Dengler Domain: Robinson-Patman Act
Growing up in northern Tama County, oddly enough, I have fond memories of getting groceries. When staying with my grandma in Clutier, I remember visiting the small grocery store on Main Street. Since the last time I stepped foot into the store, maybe over 20 years ago, I still vividly remember the small but mighty store. The store was the right size for Clutier.
When it came to visiting the Dysart grocery store, now Bobby’s BBQ & Grocery, after attending church on Sundays, my family would place bets. Not on how much food we can eat, but how long it took my mom to get warm chicken while we waited in the van. Who knows who won the most times but sitting outside the red awning lives on.
As for the Traer grocery store, those delicious meals still make my mouth water. Whether for my grandparents or my parents, these meals always hit the spot. The amount of gravy on top of the mashed potatoes was always an impressive amount. At this point in my life, most of my visits to the grocery store are for grabbing bottles of the tasty Fox Ridge wine.
While two of these grocery stores are still in operation – one with recently documented troubles – they are vital to our community. They keep the wealth in the community and more importantly, they prevent food deserts. No one needs to drive extraordinary lengths to get fresh food like meat and vegetables.
The funny and sad thing is food deserts were not a part of society until the 1980s according to an Atlantic article written by Stacy Mitchell, co-director of the Institute for Local Self-Reliance. Unfortunately, since the 1980s, they have become more common. What has led to the food deserts is the abdication of rural and urban areas by big grocery retailers. While food deserts are relatively new, the fix for these food deserts has been around for a long time. This current emptiness is nothing Americans have not faced before. There was a time Americans took this problem head on which helped support rural Iowa life. This was the time when small towns were filled with life, and this was not one person saying what can and cannot happen. No, it was the Robinson-Patman Act.
According to the Atlantic, this act, passed in 1936, essentially banned price discrimination, making it illegal for suppliers to offer preferential deals and for retailers to demand them. The act allowed businesses to pass long savings. If it costs less to sell a product by truckload rather than by the case, then suppliers could adjust their prices. The key part is that every retailer who buys the truckload gets the same discount.
Robinson-Patman led to better competition in the grocery retail space. The eight largest supermarket chains captured 25 percent of grocery sales in 1954, and this was similar in 1982, even though the specific companies had changed. This form of competition, not based on price discrimination, led to innovations by independent stores like the self-service supermarkets, shopping carts, and automatic doors. These innovations forced national chains to keep up. A common phrase heard today is “economies of scale,” which is why everything must go big or go home. This is not the case. In 1965, a federal study revealed large independent grocers were less than one percent more expensive than the big chains, according to the Atlantic.
Despite this success for small grocers and rural America, the Reagan administration saw the Robinson-Patman Act as an economically illiterate handout to inefficient small businesses. The administration stopped enforcing this law. Since then, chains like Walmart and Dollar General take full advantage of this circumstance by making suppliers bend to their will. This unfair approach led to a “waterbed effect,” causing the suppliers, who give the large grocers significant discounts, to then increase the prices on smaller retailers. From 1982 to 2017, the market share of independent retailers shrank from 53 percent to 22 percent.
With the closing of small grocery stores like the one in Clutier, these large chains see no reason to fill this gap. Walmart and Dollar General know they can make the public come to them at the expense of their local community. Hy-Vee even closed stores in urban Iowa areas due to low profits, forcing these areas to become food deserts. The FTC under the Biden administration is widely expected to file its first such case regarding the Robinson-Patman Act, per the Atlantic. What becomes of this case is unknown due to the incoming Donald Trump administration.
If you want to support local businesses and fight for a fairer price for your local grocery store, lobby your U.S. representatives to put pressure on the current and incoming administration to enforce the Robinson-Patman Act. When people spend their money at the local grocery store, there is a better chance they will stay in town to buy local as well. Few people like driving more than they must. If this act is not enforced, rural and urban America will continue to see an increase in food deserts – leading to more people driving farther and spending less of their money in their local economy.
This is not a handout for local grocery stores, not even close. This is about giving them a chance to compete on merit with the larger grocers. For the large grocers, this was never about always low prices or being more efficient, this was about market dominance. These large grocers suck the wealth out of hard-earned American bank accounts and ruin local economies for the better of a few. Walmart and Dollar General have an unfair advantage, and this leads to hurting the independent grocers and local economies. This is unhealthy for competition, unhealthy for our citizens, and unhealthy for democracy. No one should be allowed to cheat, big or small. This is why rural and urban Americans alike need the government to enforce the Robinson-Patman Act.
Sean Dengler is a writer, comedian, farmer, and host of the Pandaring Talk podcast who grew up on a farm between Traer and Dysart. You can reach him at sean.h.dengler@gmail.com.