Going hungry in the food factory

Even as production costs fall, staggeringly high inflation continues unabated, in large part driven by skyrocketing prices of the one thing everyone needs – food.

Research by consumer group Which? found that in April, own-brand budget items at the UK’s largest supermarkets jumped by as much as 25 per cent in only a month, hitting low-income shoppers the hardest.

The big supermarkets and other large companies in the food supply chain have continuously blamed the increasing costs of production for unprecedented price hikes, such as the cost of energy. But as energy and other production costs ease, shoppers still face shockingly high food bills that are only getting worse. 

Meanwhile, these same businesses pleading poverty are raking it in like never before – Unite research has found staggering profiteering in the food sector. The UK’s biggest supermarket Tesco, for example, made £3bn in profits over the last two years alone, with shareholders receiving a £1bn buyback bonanza.

Eight of the top UK food manufacturers made a combined total of £22.9bn in 2021. The biggest winner was Nestle, which alone pocketed a net profit of £13.7bn – up by nearly £4bn on 2019.

In May, prime minister Rishi Sunak convened a so-called ‘Farm to Fork’ food summit to discuss food security and inflation. The summit brought together executives from the biggest food businesses, as well as farmers and other industry leaders.

It was described by those who attended as “an empty meeting”, “no more than a PR stunt” and as having “nothing of substance”.

And noticeably absent were the voices of food workers themselves, who are in many ways on the very frontline of unprecedented food price inflation.

‘Demoralising’

For them, reports senior Unite rep for Sainsbury’s John*, “it’s been very difficult”.

“In some cases it is our members who are physically changing the prices on the shelves, so they’re seeing with their own eyes prices going up by such a large margin,” he told UniteLive. “Then to know that their wages are not going up enough to meet these price increases is very demoralising.”

John notes that supermarket workers must also deal with frustrated customers.

“Checkout staff especially are bearing the brunt,” he explained. “There aren’t enough staff to do the work anyway, so customers are already frustrated by having to wait so long in the queue, and then they’re also understandably doubly aggrieved by the price rises.

“Customers can’t complain to those who are responsible for the price increases so they sometimes take it out on staff. The poor worker then has to deal with these complaints day-in and day-out, when workers are just as much victims of food price inflation as the customers they serve.”

John said he was proud of the in-roads Unite has made at Sainsbury’s – for example, Unite last year negotiated a 15 per cent staff discount on payday weekends from Friday through Monday, up from the 10 per cent discount they had previously.

But the fact still stands, John went on to say, that Sainsbury’s workers’ wages as a whole aren’t enough to beat food inflation — and so they’re often forced to shop elsewhere in the intervening weeks when they don’t receive a discount.

“It’s not unusual for a Sainsbury’s worker to go to one of the discount supermarkets like Lidl after work, and they’ll be in their Sainsbury’s uniform,” John explained. “Personally I can see how it could be a little embarrassing as a CEO if I saw my company’s staff were forced to shop at a rival supermarket.”

John praised Sainsbury’s willingness to increase staff pay during the cost of living crisis – thanks to strong representations by Unite, all workers now receive at least £11 an hour, which is just above the real Living Wage. Last year, they received an inflation-matching pay rise.

But the biggest problem is that most Sainsbury’s workers don’t work full-time hours.

“The Living Wage is calculated for people who are working full-time, and the vast majority who work at Sainbury’s are on part-time contracts, despite many wanting more hours,” John said. “Some are forced to work two jobs just to make ends meet. Sainsbury’s has recently been listening to Unite’s concerns about colleague hours.”

‘Chicken is now a luxury’

Like food retail workers, food manufacturing workers also have a unique relationship with food price inflation – they’re feeding the nation while they can barely afford to feed themselves.

Iulian Firea is Unite convenor for 2Sisters, the UK’s largest poultry processing company, and he said the impact of the cost of living crisis on members has been “massive”.

“Last year, we did get what I would call a decent pay rise, but it’s still not enough to keep up with price rises,” he said. “And this year, prices have kept going up but the pay deal presented by the company is only pennies more per hour – it’s nowhere near what our members need.”

Iulian said he’s noticed a significant change in workers’ habits — for example, many more workers are living in shared housing. They’re also carpooling to save on petrol, with as many as six people “squeezed” into one car to get to work.

“Even in the canteen you can see the difference – people are eating the bare minimum during their lunch breaks,” he told UniteLIVE. “The cheapest fruit, the cheapest bread – it’s rare to even see a ham and cheese sandwich.”

Iulian recalled an article he read two years ago where 2Sisters owner Ranjit Boparan lamented the fact that a chicken cost less than a pint.

“Now, the cost of a chicken is double the price of a pint,” he said. “You’d think we were making luxury items like cars or jewelry – in these cases it’s almost a given that shop floor staff can’t afford the products they make. But when we get pennies more per hour just as the cost of chicken doubles, chicken is now literally a luxury item for 2Sisters workers.”

Iulian said he despairs when large, profitable food manufacturing companies like 2Sisters say they have no choice but to raise prices for consumers because of rising production costs.

“The price of the gas used to kill chickens, for example, has gone up five times or more since the war in the Ukraine,” Iulian acknowledges. “But for large multinational companies, we know their financial wizards plan to the penny for emergencies like this to protect their profits. This isn’t the first time they’ve had to contend with soaring production costs because of external factors yet they’re hiking prices like never before.”

Iulian said he feels for small businesses, like local family-run chip shops, which simply don’t have the resources to plan for unforeseen events, nor the leverage with suppliers.

“Companies like 2Sisters have that bargaining power with their suppliers to keep costs down,” Iulian explained. “If the chip shop gets its potatoes from Asda, and then decides it’s no longer going to buy from them because their prices are too high, Asda won’t care. Asda will care if it loses one of its biggest suppliers so there’s a huge amount of leverage with the big firms – there’s really no excuse for them to be hiking prices that much.”

Profiteering report

Both Sainsbury’s and 2Sisters were identified in Unite’s profiteering report, and John and Iulian agreed it made for dispiriting reading.

The report highlighted that the UK’s biggest supermarkets – Tesco, Sainsbury’s and Asda – doubled their combined profits to £3.2bn in 2021 compared to 2019. Meanwhile, Boparan Holdings, the parent company of 2Sisters, was identified as one of the top ten UK food manufacturers by revenue.

Unite also published a fresh analysis in June which found that Sainsbury’s gross profit “before non-underlying items” actually increased last year. It was £2.42bn in 2022/3, 3% higher than £2.36bn in 2021/2.

The analysis also showed that Tesco and J Sainsbury are paying out a massive £1.2bn to their shareholders this year. Tesco plans to pay £859m in dividends in 2023; Sainsbury £319m. These are their highest “common” dividends since 2015.

John said it was “uncomfortable” reading about UK supermarkets’ mega profits during a cost of living crisis.

“Supermarket workers are doing their very best to make their companies successful, and more importantly, to serve their customers and give them the best possible experience,” he said. “But when the supermarket industry is reportedly price gouging customers, then it feels like they’re just undoing all our members’ hard work.”

Iulian said what made him angriest was that while the biggest food companies were profiteering like never before, workers are being blamed for inflation when they fight for better wages.

“It is not higher wages that are responsible for harming the economy; in fact, it’s the exact opposite. When people don’t have money to spend – for food, clothes, bills – you can’t support an economy,” Iulian noted. “Without money in people’s pockets, the economy will shrink and collapse. That’s why we have to keep fighting.”

You can read Unite’s latest profiteering report here.

*Named changed to protect privacy

By Hajera Blagg