by Sarah Morrison
24 February 2013

from TheIndependent Website

 

 

 

Small Producers Face Poverty

as Ever More Commodities are Controlled

by A Coterie of Multinationals
 

 

 

As you sip your morning coffee or tea, accompanied perhaps by a chocolate biscuit, or a banana for the more health-conscious, think hard about where your breakfast comes from.

 

Increasingly, a handful of multinationals are tightening their grip on the commodity markets, with potentially dramatic effects for consumers and food producers alike.

The livelihoods of millions of smallholders who produce the drinks and snacks we consume every day are "seriously under threat", warns a report to be published tomorrow to mark the start of Fairtraide Fortnight.

 

Extreme price volatility, high food prices and more concentrated food markets threaten to leave farmers "condemned to poverty".

Three companies now account for more than 40 per cent of global coffee sales, eight companies control the supply of cocoa and chocolate, seven control 85 per cent of tea production, five account for 75 per cent of the world banana trade, and the largest six sugar traders account for about two-thirds of world trade, according to the new publication from the Fairtrade Foundation.

Such tight control of the markets by multinationals - which can use their "buyer power" to dictate how the supply chain is run - can leave smallholders "marginalized", surviving on precarious contracts, poverty wages, and with poor health and safety practices, the report warns.

 

It stresses that, with the G8 summit to be held in Northern Ireland in June, this is the year "to put the politics of food on the public agenda and find better solutions to the insanity of our broken food system".

More people may be shopping ethically - sales of Fairtrade cocoa grew by more than 20 per cent last year to £153m - but, according to the report, the world's food system is "dangerously out of control". Cocoa growers now receive 3.5 to 6 per cent of the average retail value of a chocolate bar; in the 1980s they got 18 per cent.

The report is being published to coincide with the launch of a three-year food campaign by the Fairtrade Foundation, to,

"pull our broken food system back from the brink and make it work for all".

Its recommendations include asking governments to ensure greater transparency and "fair competition" in international supply chains.

Michael Gidney, chief executive of the Fairtrade Foundation, said:

"Putting too much power into the hands of too few companies increases the risk of exploitation in food supply chains, where producers have no choice but to sell for low prices, while consumers face a bewildering array of products on shop shelves even though their purchases benefit only a small number of brands.

"Unless we do something now, millions of small farmers are condemned to poverty. If they are in crisis, and farmers see no future in farming, then many of our foods could be at risk."

About 500 million smallholders produce 70 per cent of the world's food, but make up half the world's hungry. Women at are the helm - producing 60 to 80 per cent of the food in developing countries and acting as the main producers.

'Last year I got $2.20 per pound, this year $1.40'

Gerardo Arias Camacho, 43, a coffee farmer from Costa Rica, has been producing coffee since he was taken out of school to help his father at the age of 10.

 

 

 

 

He works 13 hours a day to produce coffee from five hectares.

 

Mr Camacho, a board member of the first Fairtrade-certified co-op in his country, said this year he might struggle to profit at all from some of the coffee he sells.

"About 40 per cent of our coffee is sold to multinationals, but the problem with the free market is there is no minimum price. Last year, I got $2.20 per pound of coffee; this year it's about $1.40. This is really bad for us, as the cost of producing is about $1.60.

"They really don't care about what problems we have here in our village; we worry about having enough food, clothes, and enough money to send our kids to school. Small roasting companies have direct relations with us, know our needs and understand us. This makes a big difference."



 

 

 

 

 

 

 

 

 

Giant Multi-Nationals

...to Dominate Food Production
by Mike Stones
 

from FoodManufacture Website
 

 

 

 

 

Part 1

09 January 2012

 

The balance of power in global food production is shifting away from national governments to multi-national firms and from western economies to emerging nations, warns a new report from SAC’s Rural Policy Centre.

 

In the first of a two-part series, we focus on the growing power of trans-national
 

The balance of food production power

is shifting from governments to trans national corporations

 


“Consolidation of TNCs has seen some shifting of the focus of power from governments and supra-national bodies towards corporate business,” according to the report Power in Agriculture.

 

In parallel, state intervention in agriculture and the supply chain, particularly in the EU, is diminishing.


Speaking at the Oxford Farming Conference, whose organizers commissioned the report, one of its authors Dr Alan Renwick, said:

“TNCs are becoming increasingly dominant in all aspects of the supply chain.”

For example, four firms control more than 75% to 90% of the international grain trade.


Also, just 10 firms are responsible for 40% of the global retail market.

 

 

 


Annual turnover


Top TNC, ranked by annual turnover, was identified as the Swiss-based firm Nestlé with a turnover of more than $112bn.


Archer-Daniels-Midland (ADM) and Unilever were ranked second and third with annual sales of $62bn and $59bn respectively. Total revenue from the global food products industry, consisting of agricultural products and packaged foods, was estimated at $3.2 trillion in 2008.


Responding to the report, Caroline Spelman, secretary of state for the Department for Environment, Food and Rural Affairs, acknowledged that the UK is home to,

“some of the world’s most successful and influential agri-food corporations.

 

I’m thinking of Unilever, Tesco and Associated British Foods. The UK government understands the power of these organizations and how vital they are in building a sustainable food system and a green and growing global economy.”

Spelman added that the government understands its role in ensuring that corporations use their power positively.

 “We’re taking steps, including the introduction of a groceries code adjudicator, to safeguard it."

 

“We also know that these corporations provide the bridgehead to emerging economies for our [food] and farming industry.”

But not all speakers shared her view of the benign impact of TNCs.

 

Andrew Blenkiron, estate director of large-scale food producer Euston Estates, warned of the near unfettered power that TNCs now wield.

“The influence of TNCs is hyper political with many having a turnover many times the GDP [gross domestic product] of numerous small nations… They probably make even more from the greed that is ‘the market trader".


“No longer is the true supply and demand equation relevant; trade is rampant on rumour and conjecture. There is no doubt that volatility in the food supply chain has served to further increase TNC’s influence and power.”

Tony Hehir, Australian organic dairy farmer, warned that his country’s grains, pork and tomato industries are already dominated by TNCs.

 

 

 


Without consequence

"TNCs are now firmly entrenched in the grains industry. Grain farmers are now disadvantaged by delivery contracts with penalties for non compliance by the producer, yet absolute discretion without consequence for the TNC buyer.


Power has shifted very rapidly from the producer since the advent of TNC domination of this industry.”


 

 

 

 

 

 

 

Part 2

Food Production Power to Shift East
10 January 2012
 

The EU could lose out as the power in global agricultural production increasingly shifts east, according to a new report from the SAC’s (Scottish Agricultural Centre's) Rural Policy Centre.

 

In the second of our two-part series, we examine the growing dominance of Brazil, Russia, India and China (BRIC nations).
 

The balance of power in global farm production

will gradually shift east

 

 


While North America and EU countries currently dominate food production, power will shift to BRIC nations, warns the report, titled Power in Agriculture.

“The EU has retreated from world markets as policies have changed [from boosting production to environmental management].


“The export capabilities of the EU in some key commodity sectors are predicted to decline further in the next 10 years unless policy conditions change markedly,” warns the report.


 

 

Increasing pressure


In the coming decades, EU countries will face increasing pressure to allow greater access to their markets.

“This competition is likely to come from emerging nations - like China, India and Brazil - and will have implications for producers,” said the report.

Two factors are likely to speed the process.

  • First, the opening up of agricultural markets through a gradual process of trade liberalization and deregulation.

  • Second, the increasing globalization and concentration of the agricultural supply trade.

Moreover, some emerging nations have a strategic advantage in possessing key natural resources.

“Our analysis shows a potentially grim picture for many of today’s powerful agricultural economies, including the US and Europe.


“In particular, European countries - including the UK - appear to be relatively poorly endowed in global terms with critical natural resources used in agriculture - such as land, water, potassium, phosphate, oil and natural gas,” according to the report.

Climate change is expected to exacerbate some of these changes.


Many emerging nations, such as Brazil, China and Russia, are better placed in terms of water and energy endowments but are vulnerable in terms of their possession of arable lands.

 

This accounts for some large economies, particularly China, resorting to what the authors term ‘land-grabbing’ in Asia.




Unlikely to be sustainable


The report’s authors draw three main conclusions:

  1. EU countries will face competition for land from countries such as China.

  2. Water-, energy- and fertilizer-intensive agricultural production systems are unlikely to be sustainable in the near future.

  3. EU countries need to balance their general level of agricultural efficiency - particularly in water use.

Speaking at the Oxford Farming Conference, Caroline Spelman, secretary of state for the Department for Environment, Food and Rural Affairs, said:

“I read this as a call to the EU farming industry to become competitive - and grasp the many opportunities of globalization and the need for sustainability.”

Terry Hehir, Australian organic dairy farmer, warned the conference that:

“Land [in Australia] is already being procured in vast amounts by foreign countries to secure future food supplies.”

The Qatar government has already bought 170,000ha of Australian farmland, he added. It plans further investment to supply up to 35% of Qatar’s food supply from these farms.


Meanwhile, Brazilian agricultural exports soared by 24% last year to reach $94.6bn compared with the previous year. Agriculture minister Jorge Ribeiro has identified a target of $100bn for this year.


The biggest importer of Brazilian food was China, which accounted for $16.5bn of purchases.




 

 

 


 

 

 


The Global Food Crisis

-   ABCD of Food or How The Multinationals Dominate Trade   -
by Felicity Lawrence
2 June 2011

from TheGuardian Website




Wherever you live,

you can't avoid the four global giants
 


 

Wheat stands in a field in Brazil waiting to be harvested.

Photograph: Adriano Machado/Bloomberg via Getty Images

 

 

By mid-morning snack you will certainly have encountered their products several times already wherever you are in the world, whether it is the corn in your flakes, the wheat in your bread, the orange in your juice, the sugar in your jam, the chocolate on your biscuit, the coffee in your cup.

 

By the end of the day, if you've eaten beef, chicken or pork, consumed anything containing salt, gums, starches, gluten, sweeteners, or fats, or bought a ready meal or a takeaway, they will have shaped your consumption even further.

And yet, the four giant transnationals that dominate the raw materials of the global food system have largely stayed below the radar of European consumers.

 

Known as the 'ABCD Group' for the alphabetic convenience of their initials,

  • ADM (Archer Daniels Midland)

  • Bunge

  • Cargill

  • (Louis) Dreyfus,

...account for between 75% and 90% of the global grain trade, according to estimates.

 

Figures cannot be given with confidence, however, because two of the companies are privately owned and do not give out market shares.

This extraordinary concentration of power and money in the global food trade has been identified by Oxfam in a new report this week as one of the structural flaws of the system. At each stage a handful of players dominate, not just in primary agriculture but in food manufacturing and retailing.

 

The result, according to Oxfam, is that,

"they extract much of the value along the chain, while costs and risks cascade down on to the weakest participants, generally the farmers and labourers at the bottom".

Oxfam is the latest in a long line of critics to highlight this corporate concentration as a root cause of hunger and poverty.

 

The ABCD group have said they welcome informed debate but that, as far as they are concerned, their operations are the vital waters that keep food and its finance flowing from those who can grow it to those who need to consume it. Scale enables them to be highly efficient.

 

The grain trade is capital intensive; they invest heavily in storage facilities and port and transport infrastructure.
 

  1. US-based Cargill with the highest revenues, is the largest private company in the world - and famous for its secrecy. Its headquarters is a mock-Tudor meets mock-French chateau in Minnetonka in the US mid-west, where the company was founded by a family of grain traders in 1865.

     

    Today, it is still majority-owned by descendents of the family. Its main commodity trading operation is run out of the tax haven of Switzerland. Its sales were $108bn in 2010, and $115bn in 2009, and its net earnings were nearly $6bn for those two years.

    As well as being a leading player in the trading, processing and transporting of the most important agricultural commodities, fertilizer and meats, it is one of the world largest hedge funds.

     

    When Gordon Brown, as prime minister, called a summit in London on the 2008 food crisis, Cargill was invited.

     

    When Walker crisps had an image problem with the saturated fats in its crisps, Cargill came to the rescue, having a large acreage of land in eastern Europe planted with a new variety of "Sunseed".

    It produces about half of all McDonald's chicken products across Europe. It sells fats to Unilever.

     

    When the US needed to appoint someone to lead the reconstruction of agriculture in Iraq, it turned to former Cargill executive Dan Amstutz. In China, where it has a joint venture with Monsanto, to whom it sold its enormous seeds interests a decade ago, it has trained over 2 million farmers in the American way of agriculture.

    Over that same decade, Cargill, ADM and Bunge are thought to have acquired about 80% of China's soya processing capacity. More recently, Cargill has been moving up the food chain into high-value, hi-tech additives and what it calls food solutions for the manufacturing industry.

     

  2. Louis Dreyfus, established in 1851, is also private and still family owned, headquartered in Paris but again trading largely out of Switzerland.

     

    It gives no figures and never comments to the media, but its estimated revenues in 2009 were £34bn. It has enormous grain, sugar and energy trading interests around the world, although in recent years it has concentrated on financial aspects of commodity trading.

     

  3. Bunge, which expanded through the late 19th century as a grain trader in South America, is now incorporated in the tax haven of Bermuda but its headquarters are in the US. Its net revenues in 2010 were $47bn, and net earnings were $2.3bn. It is a leading processor of oilseeds, and producer and trader of grains, sugar and bioenergy. It is also a key player in the global fertilizer market.

     

  4. ADM, or Archer Daniels Midland, is incorporated in the US tax-haven state of Delaware and headquartered in Illinois. Its revenues in 2010 were $62bn and its earnings were $1.9bn.

    ADM's origins go back to a US seed crushing business begun in 1902.

     

    Today, it has vast interests in trading, processing and transporting soya and other oilseeds, and corn, wheat cocoa and other agricultural commodities. It is a leading manufacturer of oils, corn sweeteners, flour, biofuels, food additives from gums to gluten, soya isolates and animal feed ingredients.


To add to the concentration, Cargill, ADM, and Bunge have strategic alliances and joint ventures with the seed and agrochemical companies that dominate the agricultural inputs part of the global food system.

 

In seeds four firms,

  • Monsanto (incorporated in Delaware, HQ in Missouri)

  • Dupont (incorporated and HQ in Delaware)

  • Syngenta (incorporated and HQ in Switzerland)

  • Limagrain, a French-based international co-operative,

...account for over 50% of global seed sales.

In agrochemicals six firms,

  • DuPont

  • Monsanto

  • Syngenta

  • Dow (incorporated in Delaware, HQ in Michigan)

  • German chemical giants Bayer and BASF,

...control 75% of the market.

 

 

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