In the grip of giants

A new report finds that free trade has exacerbated global poverty by putting control of the world's food in the hands of just a few companies.


John Vidal
January 28, 2005 8:56PM (UTC)

Global food companies are aggravating poverty in developing countries by dominating markets, buying up seed firms and forcing down prices for staple goods including tea, coffee, milk, bananas and wheat, according to a report released Thursday.

As 50,000 people marched through Porto Alegre, in southern Brazil, to mark the opening of the annual World Social Forum on developing-country issues, the report from ActionAid highlighted how power in the world food industry has become concentrated in a few hands. The report says that 30 companies now account for a third of the world's processed food; five companies control 75 percent of the international grain trade; and six companies manage 75 percent of the global pesticide market.

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It reports that two companies dominate sales of half the world's bananas, three trade 85 percent of the world's tea and one, Wal-Mart, now controls 40 percent of Mexico's retail food sector. It also says that Monsanto controls 91 percent of the global genetically modified seed market.

Household names including Nestlé, Monsanto, Unilever, Tesco, Wal-Mart, Bayer and Cargill are all said to have expanded hugely in size, power and influence in the past decade directly because of the trade liberalization policies being advanced by the United States, Britain and other G-8 countries whose leaders are meeting this week in Davos, Switzerland.

"A wave of mergers and business alliances has concentrated market power in very few hands," the report says. It accuses the companies of shutting local companies out of the market, driving down prices, setting international and domestic trade rules to suit themselves, imposing tough standards that poor farmers cannot meet and charging consumers more.

The report says that 85 percent of all the recent fines imposed on global cartels were paid by agrifood companies, with three of them forced to pay $500 million to settle price-fixing lawsuits. "It is a dangerous situation when so few companies control so many lives," said John Samuel of ActionAid Wednesday.

The ActionAid report notes that many food behemoths are wealthier than the countries in which they do their business. Nestlé, it says, recorded profits greater than Ghana's GDP in 2002, Unilever profits were a third larger than the national income of Mozambique, and Wal-Mart profits were bigger than the economies of both countries combined. The companies are also said to be taking advantage of the collapse in farm prices. Prices for coffee, cocoa, rice, palm oil and sugar have fallen by more than 50 percent in the past 20 years.

The report feeds into growing calls at Porto Alegre for the regulation of multinational food companies. A coalition of the largest international environmental, trade and human rights groups, including Greenpeace, Friends of the Earth, Amnesty, Via Campesina and Focus on the Global South, Wednesday said they would be working together to press for corporate accountability.

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Retailers such as Tesco, Ahold, Carrefour and Metro are buying increasing volumes of fruit, vegetables, meat and dairy products in developing countries, but their exacting food safety and environmental standards are driving small farmers out of business, says ActionAid.

A spokeswoman for the Food and Drink Federation, which represents British food businesses, Wednesday recognized that the industry's success "is closely linked to those at the beginning of the food supply chain." But she added: "Britain, the world's fourth largest food-importing country, invests heavily and provides an enormous market for developing-world farmers."


John Vidal

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