Grocers Serving Low-Income Neighborhoods Pinched by Shortages, Rising Prices

Abdul Taleb, the owner of a mid-size market in Oakland’s Fruitvale district, sells meat, produce, dairy and other essential groceries to mostly Latino workers and elderly residents who live nearby.

But beginning last month, the coronavirus pandemic triggered panic shopping, and now Taleb and other independent grocers serving low-income Bay Area neighborhoods say they can’t replenish their stores with basic foods in high demand.

“It’s a problem because many of our customers depend on us to go buy their eggs, their rice, because they don't have the resources or they don’t want to go to the big stores,” said Taleb, a Yemeni-American who speaks in fluent Spanish to his clientele at Mi Carnal Market. Many of his customers don’t have cars, he said.

While empty shelves are now a common sight at markets of all sizes, small store owners say they are bearing the brunt of a food supply chain strained by consumers overbuying groceries while under shelter-in-place orders. The increased demand has pushed up prices for some staples nationwide, say experts, raising costs for retailers and consumers.

“This hoarding behavior is unfortunate,” said Richard Sexton, a professor of agriculture and resource economics at UC Davis. “We can understand why people do it, but it is what's causing these disruptions.”

Members of the Bay Area Small Merchants Chamber of Commerce, which includes Taleb and about 60 other store owners, said wholesale distributors are rationing the amount of non-perishable items in high demand they can purchase, such as instant noodles, rice, beans and flour.

Taleb used to purchase 80 cases of flour per week, he said, but he can only get three cases these days.

Most alarmingly to Taleb and his customers, is that prices have skyrocketed. An 18-pack of eggs now costs him $5.50, more than double what distributors charged a month ago, he said.

“It's very hard for us at this time when people are losing their jobs to charge that price,” said Taleb.

A regular at his market, Angeles Rocha said she has resorted to buying fewer groceries for her household and her 90-year-old mother, who lives near the store.

Rocha’s husband, a janitor, was recently furloughed with no pay. Rocha said she also lost her income from a childcare gig. The couple worries about how they’ll feed their three kids and pay the bills.

“We are not earning money. And with these prices, I don’t know what we’ll do,” she said.

One of Taleb’s wholesale distributors, Jetro Restaurant Depot, said manufacturers are charging higher prices and not sending enough supplies of coveted items, such as bottled water and gloves.

The company is limiting how much each customer can buy, to ensure there is enough to go around, said Richard Kirschner, Jetro’s president. As to the higher prices, he said that he is simply passing on the extra cost to grocery stores and other clients.

“We're not making a nickel more than we used to make. We don’t charge any more,” said Kirschner.

For decades now, small store owners have gotten squeezed as the grocery industry consolidated, and giant corporations such as Walmart and Costco, bought higher volumes directly from producers — getting better bargains in the process.

The current shortages could deepen disadvantages for family-owned neighborhood stores, said Sexton, the UC Davis economist.

“The little guys, the small chains of just a few stores, could get the short end of the stick in this situation because food manufacturers and distributors are going to probably prioritize their biggest and best customers,” he said.

As California continues to fight the spread of COVID-19, Gov. Gavin Newsom issued an executive order last week prohibiting all merchants from raising prices on food, consumer goods, medical or emergency supplies and other items by more than 10 percent until Sept. 4, 2020.

Attorney General Xavier Becerra has encouraged people to report to his office or local law enforcement if they suspect price gouging, which is punishable as a misdemeanor.

But the law makes exceptions for sellers who can show that their price increase is due to additional costs imposed on them by suppliers.

Sexton believes that many of the grocery price increases may come from producers in other states or other parts of the world, so California authorities will be limited in their ability to enforce anti-gouging laws.

Oakland city councilman Loren Taylor has heard the concerns from independent grocers in his East Oakland district and other parts of the city, and he said he worries for low-income residents who rely on those markets.

“It’s the classic, ‘It’s more expensive to be poor,’” said Taylor, adding that there are no national brand supermarkets in District 6, which has about 64,000 residents.

The city’s Economic and Workforce Development department is poised to help grocers find other distributors or get resources for struggling businesses, said Taylor.

Another possibility is for Oakland to offer grocery vouchers that  residents in need could use at small and medium-sized stores, said Taylor, who is exploring funding the idea with a portion of the city’s soda tax revenue.

Seattle has recently dedicated $5 million from its sugary beverage tax funds to provide supermarket vouchers to thousands of families who are already enrolled in city-subsidized child care and food assistance programs. The vouchers are aimed at helping families get through the coronavirus crisis.

In California, the current challenge to the supply chain has to do with the delivery of goods to warehouses and retailers, said Dave Heylen, a spokesman for the California Grocers Association.

“As one large manufacturer that produces paper products including toilet paper told me the other day, they are in production 24 hours a day but their plants only have so many docks and trucks,” said Heylen.

Once consumers stop overbuying, the supply chain should catch up and begin to normalize, said Heylen and other observers.

At Mi Carnal Market, Taleb said he hopes that happens sooner rather than later.

“At the end of the day, if we don't have merchandise for the clients, then we don't have business,” he said.