Zero-Profit Groceries, ACA Logic, and the Myth of Cheap Healthy Food

Calls to nationalize or force grocery stores to operate at zero profit may sound populist, even compassionate. But follow the math — not the slogans — and the idea collapses fast. Grocery retail is one of the thinnest-margin businesses in America, typically earning just 1–3 percent. Strip that margin away and you don't get cheaper food; you get pressure cascading backward through the entire supply chain, all the way to the farmer.

Imagine the top 100 companies in the US were state-owned and run. Take the grocery chains — well, what about the farmers and the supply chain? Are they then included? Would that lead to a revolution in the farmers' world away from processed foods to natural? The Mamdani plan for city-run grocery stores has already been criticized as unrealistic.

Retail is not where food prices are born. They are shaped upstream: processors, wholesalers, logistics networks, packaging, fuel, fertilizer, land, labor, insurance. If the state only owns grocery stores, nothing structural changes. If it owns processors and distributors too, we are no longer talking about markets — we are talking about centralized planning. And centralized systems, historically and predictably, favor shelf-stable, processed food over fresh, local, labor-intensive nutrition.

This is not theory. We have already built a near-perfect analogue in healthcare.

The ACA Comparison

The Affordable Care Act caps insurer profits but leaves medical prices largely unchecked. Insurers respond rationally: they expand volume, tolerate rising provider prices, and pass costs through premiums and subsidies. A 5 percent margin on $100 is better than 5 percent on $10. The result is a pass-through system where consumers and taxpayers fund an ever-expanding cost structure.

Apply that logic to food. Cap grocery profits and retailers chase volume. Volume favors processed foods with long shelf lives and predictable logistics. Processors raise prices upstream. Farmers are squeezed. Consumers get cheaper calories — not healthier diets. The system becomes more consolidated, not less.

The Myth of Cheap Healthy Food

Advocates of zero-profit groceries often imagine a renaissance of natural, affordable food. In reality, they would engineer the opposite. Healthy, minimally processed food is labor-intensive, seasonal, perishable, and infrastructure-heavy. Cheap food is processed, standardized, transport-efficient, and scalable. You do not get both without massive subsidies, cultural change, and decades of rebuilding local supply chains.

The Make America Healthy Again guidelines under RFK Jr. may be well-intentioned, but eating healthy is fundamentally at odds with the economics of cheap processed food — and that tension cannot be resolved by price controls.

Recent grocery profits are often framed as evidence of exploitation. Yet grocery stocks have outperformed the broader market not because stores suddenly discovered greed, but because they discovered pricing power inside inflation. Walmart, Kroger, and Costco have been rewarded by investors for logistics efficiency, private-label expansion, and scale — precisely the traits critics claim to oppose. What's really behind high grocery prices is far more complex than corporate villainy.

The Amazon Elephant

The political irony is hard to miss. Some reformers rail against grocery consolidation while ignoring Amazon , a company that runs on pennies per dollar yet dominates through logistics, scale, and market share. No serious movement proposes dissolving Amazon because doing so would require rebuilding physical infrastructure from scratch. Anyone in Mamdani's circle asking to dissolve Amazon? Check who Amazon's competitors actually are — and how few can challenge them.

There was a reason processors and wholesalers became quasi-monopolies: scale lowers per-unit costs, food safety compliance is expensive, and distribution networks are brutally hard to duplicate. Break them up without rebuilding local infrastructure and you don't get competition — you get shortages.

The Bottom Line

State ownership is not a magic fix. Political pricing does not defeat economic gravity. Zero profits at the retail level simply push costs backward until something breaks, at which point taxpayers step in anyway. Affordability doesn't improve; it just gets hidden.

New York's food processing plants are a testament to the state's food industry — but state ownership won't change the fundamental economics. The US doesn't grow enough food , but we could — the question is whether political slogans or actual investment will get us there.

To make a healthier, cheaper, more resilient food system work, you would need to rewind to roughly 1950 — local distribution, simpler diets, cheap energy — while somehow layering on modern technology. That is not impossible, but it is not a slogan. It is a generational project.

The uncomfortable truth is this: affordability, nutrition, resilience, and freedom of choice cannot all be maximized at once. Every system picks tradeoffs. Pretending otherwise is not reform — it's denial. And denial, unlike food, is never in short supply.