Unsustainable food monopolies

NM_nm cocoa0 REUTERS With multinationals monopolising the worlds food trade - only three companies worldwide dominate the cocoa industry, for eg - countries like Ivory Coast in West Africa which previously had rich agricultural land and was dependent on produce from there, are now seeing large tracts of community land taken away from locals to hand over to foreign companies.

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By David Canning

IT is no wonder the world is witnessing a global rise in social unrest – something that has political leaders fearfully looking over their shoulders.

In short, the so-called “triumph” of the free market system has entrenched rich and powerful corporates and individuals at the expense of emerging communities and local business activity – and people don’t like it.

Once-proud small-scale African farmers, for example, are being forced into penury as a result of the growth of a handful of transnational corporates and the “commodification” of food products.

The global food system has become grossly distorted over the past few decades.

While surplus foods were exported, local communities have largely looked after themselves throughout history. Local farmers produced for local markets and local shops.

Today, however, large sections of the world food trade have been monopolised by transnationals in a way that has created shortages and boosted prices. Food is no longer as available in rural areas. Governments and regulatory authorities seem unable or unwilling to do anything abut it.

The system is unsustainable, with about 1 billion people going hungry while another 1 billion suffer from problems related to being overweight – these being closely related problems.

Some of these devastating recent trends were highlighted by several speakers at last week’s Power Reporting conference held at the Wits Journalism School in Joburg.

Felicity Lawrence, special correspondent of The Guardian in London, said that just four huge transnational conglomerates today control 75 percent to 90 percent of the global grain trade. A similar number of seed firms account for half of global seed sales. Just four companies are dominant in the global coffee business and three in the cocoa trade, and so on.

A handful of giant supermarket chains have effectively put thousands of small shops out of business in many countries. For example, four supermarket groups control 80 percent of the grocery market in the UK. Seven supermarket groups control 60 percent of the US market. These chains have a powerful impact on the food chain.

Many of the transnational producers have offshore company registrations and pay very low taxes. Hungry for resources and new markets to keep their profits up, they are responsible for what are described as “commercial land grabs” in Africa, Asia and South America. They take over rural farmland to create “farm factories”, often for export purposes.

Selay Kouassi, a journalist from the Ivory Coast, last week described the devastating impact this process was having on local communities in west Africa.

His country has fertile soil and traditionally has been highly dependent on agriculture – known as the leading world producer of cocoa and a major grower of mangoes, coffee, yams, bananas, sugar, pineapples and so on.

In years gone past the Ivory Coast was able to help feed its neighbours in Africa, but things have changed rapidly. Paradoxically the country was not even spared from the food crisis of 2008 – experiencing consumer protests about the prices and non-availability of basic foods.

Kouassi explained that large sections of land in his country (as in many others) have been taken from communities and given or sold to major foreign operators. Even now, the largest forest in Ivory Coast is about to end up in the hands of a large Chinese operation. Many such deals are forced on communities by local officials or government figures complicit in the process. Land belonging to communities is sometimes simply described as “vacant”. There has been gross manipulation of the law related to land law in rural areas. Those who oppose this have been intimidated or threatened.

The result has been a collapse of local markets in numerous areas and a loss of food security. Many local jobs have also been lost. Today some former farmers are forced to work in factory farms or in the supply chains for low wages. Some cannot even afford to feed themselves.

Local communities and their countries lose out hugely. One study in the US, quoted by Lawrence, focused on asparagus grown in Peru. It showed that 85 percent of the asparagus revenue actually accrued outside that country. Even the 15 percent retained inside Peru was subject to a “tax break” that the government there had extended to a transnational corporation.

There has also been an explosion in speculation on food prices – promoting price volatility. These rural pressures have hastened the urbanisation of populations and more people are struggling to pay for food.

They turn to highly processed alternatives which have less nutrition, and, cumulatively, this promotes malnutrition, diseases and obesity.

Consumer protection bodies around the world are often restricted in their powers of investigation into monopolies – generally they can deal with these issues only at the margin. This makes our Competition Board’s investigation of the Walmart deal a breath of fresh air – and rather exceptional, as Lawrence pointed out.

She said it was ironic that South Africa’s forced isolation under apartheid had protected it from some of these international trends and forces. However, the global giants wasted no time in entering the country once isolation ended.

Unrest is growing around the world and it is time governments awoke to the damage they have (often unknowingly) allowed.

There is some hope, however, in the social accord reached between the South African government, business and labour last week to “manufacture and buy local”. It could have some far-reaching consequences – that is, if narrow inte-rests can be kept in check.


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