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The harmful harvest of monopoly agriculture A global agricultural system controlled by a handful of mega-corporations is hurting food producers and consumers alike and ruining the health of people and planet. Daisy Pearson and Nick Dearden OUR food system is in crisis. While most people in the world are experiencing a cost-of-living crisis, and small food producers are struggling, the barons of the food industry are enjoying bumper profits. There is a causal link here: the profits of giant and extremely powerful food corporations are deeply interwoven with the crisis for producers and consumers. Recent figures suggest that well over 50% of recent price rises in the UK, the US and Australia have been driven by increases in profits. A 2023 report from Oxfam states that ‘not only are companies passing increased input costs on to consumers, but they are also capitalising on the crisis, using it as a smokescreen to charge even higher prices.’ Its research shows a huge increase in the wealth of food and energy billionaires, with 62 ‘food billionaires’ created between 2020 and 2022. In this period, billionaires in the food and energy sectors saw their combined fortunes increase by a billion dollars every two days. At the same time, 263 million people were at risk of being pushed into extreme poverty, with rises in the price of food a core driver. While our food system is succeeding at funnelling vast wealth into the banks of the super-rich, it is failing to provide the rest of the world with affordable, nutritious food. These perverse outcomes are just one result of an industry that has become increasingly concentrated, with just a few large companies establishing monopolistic control over entire supply chains. What’s increasingly clear is that the behemoths that control the food industry are not earning their crust; they’re simply taking it – at whatever cost to people and planet. The corporate takeover of our food system Over three decades, there has been a huge concentration in the food industry as the big players have taken over hundreds of smaller companies, part of a broader trend of ‘mergers and acquisitions’ that has been a dominant feature of the neoliberal economy. While 25 years ago, 10 corporations controlled 40% of the seed market, a series of mega-mergers means that today just four – Bayer, Corteva, Syngenta and BASF – control more than half. Together, they also control more than 60% of the world’s agrochemical market. Another area of massive concentration is the trade in agricultural commodities, including grains, meat and sugar, a process dominated by ‘the most powerful and least-transparent companies in the industrial food chain’. The top 10 such commodity traders brought in more than half a trillion dollars in 2020. Within that, just four companies – Archer-Daniels-Midland (ADM), Bunge, Cargill and Louis Dreyfus – control 70% of the world market in agricultural commodities. The problem of monopolisation is just as acute in the world of sales: in an already concentrated sector in the US, a merger currently on the table could see just three supermarkets controlling 70% of the grocery market across 167 cities, even further reducing the range of options available to consumers. As Krista Brown, policy analyst with the American Economic Liberties Project, put it: ‘We’re at a point in our market concentrations that we haven’t seen ever before.’ This concentration has had some serious consequences for our food system, allowing corporations to squeeze suppliers at one end and consumers at the other, as well as shaping farming practices that damage the environment, entrenching unfair trade systems, and holding back smaller farmers from building more sustainable systems. You might think that these corporations’ market dominance is rooted in a substantial contribution to global food security, but many of their riches have been accumulated from operations that don’t obviously deserve merit or represent useful forms of productivity. Many of the big agricultural corporations have benefited from unfair trade deals and laws that tilt power in their favour. Some of them have even helped to write those rules themselves. Meanwhile, many of the biggest players, especially commodity traders and supermarkets, have built their wealth from exploiting chokepoints in supply chains, using their power to squeeze producers and fleece customers. In a further move away from actually producing food, agricultural traders increasingly make a large chunk of their money through financial speculation. And as millions of people around the world have found to their cost, this imposing collection of giants is too often failing in its supposed mission to provide nutritious, affordable food to those who need it. Monopolising chokepoints One way in which big agriculture companies have built immense power in their dealings with both consumers and producers can be understood using the image of an hourglass. With over a billion farmers producing food at one end, and billions of consumers buying it at the other, commodity traders and supermarkets represent a handful of corporations dominating the middle. Cory Doctorow and Rebecca Giblin argue that companies exploit these chokepoints to lock in customers, which in turn locks in suppliers, in a cycle that gives them more and more power over the whole system, while reducing the power, and the income, of everyone else. Given neither producers nor consumers have anywhere else to turn, monopolies are able to push food prices down for farmers, while simultaneously pushing prices up for the public. As one food expert points, out, ‘[a] lot of people are making a huge amount of money out of food, but food producers [only] get about 8% of the £250bn a year we spend on food.’ Buying up the supply chain Big agriculture companies have also expanded their control by using their immense financial clout to buy up multiple stages of the food value chain, from production through to processing and supply. This gives them the ability to shift resources around in order to maximise their own profits and crush smaller businesses, reducing the choices for both suppliers and consumers. An example is soy production in Brazil, where Cargill, ADM and Bunge not only provide over 60% of the total financing, they also supply the seed, fertiliser and agrochemicals to the farmers, and manage the purchase, storage and transport of the harvested soy in their own facilities and infrastructure. It also undermines local economies: slowing the circulation of money among smaller businesses, and increasingly funnelling it into the bank accounts of these large corporations. Further, the crushing of smaller farmers and suppliers also limits diversity of production, a process which ultimately leads to higher prices. This broader process of concentration means food giants don’t have to fear being outcompeted, leaving them with outsized power to set prices – this can in turn drive inflation. In fact, during 2022, the profits of food and commodities giants ADM and Bunge rose much faster than the inflation fuelled by Russia’s invasion of Ukraine. While the system’s defenders argue that food companies were simply accounting for increased costs across the supply chain, the bottom line of these companies told a different story. The biggest corporations are marking up their prices twice as much, on average, as smaller companies, ripping off consumers, workers and citizens while suffocating smaller companies. In 2022, the profits of food and energy companies more than doubled. Speculation The outsized influence of these companies has had other perverse consequences too; for instance, some food corporations have become major speculators on financial markets, increasingly making money not from actually producing anything to eat, but gambling on food prices – a process which can itself increase costs. In 2008, when food prices spiked dramatically and millions were plunged into hunger, financial speculation was considered a significant factor. Then, in 2022 when food prices again went through the roof, researchers at Manchester University argued that increases in financial speculation in the years leading up to the crisis likely contributed. Unfair trade This consolidation of agricultural monopolies has been an intensely political process, spurred on by the relentless drive of corporations to corner ever-greater sections of the food market, but aided by policies that have tilted the balance of power away from local economies and towards agricultural behemoths. Neoliberal free trade agreements across the 1980s and 1990s favoured Global North agriculture and big business, with uneven rules on subsidising that overall allow rich countries to give far more support to their farming industries than poor countries. Big agriculture company associates have even been involved in writing some of these international agreements (see box). These trade deals allowed heavy subsidisation of agriculture in the Global North, which led firms, especially in the US, to produce huge surpluses of food. Much of this was exported far below the cost of production. Meanwhile, Global South countries were forced to slash import tariffs, leading to the mass dumping of cheap Global North food on Global South countries. This decimated domestic Global South food markets across many sectors while bolstering forms of industrial farming. Once almost self-sufficient in rice production, Haiti was forced to cut import tariffs on rice from 50% to 3% in less than two years from 1994–95 if it wanted to participate in the global market. Meanwhile, the US government was heavily subsidising its own rice industry – in 2003 it provided $1.3 billion in subsidies, a whopping 72% of the total cost of production. As a result, Haiti was flooded with US rice and Haitian rice production was destroyed, along with hundreds of thousands of jobs. Up to 2023, Haiti was still importing 80% of its rice, while global rice prices have gone through the roof. In this context, 44% of Haiti’s population faces acute food insecurity, which is the fourth-highest per capita figure in the world. Intellectual property Similarly, the drive by the US to establish globally enforceable intellectual property rights encourages agricultural companies to expand their ownership over ever-greater swathes of the food chain. Long resisted by peasants’ groups like Via Campesina, who argue that natural resources should not be privatised, this move allowed big agriculture firms to slap patents on seeds. Driven on by the big four seed companies, this approach is increasingly pervasive. Over the past few decades, big agribusiness companies have also been pushing for farmers to adopt genetically modified (GM) seeds, with worrying effects. In India, where Monsanto (bought up by Bayer in 2018 as concentration in the market deepened even further) controlled 90% of the cotton seed market, small-scale farmers have been at the sharp end of Monsanto’s activities. Unlike farmers’ own seeds which can be saved and swapped freely, Monsanto’s GM cotton seeds are patented, which means farmers have to buy them every year. At a cost of up to four times more than traditional varieties, this increases farmers’ costs considerably, creating indebtedness and threatening livelihoods. Further, the GM crops pushed by big agriculture firms are often designed to withstand increased use of specific herbicides. Inevitably, this means more chemicals and more products that farmers must buy from the companies like Bayer. In some cases, this has led to the growth of herbicide-resistant weeds that require ever-more toxic chemicals to kill. As well as contaminating water, soil and air, heavy pesticide use is a huge driver of biodiversity loss, at a time when we’re experiencing the sixth mass extinction event: a human-led biodiversity crisis. Damaging the health of people and planet The industrial forms of farming that secure huge profits for the big agrochemical companies have had disastrous effects on our health, the conditions of workers and the environment. The heavy use of pesticides is linked to many chronic illnesses in humans, such as cancer, and heart, respiratory and neurological diseases. In perhaps the most high-profile case, Monsanto has faced tens of thousands of legal claims that its Roundup herbicide caused people’s cancer, with the company’s new owners Bayer settling cases to the tune of over $10 billion. Not only does the model pushed by monopoly agriculture corporations run on chemicals, but it contributes to climate change too, with this model of farming relying heavily on fossil-fuel-based fertilisers. Between a quarter and a third of global greenhouse gas emissions come from food, and emissions from agriculture are on the rise, having increased by more than 20% since 1990. The trends driven by these giants of agriculture have also made our food system more vulnerable. It is estimated that around 75% of plant genetic diversity has been lost since the 1990s as farmers are encouraged to cultivate genetically similar high-yielding crops. Around three-quarters of the food we consume now comes from only 12 plant and five animal species. This monocultural approach is dangerous, leaving us far more vulnerable to climate change or crop disease. Digital domination to come? The food industry has never been so concentrated in the hands of so few corporations, and these huge companies are now eyeing the next big frontier to help them consolidate their power: the digital economy. It’s now possible to collect increasing amounts of data on farms – whether through advanced sensors on digital tractors or through simpler recordings on mobile phones – and this data could prove extremely lucrative. Big agriculture companies have swarmed to take up the technology, with companies like Bayer having created or bought apps which they say will ‘help’ farmers ‘take decisions on what to plant, how much to spray, [and] when to harvest’. Some of these companies market their apps as ways of helping farmers to be more ‘climate smart’, including through more precise use of chemical inputs and water. In almost every case, this means farmers have to give up their agricultural knowledge about a whole range of issues, including soil fertility and crops. Inevitably, these apps heavily encourage farmers to buy tools and inputs from the same agricultural giants that control the app. Such technologies generate vast amounts of data, which will only set these agricultural giants even further apart from their smaller competitors. IT for Change argues that these firms benefit not only from a ‘constant flow of profitable data and a bigger and better dataset, but also the emergence of a systemic dependency [on their services]’. While data technology may have a role to play in responding to climate and environmental crises, it’s worth remembering that Big Agriculture created many of the problems they are now claiming to solve. Understandably, there is huge scepticism around the ‘precision’ advice provided by the firms now hoovering up masses of data. Will an industry that makes its money from selling huge quantities of chemical inputs really prioritise what’s best for farmers and their fields? The system isn’t working Interviewed in 2021 about claims that Cargill’s recent mega acquisition of Sanderson Farms had contributed to poultry price rises of 30%, Dave MacLennan, chairman and CEO of Cargill, responded, ‘You can’t have a bunch of small players delivering such an important food source to the nation’s consumers. You have to have larger companies that can do it cheaply and can keep costs down.’ Even aside from this being a bizarre response to the question, given his company appeared to have just sent prices rocketing, the broader argument is clearly untrue: a system driven by monopoly corporations is not delivering food to the people who need it, nor is it helping to keep prices down. Food prices have instead risen with the profits of the megarich, and the people who most need food aren’t getting it. Just as the number of people using food banks surged in the UK and globally 735 million people faced hunger in 2022, the profits of big agriculture companies skyrocketed. We are allowing a handful of companies an unprecedented level of illegitimate and private control over one of our most fundamental resources for survival. Huge corporations make the decisions about everything we eat – what we eat and what is grown, and where, and by whom. Decisions that should be democratic, open and transparent are being made by corporations who have proved time and time again that they value profits over people and planet, that they’re willing to break the law, cut corners and exploit crises for their own gain. A food system run by monopolists isn’t working. It’s time to build something new. Daisy Pearson and Nick Dearden are with Global Justice Now, a democratic social justice organisation working as part of a global movement to challenge the powerful and create a more just and equal world. The above was first released as a supplementary briefing to the report Taken, Not Earned: How Monopolists Drive the World’s Power and Wealth Divide, published by the Balanced Economy Project, SOMO, Global Justice Now and LobbyControl. Both the report and the briefing (with references) are available at www.globaljustice.org.uk.
*Third World Resurgence No. 358, 2024/1, pp 2-6 |
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