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Monopsony Power - farmers making tiny profits as supermarkets reap record profits

Graham Watson

2nd December 2022

Research by food charity Sustain reveals the remarkably low profit margins being earned by the UK's farmer for essential items - cheese, bread, apples, carrots and beefburger. They earn 1p on a loaf of bread or block of cheese and 3p on a kilo of apples.

Why? Because of the monopsony power of supermarkets, who use their status as preponderant buyers to drive prices below those that would be generated in competitive markets. Are we as consumers happy with this? Given our shopping habits, it would appear so.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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