast on Wednesday due to higher prices and continued demand for its packaged food products.” The analysis adds that the company “saw its first-quarter 2023 net income increase 7.1% year-on-year to $837 million and spent $491 million on shareholder dividends.”
Accountable.US noted that in the first quarter of this year, “Mondelez – which has touted price increases for its double-digit increases in revenue and earnings – returned $928 million to shareholders through a combination of dividends and share buybacks, after reporting $2.1 billion in profits, a 143% increase from last year.
NEW: While inflation remains stubbornly high, @accountable_us points out that big food companies continue to raise prices in order to increase profits and reward shareholders. https://t.co/omJ5d2zM94
— Ryan Summers (@RyanTSummers) May 10, 2023
As the #Feed considering even more rate hikes, #Powell must finally recognize that rate hikes will do NOTHING to tackle the MAIN driver of inflation: corporate greed. Rate hikes will only put more banks on the brink of collapse and risk massive unemployment. https://t.co/y2JIqScCUM
— Ryan Summers (@RyanTSummers) May 10, 2023
The group used its new analysis to challenge the Federal Reserve, saying “the results are the latest evidence that if inflation is slowing, the Fed’s stubborn policy of repeated interest rate hikes [is] do little to contain the main driver of rising costs: corporate greed.
The report also highlights recent admissions by economists that corporate greed is driving inflation, something progressive organizations and pundits have been pointing out for months in response to interest rate hikes by the Fed.
As the analysis indicates, The Wall Street Journalreported earlier this month:
Consumers have … been unusually willing to accept higher prices lately. Paul Donovan, Chief Economist at UBS Global Wealth Management said companies are betting consumers will follow because they know about supply bottlenecks and rising energy prices.
“They’re confident they can convince consumers it’s not their fault and it won’t hurt their brand,” Donovan said.
According to the Consumer Price Index report released According to the US Bureau of Labor Statistics on Wednesday, the “food-at-home index fell 0.2%” from March to April. While cereals and bakery products saw a slight increase, there were declines for milk; soft drink; fruits and vegetables; and meat, poultry, fish and eggs.
However, the bureau’s report also provides context for the past year: “The home food index has increased by 7.1% over the past 12 months. The cereals and bakery products index rose 12.4% in the 12 months to April. Other large grocery store food groups posted increases ranging from 2.0% (fruits and vegetables) to 10.4% (other food at home).
The Accountable.US analysis notes that in January and February, “food equity advocates warned that ‘food insecurity for millions of American consumers is worsening’ despite the overall drop in inflation, a number higher number of food stamp recipients reporting “skipping meals, eating less, and going to food banks to manage costs.
The US Census Bureau has estimated throughout 2023, according to household surveys, about 25 million people sometimes or often did not have enough to eat in the previous seven days. The United States Department of Agriculture reports that nearly 34 million people live in food-insecure households, although research published last month suggests that figure is likely an undercount.
What’s more, food insecurity numbers don’t paint the full picture of how many families are struggling to stay fed, as Claire Babineaux-Fontenot, CEO of food bank network Feeding America, explain For CNN in March: “The nuance is that some people are not ‘food insecure’ because they have access to the charity food system. This does not mean that they are able to achieve self-sufficiency.
American households are also facing the loss of assistance related to the Covid-19 pandemic, including the end of the expanded child tax creditfree universal school mealand increased Supplemental Nutrition Assistance Program (SNAP) benefitsformerly called food stamps.
As Common dreamsreported in late February, as experts warned that the end of enhanced SNAP benefits would lead to increased poverty in the United States, public citizen President Robert Weissmann declared that “a decent society wouldn’t let that happen”.
