Food Supplies In A Globalised Economy
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Food supplies in a globalised economy The role of TNCs
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Transcript of Food Supplies In A Globalised Economy
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.
Global Scale
• 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.
Cereal crops
• 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 - $46bn worth of food in 2001. This is largely due to mergers & acquisitions – Kit Kat & Rowntrees are now owned by Nestlé.
Battle of the food chain extracts continued
• Mergers & acquisitions have also occurred in the agrochemical industry, as these companies have moved into GM crops.
• Similar situation in regards to supermarkets – Walmart owning Asda.
• Retailers Vs Manufactuers.
• Food industry lobby huge in Britain – Lord Sainsbury.
Problems associated with agribusinesses
• Global operations give agribusinesses a political voice in many countries – impose policies which reflect their own interests.
• Allocate labour intensive problems to low wage economies & environmentally damaging processes, where environmental regulations are lenient.
• Use high amount of pesticides & fertilisers, which contaminate water supplies. Production of one crop also leads to soil erosion & loss of biodiversity.
Problems associated with agribusinesses 2
• Destroyed traditional agricultural communities.
• Undermine long term sustainability in some parts of the world.
• Many products grown in lEDCs are not aimed at the local needs but MEDC demands – food shortages.
• Some promote GM crops• Dumping.
Top six UK food retailers Grocery market share, 12 weeks to March 30 2003.
1 Tesco 25.5%2 Sainsbury's17.4%
3 Asda 15.8% (Source: Taylor Nelson Sofres) Top 10 global food retaliers Global sales in Euros, 2002.
1 Wal-Mart (US) 199bn2 Carrefour (Europe) 86bn
(Source: Cap Gemini Ernst & Young) Top 10 global food manufacturers Total food sales in US$, 2001-2002.
1 Nestlé 46.6bn2 Philip Morris (Kraft) 38.1bn
3 ConAgra 27.6bn4 Unilever 26.7bn5 PepsiCo 25.1bn
6 ADM (corn milling) 23.5bn7 Tyson (meat processing) 23.4bn
8 Cargill 21.5bn9 Coca-Cola 20.1bn
10 Mars 15.3bn
