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Big Food Raking in Huge Profits From Price Hikes as US Hunger Persists: Analysis
"It's shameful that Americans are left food insecure and have to skip meals while corporations and their wealthy shareholders enjoy the spoils of supersized profits under unjustified price hikes."
May 10, 2023
As the U.S. government on Wednesday released its latest inflation report, the watchdog Accountable.US put out a new analysis detailing how Americans face food insecurity while major food corporations are padding their profits with price hikes.
"Big Food's staggering increase in earnings shows they did not need to raise prices so high on consumers but did so anyway to maximize record profits," said Liz Zelnick, director of Economic Security and Corporate Power at Accountable.US, in a statement.
"It's shameful that Americans are left food insecure and have to skip meals while corporations and their wealthy shareholders enjoy the spoils of supersized profits under unjustified price hikes," she added. "It's clear that the food industry will not hold itself accountable. It's time Congress do more to rein in corporate greed, one of the main factors currently driving up costs for families."
"It's time Congress do more to rein in corporate greed, one of the main factors currently driving up costs for families."
The Accountable.US report takes aim at General Mills, Kraft Heinz, and Mondelez—three of the top "at home" food companies in the United States based on market capitalization—focusing on January through March, the first quarter of this calendar year.
General Mills is one of a few companies that dominate the U.S. breakfast cereal market, with brands including Cocoa Puffs, Cookie Crisp, and Lucky Charms. Kraft Heinz is known for not only ketchup and macaroni and cheese but also Jell-O, Kool-Aid, and Philadelphia Cream Cheese. Mondelez's top brands include Chips Ahoy! and belVita.
The companies' combined net earnings for the quarter rose by 51% year-over-year (YoY) to a combined $3.47 billion, and the trio collectively spent over $1.3 billion on shareholder dividends, Accountable.US found. Of the three, only General Mills saw its earnings drop from the first three months of 2022 to the same period in 2023—though the company still spent more on dividends this year compared with last year.
The first three months of this calendar year were the third quarter of General Mills' 2023 fiscal year. Accountable.US cited Reuters' March 23 report that the company "raised its fiscal 2023 forecasts for a fourth time after beating estimates for quarterly results, helped by price increases and steady demand for its packaged-food products."
The watchdog also highlighted that General Mills "saw its net earnings increase by nearly $2 billion YoY for the first nine months of FY 2023, as the company spent over $2.16 billion on its shareholders through a combination of dividends and stock buybacks."
For Kraft Heinz, the watchdog referenced Reutersreporting earlier this month that it "raised its full-year profit forecast on Wednesday on the back of higher prices and sustained demand for its packaged food items." The analysis adds that the company "saw its Q1 2023 net income increase by 7.1% YoY to $837 million and spent $491 million on shareholder dividends."
Accountable.US noted that during the first quarter of this year, "Mondelez—which touted price hikes for its double-digit increases in revenue and earnings—returned $928 million to shareholders through a combination of dividends and stock buybacks, after reporting $2.1 billion in profits, a 143% increase from last year."
\u201cAs the #Fed mulls even more rate hikes, #Powell needs to finally recognize rate hikes will do NOTHING to address 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\u201d— Ryan Summers (@Ryan Summers) 1683728189
The group used its new analysis to call out the Federal Reserve, saying that "the findings are the most recent evidence that while inflation is slowing, the Fed's single-minded policy of repeated interest rate hikes [is] doing little to contain the primary driver of rising costs—corporate greed."
The report also emphasizes recent admissions from economists that corporate greed is driving inflation—which progressive organizations and experts have been stressing for months in response to the Fed's interest rate hikes.
As the analysis points out, 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 businesses are betting that consumers will go along because they know about supply bottlenecks and higher energy prices.
"They are confident that they can convince consumers that it isn't their fault, and it won't damage their brand," Mr. Donovan said.
According to the consumer price index report released Wednesday by the U.S. Bureau of Labor Statistics, "the food at home index fell 0.2%" from March to April. While cereals and bakery products saw a slight increase, there were decreases for milk; nonalcoholic beverages; fruits and vegetables; and meats, poultry, fish, and eggs.
However, the bureau's report also provides context from the past year: "The food at home index rose 7.1% over the last 12 months. The index for cereals and bakery products rose 12.4% over the 12 months ending in April. The remaining major 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 overall inflation easing, with higher numbers of food stamp recipients reporting 'skipping meals, eating less, and going to food banks to manage costs.'"
The U.S. Census Bureau has estimated throughout 2023 that based on household surveys, roughly 25 million people sometimes or often did not have enough to eat in the previous seven days. The U.S. Department of Agriculture reports that nearly 34 million people live in food-insecure households—though research published last month suggests that figure is likely an undercount.
Additionally, food insecurity figures don't provide a full picture of how many families struggle to stay fed, as Claire Babineaux-Fontenot, CEO of food bank network Feeding America, explained to CNN in March: "The nuance is that some people are not 'food insecure' because they get access to the charitable food system. That doesn't mean they're able to achieve self-sufficiency."
U.S. households are also contending with losing assistance related to the Covid-19 pandemic—including the end of the expanded child tax credit, universal free school meals, and increased Supplemental Nutrition Assistance Program (SNAP) benefits, formerly known as food stamps.
As Common Dreams reported in late February, while experts warned that the end to boosted SNAP benefits would cause a rise in U.S. poverty, Public Citizen president Robert Weissman declared that "a decent society would not let this happen."
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Data Highlights 'Egregious' Pandemic Profiteering by US Food and Oil Giants
On the eve of a congressional hearing on corporate price hikes, a new analysis shows that "companies are hiding behind the pandemic and supply chain disruptions as an excuse to gouge consumers."
Feb 01, 2022
A new analysis released Tuesday ahead of a congressional hearing on pandemic-era price gouging shows that U.S. corporations in the food and energy sectors--from Tyson to Exxon Mobil--are pushing higher costs onto consumers while raking in ever-increasing revenues and handing executives massive pay packages.
Conducted by the advocacy group Food & Water Watch (FWW), the analysis spotlights the fact that skyrocketing food and energy--specifically gasoline--prices have been major contributors to the overall rise of inflation in the U.S. Between December 2019 and December 2021, the nation's Consumer Price Index (CPI) jumped by 8.5%.
"Many companies have subsequently fattened executive compensation while worker wages have stagnated."
According to FWW, overall energy costs rose 20% over that period while the price per gallon of unleaded gasoline increased by 31.7%.
Meanwhile, FWW found, "the cost to feed a family of four on a 'thrifty' food plan has increased by 33.5%," driven by the rising prices of ground beef (+19.2%), bacon (+31.7%), chicken breasts (+19.7%), milk (+17.4%), and eggs (+16.5%).
The analysis emphasizes that such "egregious" price increases come as leading corporations in the U.S. food and energy sectors are reporting growing revenues and huge profits. Tyson Foods--the second-largest chicken, beef, and pork processor in the world--has seen its revenue grow 11% above pre-pandemic levels.
The corporation also rewarded its top executives with higher pay in 2021 even as it raised prices for consumers, blaming supply chain issues.
Amanda Starbuck, research director at Food & Water Watch, argued in a statement Tuesday that "companies are hiding behind the pandemic and supply chain disruptions as an excuse to gouge consumers."
"In reality, 2021 revenues among the largest food and energy corporations topped pre-pandemic levels," said Starbuck. "Many companies have subsequently fattened executive compensation while worker wages have stagnated or even dropped."
FWW's analysis was published on the eve of a House Energy and Commerce Committee hearing scheduled for Wednesday titled, "Pandemic Profiteers: Legislation to Stop Corporate Price Gouging."
"We spent a half-century allowing business executives and financiers to take control of our supply chains."
One of the witnesses set to testify at the hearing is Groundwork Collaborative chief economist Rakeen Mabud, who on Monday co-authored an article in The American Prospect arguing that recent product shortages and price hikes were "brought to life through bad public policy coupled with decades of corporate greed."
"We spent a half-century allowing business executives and financiers to take control of our supply chains, enabled by leaders in both parties," wrote Mabud and David Dayen, the Prospect's executive editor. "They all hailed the transformation, cheering the advances of globalization, the efficient network that would free us from want. Motivated by greed and dismissive of the public interest, they didn't mention that their invention was supremely ill-equipped to handle inevitable supply bottlenecks."
"And the pandemic exposed this hidden risk," they added, "like a domino bringing down a system primed to topple."
Mabud is expected to reiterate that conclusion before lawmakers at Wednesday's House hearing. According to her prepared testimony, Mabud will contend that "big corporations have taken advantage of shifting demand to raise prices on essentials like Covid tests, masks, and hand sanitizer, all to generate record profits."
"Our economy works best when it works for all of us, but deeply entrenched concentrated corporate power has systematically stripped down supply chains and undermined consumers' bargaining power," Mabud plans to say. "The path towards an inclusive, resilient economy must include policies that foster competitive markets where consumers, working people, and smaller competitors all have meaningful bargaining power."
Correction: An earlier version of this story misidentified Dr. Rakeen Mabud of the Groundwork Collaborative.
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It's International Food Workers Week--Support Organizing That Centers Those Who Feed Us
There's a long history of over-exploiting and under paying the people who do the vital, yet too often unseen, work that keeps grocery stores stocked with food.
Nov 23, 2021
Every year, the Food Chain Workers Alliance marks International Food Workers Week in November. As peoples' thoughts turn to holiday feasts, it's a time to recognize the labor that people working from field to factory contribute to feeding the world. What started as an awareness campaign in 2012 by organized food and farmworkers leveraging end-of-year holidays around the need to raise the minimum wage and improve working conditions from farm to table, the campaign has become more relevant than ever in 2021.
Too often, workers' calls for justice and all of our calls for a fair food system are met with false solutions.
Corporate greed has long been at the root of human rights violations in workplaces along the supply chain. Throughout the COVID-19 pandemic, big food companies that control much of the U.S. food supply and its infrastructure have posted record profits. Meanwhile, food and farmworkers were deemed "essential"--even as they struggled to get basic protections and fair pay at work. What we have witnessed throughout the pandemic is nothing new. There's a long history of over-exploiting and under paying the people who do the vital, yet too often unseen, work that keeps grocery stores stocked with food. But there's an equally long history of resistance led by those same people.
So often in the grocery store, those stories of resistance are made invisible. What we know of the struggles for human rights and dignity gets boiled down to an ethical label on a bar of chocolate or a tub of yogurt, and a simple question, "buy this, or buy that?" Over the years, my organization, Fair World Project, has produced many resources to help answer and expand on that question. But as the stories of #FoodWorkersRising this International Food Workers Week remind us, there are so many more ways we can build towards a fairer food system too.
In our "For a Better World" podcast, I have the honor of speaking to worker organizers, as well as others working to transform the food system. Right now, in the dairy barns of upstate New York, there's a years-long struggle going on for safe working conditions and for dignity. Workers tending the cows whose milk goes to Chobani have been calling on the yogurt maker to meet with them and negotiate. Organizing with the Workers Center of Central New York, these workers have moved legislative mountains, winning historic protections for union organizing and wage protections that too many farmworkers nationwide lack.
Now is a critical time in their campaign for justice. Instead of meeting with workers, Chobani has gone its own way, working with Fair Trade USA to develop a "fair trade dairy" label--without the participation or support of the workers it claims to benefit. In the words of organizer Crispin Hernandez, "We've spoken with workers on several of the farms participating in this program and without fail they are all confused about the program--how it works, who's running it, what their rights and benefits are, and how to get more information. Meanwhile working conditions and housing issues have not changed. We haven't seen any benefit to workers."
Too often, workers' calls for justice and all of our calls for a fair food system are met with false solutions like this label that try to rebrand the exploitative status quo as ethical. But there is another way.
Throughout the fall, we have seen wave upon wave of national strikes and labor actions as workers at national brands like Nabisco, Kellogg's and Hello Fresh joined thousands of others to stand up for fair pay and better working conditions. When actor Danny DeVito tweeted "No Contract, No Snacks," he set an example for what we can all do, regardless of our jobs. Our power and our participation in the food system doesn't start and stop in the grocery aisle. This International Food Workers' Week, we can amplify the demands of worker-led campaigns who are sharing their calls for action at #FoodWorkersRising2021. Together, we can support a food system grounded in justice that nourishes us all.
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