Post on 18-Apr-2022
Sponsored by:
Power in Agriculture:
Challenges for Rural
Leadership
Alan Renwick, MofakKarul Islam and Steven Thomson
Rural Policy Centre
Scottish Agricultural College
Edinburgh
The Oxford Farming Conference Research 2012
Power in Agriculture
In partnership with:
Research Undertaken by:
Background
• The perception of a shift in global power
eastwards • The opening up of agricultural markets
through a gradual process of trade liberalisation and de-regulation
• Increasing globalisation of agricultural trade, with increased levels of concentration in agricultural market places
• The heavy reliance on use of natural resources, including non-renewables means factors, such as climate change and depletion of mineral reserves will be important.
Power
• What is Power?
• We chose to consider
– Economic
– Political
– Power over Natural Resources
The Sarkozy
‘power digit’
‘Power is the ability of an actor to compel, persuade, or control the
behaviour of other actors through the deliberate and politically motivated
use of economic assets’ Frost (2009)
Economic Power in Agriculture
• Size of agricultural sector
– Self-sufficiency
• Power in terms of Trade
– Exports and Imports
• Agri-business power
– Transnational Corporations (TNCs)
Agricultural Trade
• Very concentrated – top 20 exporting and importing countries
account for 78% of global exports and 70% of global imports.
• Trade patterns reflect factors including proximity and historic relationships – reflection of past power relationships
• New and evolving trade patterns emerging – Multi and Regional/Bi lateral Trade
Agreements and other – particularly noticeable is the rising
importance of a number of the BRICS countries
14.7% Mexico
10.6% Canada
58.2% Japan
$2,163m
% of countries exports
34.7% Mexico
20.3% Canada
15% Japan
$2,059m
49.1% Japan
4.6% China
25.8% USA
$1,777m
44% Japan
24% S. Korea
13% USA
$3,648m
% of countries exports
$827m
12.2% Russian
Federation
1.9% Saudi Arabia
6.6% Egypt
% of countries exports
4.2% Chile
74.7% EU27
4.4% Hong Kong $305m
31.5% Russia
16% EU27
7.7% Iran
7.1% Egypt
$3,497M
% of countries exports
% of countries exports
12.9% Japan
13% Egypt
6.6% EU27
6.6% Philippines
$3,971m 11.3% USA
8.5% EU27
11.1% Algeria
8.6% Iran
$2,799m
7.1% Morocco 7.2%
Algeria
5.8% Egypt
$2,121
m
13.2% Indonesia
8.9% Japan
10.2% Iran
$2,590m
% of countries exports
12.6% Japan
9.2% Nigeria
8.4% Mexico
$8,485m 13.4% USA
9.6% EU27 6.4%
Japan
$5,584m
13.5% Morocco 27.1%
Algeria 5.6% Egypt
$ 4,862m
23.3% Indonesia
10.9% Japan
8.3% Malaysia
7.8% S. Korea
$3,740m
• State intervention in agriculture and trade has been diminishing.
• TNCs have become increasingly dominant in all aspects of the agricultural supply chain.
• Statistics tell the story: – 4 companies account for 75-90% of the global
grain trade – 10 companies are responsible for >40% of the
global retail market – 7 companies control virtually all fertiliser supply – 5 companies share 68% of the world’s
agrochemical market – 3 companies control almost 50% of the
proprietary seeds market
Corporate Power
Other Transnational Corporations are available
Seed Industry
• Animation of agglomeration in seed industry
Supply Chain Consumers
Shoppers
Supermarket Buyers
Retail Outlets
Supermarket Businesses
Processors
Merchants
Farmers
Wholesalers
Agents/Agronomists, etc
POWER
POWER
Supply retailers
Traditional thinking regarding power in the agricultural supply chain Input supply and commodity purchasing increasingly linked
Agro-Chemical, feed, equipment
manufacturers etc
Supply Chain
Farmers
Consumers
Traders
Millers
Bakers
Retailers
POWER
Consumers
Shoppers
Supermarket Buyers
Retail Outlets
Supermarket Businesses
Processors
Merchants
Farmers
Wholesalers
Agro-Chemical, feed,
equipment manufacturers etc
POWER
POWER
Agents/Agronomists, etc
Supply retailers
Political Power
• Agriculture liberalisation agenda set by few key international institutions
– World Trade Organisation
– World Bank
– IMF
• Economic power closely linked to political power in these institutions
• Increasingly wider trade concerns dominating agriculture
Resource Competition
70% of water
abstractions
are for agriculture
Potash & Phosphates
key fertiliser inputs
Farming <2% of
energy
demand....
but energy
is vital!!
Land
accounts for
28% CO2e
Finite amounts of
farmland – under
increasing
pressures
Distribution
EU27 US Brazil Russia China Australasia Africa
Agricultural Area 4 4 3 3 5 5 3
Arable 4 5 3 4 4 5 3
Water 3 4 5 4 4 2 2
Potash 2 1 2 5 2 0 1
Phosphate 0 3 2 2 5 2 3
Oil 2 3 2 5 3 1 2
Gas 1 3 3 5 3 1 2
Conclusions
• Current power in world agriculture remains in North America and Europe
• However, Europe’s exports have declined as reforms taken place – but still fortress Europe
• Emerging (emerged) economies have less corporate and political power
A key challenge
Exploiting global
power whilst
protecting domestic
producers and
consumers
Resource Implications
• Globally there will be increased competition for resources.
• In the shorter term, further improvements in resource use efficiency (water, fertiliser and energy) are needed to sustain current levels of production.
• As traditional resources become more scarce, alternative practices will need to be developed and adopted.
The Power Index
Dimension EU27 US Brazil Russia China Australasia Japan UK
Agricultural Trade 4.5 5.0 2.0 3.0 3.0 2.5 2.5 3.0
Corporate 5.0 5.0 1.0 1.0 2.0 2.0 3.0 3.0
Political 5.0 5.0 1.0 3.0 2.0 1.0 4.0 4.0
Natural Resource 3.5 4.0 3.3 3.5 4.5 3.3 1.5 2.0
Mineral and Fuels 1.3 2.5 2.3 4.3 3.3 1.0 0.0 1.0
Total 19.3 21.5 9.5 14.8 14.8 9.8 11.0 13.0
Challenges for Rural leaders
• How to counter the power of TNCs in the supply chain?
– Getting more of the value back to the farmer
– Co-operation
– Alternative routes to market
• How to deal with challenges in terms of resources?
– Sustainable Intensification: Innovation will play a key part
Responses
• Power in Research
– the Science Base (Spelman)
• Farmer owned businesses compared with TNC’s
– TNC’s only responsibility is to shareholder (Australian speaker)
– Return of value to farmers – Fonterra
– Therefore co-operation is key
• Competition
– Prices (Farming Today)