March 6, 2013
There was a reason why our founding fathers were leery of monopolies – because they knew that too much power and influence in too few hands was not conducive to liberty and freedom.
That’s one reason why they would likely be concerned about control of the global food supply these days – because too few food multinationals have a grip on commodity markets, “with potentially dramatic effects for consumers and food producers alike,” Britain’s Independent reported recently.
The newspaper was citing a new report that warned the livelihoods of millions of small business owners and firms that produce many of the drinks and foods we consume on a daily basis are “seriously under threat,” noting that extreme price volatility coupled with higher food prices and more concentrated food markets threaten to leave farmers “condemned to poverty.”
The paper said three mega-multinationals now control better than 40 percent of global coffee sales, for example. Eight companies control the supply of cocoa and chocolate. Seven control the lion’s share – 85 percent – of tea production. Five multinationals control three-quarters of the world banana trade. And the largest half-dozen sugar traders account for about 66 percent of world trade, the new report by the Fairtrade Foundation said.
World food system ‘dangerously out of control’
That tight control of the markets by the mega-companies, which utilize their “buyer power” to control the supply chain and how it operates – can leave smaller firms “marginalized” and surviving on low-yield contracts, poverty-level wages and with poor health and safety practices to boot, the report warned.
It stresses that, with the G8 summit set for June in Northern Ireland, 2013 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.”
While more and more people may be shopping ethically, the world’s food system is still “dangerously out of control,” the report said. Cocoa growers, for example, now get only between 3.5 and six percent of the average retail price of a chocolate bar, while in the 1980s they earned about 18 percent.
The new report is being published to coincide with the launch of a three-year food campaign by Fairtrade Foundation, in order to “pull our broken food system back from the brink and make it work for all.” The report contains recommendations, including asking governments to guarantee greater transparency and “fair competition” in the realm of international food supply chains.
“Putting too much power into 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,” said Michael Gidney, chief executive of the foundation. “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.”
Interestingly, about 500 million small farmers produce some 70 percent of the world’s food, the foundation said, but comprise half of the world’s hungry; women are the forefront of this alarming statistic, producing 60 to 80 percent of the food in developing countries and acting as the primary producers.
‘Consolidation shifting power away from governments and towards multinationals’
Take the case of Gerardo Arias Camacho, a 43-year-old coffee farmer from Costa Rica. He has been producing coffee since he was removed from school to help his father farm the commodity at the age of 10. Today, he works 13 hours a day to produce coffee from about five hectares (about 12.3 acres). Camacho, who is a board member of the first Fairtrade-certified co-op in Costa Rica, said this year, he will likely struggle to make even a small profit from some of the coffee he produces and sells.
“About 40 percent of our coffee is sold to multinationals, but the problem with the free market is there is no minimum price,” he told the paper. “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.”
He continued: “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.”
A separate report, Power in Agriculture, also warns that food production is shifting away from governments and is being overly concentrated in the hands of fewer food multinationals.
“Consolidation of TNCs (trans-national corporations) has seen some shifting of the focus of power from governments and supra-national bodies towards corporate business,” the report said.
That includes food production, the report said, noting that 75-90 percent of the international grain trade is controlled by just four multinationals.