The Real Costs of Cheap Food
Hans Herren, holder of the Right Livelihood Award, demands a global change of food production.
Global hunger is unacceptably high. Two root causes of the global food crisis are the corporate domination of the food supply and the systemic destruction of local food systems. We need a fundamental change.
For more than 100 years, the world's most powerful food and beverage companies have relied on cheap land and labor to produce food products and huge profits. But these profits have too often come at a high cost to the environment and poor people around the world, and have contributed to a food system in crisis. Small-scale farmers have been displaced from their lands by governments and companies in search of fertile land. Sprawling sugar, oil palm and soy plantations have pushed families onto poor quality land, often far from water, where they then attempt to farm. Large-scale monoculture expansion deepens the concentration of land ownership, exacerbates unequal access to land and water, degrades the environment, harms the health of local populations, creates exploitative working conditions, and severely threatens the traditional livelihoods of small-scale farmers.
The top 10 food processing companies control 28% of the global market, while holding large shares in specific food products.
There has been – and continues to be – a lack of adequate regulatory frameworks to address these problems. Instead trade liberalization and the enabling investment climates enabled by the World Bank, International Monetary Fund, World Trade Organisation, bilateral FTAs, investment treaties and national policies have increased the dominance of large multinational food companies and incrementally destroyed local food systems.
Agri-food chains have become increasingly concentrated as large multinational food and agricultural companies dominate these chains. Traders such as ADM, Bunge, Cargill and Dreyfus are a hidden power in the food system that controls about 75 per cent of global grains and soy trade. They act also as landowners, meat producers and food processers. The concentration in the packaged food sector is lower: The top ten food processing companies control 28% of the global market, while holding large shares in specific food products. Further upstream, market concentration is caused by consolidation at the food retail level in high-income countries where food retail is controlled by a few large supermarket chains. High concentration is also found in the input sector: The ‘Big Six’, the agro-chemical giants - Syngenta, Bayer CropScience, BASF etc. - continue to dominate with a 76% market share. In the seed sector, the top ten control 75% of the global market.
Stiff price competition in a liberalized market dominated by a few large companies forces small-scale producers to move ‘up or out’.
This means there are huge power imbalances between these big players and farmers, especially small-scale farmers, who are at high risk of being squeezed out and marginalized. Where food companies have a choice between sourcing from large producers or from small farmers, they generally prefer the larger producers. Stiff price competition in a liberalized market dominated by a few large companies forces small-scale producers to move “up or out”. Farmers are price-takers, dependent on highly concentrated industries for their inputs and for the sale of their products. They are truly the weakest link in the chain and as such at risk of suffering from their weak bargaining position by paying high input prices and getting relatively low prices for their produce.
High food and oil prices in 2007 and 2008 sparked an interest in food and agro-fuel production and put agriculture and rural development high on the agenda of donors and international finance institutions. Agri-food companies tactically sought to enter into strategic partnerships with donors in order to benefit from development aid and access to smallholders and markets. By playing the “feeding the 9 billion in 2050”and increasing production by 70% card, they aim to push input-intensive, industrial agriculture centered on a productionist and yield-focused mind-set. In public opinion, they try to portray themselves as the ones solving the hunger problem, although numerous examples demonstrate that corporate-led agriculture increases food injustice, poverty and hunger. Since the food crisis however, there has been a strong emerging trend of strategic public private partnerships (PPPs) between agri-food companies and governments, both in the North and the South.
PPPs are generally designed to be top-down and non-participatory. They are non-transparent and lack strong accountability mechanisms.
The “New Vision for Agriculture” founded by the World Economic Forum (WEF) in 2011 inspired a whole series of new PPPs, such as the German Food Partnership, GROW Africa and finally the G8 New Alliance on Food Security and Nutrition. Despite the incredible dominance of large agri-food companies, their all too often unsustainable practices and poor record for reaching the poorest, governments in the North and the South promote their businesses through PPPs under the guise of poverty alleviation and food security. These PPPs are generally designed to be top-down and non-participatory. They are non-transparent and lack strong accountability mechanisms. As such, they are also a recipe for more inequality and more food injustice, especially when it comes to access to and control over land, water and seeds by small-scale producers.
…the food sector ranks second after mining when it comes to reported human rights violations.
There is a long history of human rights violations in the agri-food sector. According to the Commission on Human Rights, the food sector ranks second after mining when it comes to reported human rights violations. The main problems are related to widespread violations of labor rights, the displacement of communities from their land, and the denial of access to water. Civil society organizations repeatedly uncover concrete cases of human rights violations and aim to achieve redress through campaigning. Other campaigns target policy changes. The Oxfam campaign “Behind the Brands” targeting the top ten food and beverage companies has, for example, succeeded in getting Coca-Cola and Nestlé to commit to “zero tolerance” for land grabs and all ten companies have committed to ‘free prior and informed consent’ (FPIC) for communities. Now they have to demonstrate that they are taking their commitments seriously and move from policy to practice.
In the past, a whole range of voluntary standards was developed in reaction to critique from civil society. But experience has shown that voluntary standards such as GlobalGAP or the Round Table on Sustainable Palm Oil (RSPO) are deficient and hardly effective. Even the more stringent standards from the OECD and of the Committee on World Food Security fall short of the expectations of civil society. This is why civil society overall keeps insisting on binding rules for agri-food companies, such as disclosure requirements, liability regulations and grievance mechanisms.
We need to shift away from industrial agriculture and end human rights violations.
The profit-driven, chemical-intensive, industrial-scale model of agriculture promoted by agri-food companies is an enormous threat to the planet and to the livelihoods of small-scale producers. We need to shift away from industrial agriculture and end human rights violations.
In 2011, the United Nations recognized the vast human rights impact of businesses and endorsed the UN Guiding Principles on Business and Human Rights, requiring companies to undertake ‘human rights due diligence’ to ensure that they do not violate human rights, and to address and mitigate any adverse impacts in any of their ‘activities or relationships’ extending down their supply chains. This needs to be accompanied by new trade and investment policies based on human rights and by regulations to reduce the market power of large agri-food companies and the abuse of buyer power. By encouraging the diversification of distribution channels and ensuring the viability of wholesale and local markets, states can support smallholders, improve their bargaining position in the food chain, and create markets that work for them. It is especially vital that farmers are not forced to join the agro-export networks, and that they are sufficiently supported if they opt to produce food crops for local consumption instead.
The agri-food companies can play a supportive role in food security if they invest in ways that strengthen ecologically sustainable small-scale production and respect human rights.
PPPs need to be regulated in order to ensure that they contribute to and do not undermine the right to adequate food and harm the environment. Regulations must ensure adherence to social and environmental legislation. The effectiveness of PPPs to reduce hunger and poverty should be comprehensively assessed. With regard to the New Alliance, for example Oxfam continues to believe that in its current form, the New Alliance should be radically reformed or discontinued. The agri-food companies can play a supportive role in food security if they invest in ways that strengthen ecologically sustainable small-scale production and respect human rights. In order to avoid harm caused by the investments of agri-food companies, regulatory frameworks are needed to protect human rights and preserve the environment. This is a core responsibility of governments.