Food Supplies In A Globalised EconomyPresentation Transcript
Food supplies in a globalised economy The role of TNCs
Introduction – Food chain
Small number of agribusinesses now dominate each part of the food chain in MEDCs.
Chemical companies that produce seeds are increasingly linked to grain traders & food processors in the production chain.
The same companies buy, ship & mill the grain and then feed it to the livestock or turn it into cereal.
Horizontal integration – When small no. of firms control a given market = increasing power & profits.
Case study: Agricultural markets in the USA - Cargill
Terminal grain handling facilities – Cargill, ADM & General Mills.
Corn exporters – Cargill, ADM, Zen-Noh
Beef packers – Cargill, ConAgra, Tyson
Flour Mill facilities – AGM, ConAgra, Cargill, General Mills.
CARGILL – largest grain exporter; dominant in wheat, soya beans, corn & cotton; ranked in the top 10 for food & beverage; major player in beef packaging, ethanol & fertiliser production.
3 companies control 90% of world coffee exporters - their turnovers are larger than the GNP of some countries.
Vertical integration – One company either owns or controls through joint ventures multiple stages of the production chain. For example, Dole – owns plantations, canning facilities and has the marketing power to bring pineapples from plantations in the Philippines to the whole world.
While farmers growing cereal crops ear, negative returns, breakfast cereal companies reap the profits.
Bushel of corn sold for $4 in 1989, while a bushel of corn flakes sold for $136.
In the same year cereal companies made 186 to 740 more profitable than the farms.
Contaminated video – You Tube
5 Agrochemical industries control the food market. They control everything from seed to table.
Companies such as Monsanto have created seeds with traits, that are desirable to them.
They have created seeds resistant to a specific pesticide – their purpose to sell more of their own pesticide ‘Round up’.
They have also patented the seeds, so farmers are not allowed to save or develop them.
Extracts from Battle of the food chain article
Manufacturers have gained the most, from the post war food settlement, of government subsidies. The subsidies ensured the manufactures had a secure supply of raw materials.
Nestlé – biggest food manufacturer - $46bn worth of food in 2001. This is largely due to mergers & acquisitions – Kit Kat & Rowntrees are now owned by Nestlé.
Battle of the food chain extracts continued
Mergers & acquisitions have also occurred in the agrochemical industry, as these companies have moved into GM crops.
Similar situation in regards to supermarkets – Walmart owning Asda.
Retailers Vs Manufactuers.
Food industry lobby huge in Britain – Lord Sainsbury.
Problems associated with agribusinesses
Global operations give agribusinesses a political voice in many countries – impose policies which reflect their own interests.
Allocate labour intensive problems to low wage economies & environmentally damaging processes, where environmental regulations are lenient.
Use high amount of pesticides & fertilisers, which contaminate water supplies. Production of one crop also leads to soil erosion & loss of biodiversity.
Problems associated with agribusinesses 2
Destroyed traditional agricultural communities.
Undermine long term sustainability in some parts of the world.
Many products grown in lEDCs are not aimed at the local needs but MEDC demands – food shortages.
Some promote GM crops
Top six UK food retailers Grocery market share, 12 weeks to March 30 2003. 1 Tesco 25.5% 2 Sainsbury's 17.4% 3 Asda 15.8% (Source: Taylor Nelson Sofres) Top 10 global food retaliers Global sales in Euros, 2002. 1 Wal-Mart (US) 199bn 2 Carrefour (Europe) 86bn (Source: Cap Gemini Ernst & Young) Top 10 global food manufacturers Total food sales in US$, 2001-2002. 1 Nestlé 46.6bn 2 Philip Morris (Kraft) 38.1bn 3 ConAgra 27.6bn 4 Unilever 26.7bn 5 PepsiCo 25.1bn 6 ADM (corn milling) 23.5bn 7 Tyson (meat processing) 23.4bn 8 Cargill 21.5bn 9 Coca-Cola 20.1bn 10 Mars 15.3bn