Giant multi-nationals to dominate food production

By Mike Stones

- Last updated on GMT

The balance of food production power is shifting from governments to trans national corporations
The balance of food production power is shifting from governments to trans national corporations
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 corporations (TNCs).

“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 organisers 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 organisations 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.”

In part two of this series, to be published later this week, we chart the shifting balance of global food production power from western countries to emerging nations.

Listen to Cedric Porter, chair of the Oxford Farming Conference, explain key messages for food manufacturers from the conference by clicking here.

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1 comment

Retail has its own squeezed middle

Posted by Tom Beeston,

Interesting article from the New Economics Foundation, with quite different thoughts on retail ... http://www.neweconomics.org/blog/2012/01/05/retail-has-its-own-squeezed-middle.

Mike Stones replies: Thanks for sharing this article.

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