Economy 3 min read By Callum Montgomery
Federal Buying Plan Could Cut Grocery Prices Without Government-Run Stores
A proposal would have the government buy 20 grocery staples at auction prices and require participating stores to sell at a preset, publicly posted markup, without the state owning any shops.
A proposal known as the Kitchen Table Project would lower grocery prices by having the government buy food rather than run stores. Under the plan, any grocer, from a neighbourhood bodega to a national chain, could purchase 20 staple goods at prices set through USDA-style competitive auctions, on the condition that it sells those items at a preset markup that is posted publicly. The government would neither own shops nor cover any gap between cost and shelf price.
The authors estimate that the scheme could save a family of four about $315 a year. The case for it rests on the fact that smaller retailers typically pay more per unit because they buy in smaller volumes. Independent grocers therefore face higher costs than large operators, and discounters frequently undercut most supermarkets in price surveys. Research from the Atlanta Federal Reserve has found that food inflation has been hottest in lower-income metropolitan areas, where independent stores are often the main option for residents, which is the group the proposal is most directly designed to reach.
The proposal differs from the approach taken in New York City, where Mayor Mamdani has proposed city-run stores offering a discount of about 30 percent at five locations. That model depends on public operation of a small number of outlets. The Kitchen Table Project would instead reach every store that chose to enrol, not a handful of publicly operated outlets, giving it a far wider footprint across the grocery sector and removing the need for the state to staff, stock and manage shops itself.
The proposal has clear limits. Six of the 20 items, including eggs, milk and ground beef, show no savings in the analysis. Ground beef is currently near $7 a pound, and the US cattle herd is at its smallest in about 75 years, factors that leave little room for procurement to bring prices down on those products. The report also argues that federal buyers are unlikely to outperform large retailers such as Walmart or Costco when it comes to purchasing, since those chains already negotiate volume deals on a scale that a public buyer would struggle to match.
Several questions remain open. The report does not say who would set the markup, and regional differences in rent and wages could make a single national margin unworkable, particularly where operating costs for a corner shop in one city differ sharply from those in another. Stores might also raise prices on items outside the programme to cover their costs, shifting part of the burden onto shoppers who never buy the 20 designated staples. Finally, the effect on the overall cost of a weekly grocery basket has not been measured, so the headline saving remains an estimate rather than a demonstrated result.
Source: fortune.com
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