Some 50 million purchase occasions take place in Germany‘s fresh food sector every day, a new report by Handelsverband Deutschland (HDE), the German retail federation, has found.
According to the report, food retailers play an important role in the supply of fresh food to the population, operating more than 36,000 stores and employing over one million people, however their influence on pricing is not as significant as is often assumed.
‘Direct economic link’
“The direct economic link between domestic agriculture and the food retail sector in Germany is limited,” commented Stefan Genth, HDE CEO, who noted that retailers’ negotiating partners tend not to be the farmers themselves, but rather large agricultural conglomerates.
“The most important factors influencing farmers and the prices of their products are the global market and the processing industry. The myth of retailers driving down prices for farmers has been debunked. It’s a legend that doesn’t stand up to scrutiny.”
As the HDE noted, just 23% of the fresh pork in Germany is distributed through food retailers, while just 12% of milk ends up on store shelves.
Overall, close to half of German agricultural production – of foods such as fruit, vegetables, potatoes, meat, eggs, and milk – is exported.
“Food prices are determined through complex negotiations between all actors in the supply chain and as a result of supply and demand on global markets,” Genth added. “Climate change also repeatedly has a significant impact on harvest yields.”
Global markets
Global markets, therefore, have a significant influence on the performance of German agricultural exports.
“If, for example, China suddenly stops importing German pork, this creates a surplus, causing prices to fall,” said Genth. “Exports, with their volatile conditions, massively impact farmers’ earning potential.”
In addition, most agricultural goods generally enter processing stages before reaching retailers, with slaughterhouses, dairies, and other intermediaries forming central links in the chain.
“The food retail sector in Germany occupies an important, but not dominant, position in the value chain,” Genth added. “Other players are at least as important for agriculture. At the food industry level, retailers face very powerful, often multinational food corporations.” Read more here and here.
