Consumer research exposes risk of unfair food prices

A new tool created by consumer organisations has highlighted the risk of unfair food prices in Ghana, driven by insufficient competition in national and global food supply chains.

The Fair Food Price Monitor warns how rising prices for Ghanaian consumers are potentially being caused not only by factors such as increased fuel costs and currency depreciation, but also dominant market actors taking advantage of this crisis to increase prices excessively.

The tool – developed by Consumers International (representing consumers across the world) and Ghanaian organisation Consumer Advocacy Centre (based in Laweh University College) – uses data from sources such as the UN World Food Programme (WFP) and UN Food and Agriculture Organisation (FAO) to track the relationship between food prices at different stages of the supply chain in Ghana, and to highlight where investigation and action may be needed from government.

Growing evidence of unfair prices

Key outcomes from the first analysis using the Fair Food Price Monitor have shown that for several important food items, retail/consumer prices have risen substantially faster than wholesale/market prices. For example, between January 2022 and July 2023:

• The retail price of onions increased by 4 percent, while the wholesale price rose by just 18.1 percent in the same period.

• The retail price of gari grew by 77 percent, compared to a 63 percent rise in wholesale prices and an increase of just 4 percent in the wholesale price of cassava, gari’s basic ingredient.

• The retail price of sorghum increased by 9 percent, while the wholesale price increased by 100.6 percent.

This shows that while costs are increasing for all market actors, consumers are bearing an unfair and excessive burden. The Fair Food Price Monitor explores several potential explanations for this divergence in retail and wholesale prices – such as rising fuel costs and a weakening exchange rate – but finds that while these factors may have contributed, they do not appear to be sufficient explanation for the excessive rise in retail prices.

When the cost of producing and importing food increases, it is inevitable that consumers will have to pay higher prices.

However, in a competitive national market it is expected that profit margins will also decrease slightly, as the burden is shared between food producers, traders, retailers and consumers. If the margin between retail and wholesale prices remains consistent (or even increases) in times of crisis, this is a sign that stronger competition will result in fairer prices for consumers.

The causes of unfair food prices

According to the UN Food and Agriculture Organisation’s Global Food Price Index, global food commodity prices have been consistently decreasing since March 2022; yet consumers worldwide are still facing food price rises.

According to Ghana Statistical Services, monthly food price inflation hit a 22-year high of 61 percent in January 2023.

The causes of rising food prices are complex – disruptions to international trade caused by climate crisis, conflict and COVID-19 all play a part – but many global experts have warned that food prices are rising excessively and unfairly. The UN Conference on Trade and Development (UNCTAD) noted in their 2023 Trade and Development Report that: “In the context of cascading crises, there is a stark contrast between growing risks to the food security of millions and profiteering by corporations”.

What solutions are needed?

Consumer organisations recommend a range of actions that government can take to tackle this threat of unfair food prices. In particular, it is highlighted that Ghana is one of the few countries in the world without a competition law or a dedicated competition authority to tackle unfair or anti-competitive pricing practices, such as price gouging and price fixing. Addressing this shortcoming must be an urgent priority.

Once this is achieved, there is a need for improved data on the price of food products at different stages of the supply chain to identify cases of unfair pricing; and action is needed to strengthen competition in the marketplace, by tackling monopolies and supporting small and medium businesses.