30 Sep 2014

Free apples!

Rosanne S. writes:*

It was a pleasant surprise for those doing their groceries at a Jumbo supermarket two weeks ago: Jumbo offered every customer an Elstar apple – for free! The supermarket launched its newest stunt in order to show that not only they, but also the Dutch consumer itself could support Dutch farmers, who are having a hard time keeping their heads above the water due to the Russian boycott. I wondered how that free Elstar apple would taste.

Dutch farmers are facing serious problems indeed. The EU decided to take economic sanctions against Russia this summer to punish it for its involvement in the Ukrainian conflict. Yet, Russia decided to retaliate by boycotting many European products, including Dutch products such as apples, pears, bell peppers and dairy products (cheese, of course). As CBS statistics show, the Netherlands will lose exports worth over 500 million euro’s, leading to a total loss of 300 million in earnings for the Dutch economy. Consequently, this puts 5,000 jobs at risk.

Jumbo’s generous free-apples stunt to stimulate the Dutch economy seems to convey the message that the Dutch can support their own economy and make up for the lacking Russian demand if they simply eat more Elstar apples (not just the free ones), onions, bell peppers and cheese (preferably bought at the Jumbo, of course). Or can they? As Anna Vossers writes in NRCQ (Dutch), that would oblige us to completely adapt our food menu to Dutch farmers’ products and eat about 3 kilos of cheese a day, preferably with pears.

Besides this being a practically impossible menu, there is another problem to this. The prices of Dutch fruit and vegetable products will not decrease in Dutch supermarkets, as they have contracts with Dutch suppliers in which purchasing prices have been fixed on the long run. If we decide to increase our demands drastically, this will create a Valhalla for other European producers who also face the boycott, but who can sell at much lower prices. It is unlikely that we would still buy the much more expensive Dutch Elstar instead of the cheaper German, French, Italian or Polish equivalent. In other words, the menu of cheese and pears and increased Dutch demand would not be a success.

Once we turn back to the local Jumbo store and see their profits rise, we should realize that Jumbo’s free apples are most juicy for Jumbo itself, but not for us, nor for Dutch farmers. Its strategy is a cunning one, as the supermarket benefits from its new image as a generous supermarket supporting the Dutch economy and its farmers.

Thus, the support-Dutch-farmers-by-eating-a-free-Elstar-apple should taste more sour once we realize that the free apple is a delusion. Of course, a consumer appreciates free food, but contrary to what Jumbo implied, there is little we can do in order to support our Dutch farmers, let alone to save our economy.

Bottom Line: Dutch farmers must not expect the Dutch take over the lacking demand of the Russians, whilst the Dutch citizens must realize that they themselves face economic downturn and job risks. In this case, the only one truly enjoying the tastiness of the Elstar, is Jumbo itself.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.