Culture, Community, and Sustainability - Agroecology: The Ecology of Sustainable Food Systems - page 329

E CONOMIC I MPERATIVES OF THE G LOBAL
F OOD S YSTEM

TA B L E 2 3 . 1
Examples of Concentration in the Agricultural Sector

Recall the graph in Chapter 1 entitled “Farmers' declining
share of the consumer food dollar” (page xx). It shows
that the money spent on food has gone increasingly to the
processing, shipping, and marketing side of the food sys-
tem, leaving farmers, at the end of the 20th century, with
less than eight cents of every food dollar spent. This by
itself is a major reason for the decline of the farming
occupation — as a basic economic reality it leaves farmers
with little option but to follow the mantra of “get big or
get out.” But the 73% share of the consumer food dollar
going to the processing, packaging, shipping, and market-
ing middlemen indicates just how much our food system
has changed (this share was well under 50% in 1919)
and how thoroughly it is now stacked against the small-
scale farmer.
With much of the profit in the “marketing” segment
of agriculture, it is no surprise that most of the pro-
cessing, brokerage, shipping, packaging, and marketing
functions are performed by transnational corporations
and the firms they own or control. Further, these large
international corporations have taken full advantage of
vertical integration — each corporation owns firms at
every link in the food-system chain, from seeds to
shipping to processing to distribution to marketing.
Over time, there has been a tendency for the overall
number of these firms to decrease. This economic con-
centration, combined with vertical integration, allows
a relative handful of agribusiness corporations to domi-
nate the agricultural sector of most nations' economies
(Table 23.1).
The farmer, therefore, faces a virtual agricultural
oligopoly. For example, consider a typical corn farmer
in U.S. Midwest buying seed for next year's crop. That
farmer has little choice of what seed to buy and who to
buy it from, because he is confronted with a system where
the only buyer of corn in his region is a large transnational
corporation that is in partnership with another large cor-
poration that provides seeds for the only variety of corn
that the buyer will purchase. The bank that provides the
production loan most likely is part of the same transna-
tional's portfolio, and will probably have the same require-
ments of which seed variety to use, and recommend very
highly that the farmer use fertilizers and pesticides from
sources the transnational also owns or controls. Once the
farmer has grown the corn, and does not want to sell to
the transnational at the fixed price, he could choose to
feed the corn to hogs for sale at auction. But the transna-
tional will be there bidding on the hogs as well. And
finally, if the farmer gives up and decides to plant a crop
other than corn, he will find that there are very few, if any,
other crops that are not controlled by the system of food
“cartels.” (Halweil, 2004).

Product or
Activity

Proportion of all
Firms

What These Firms
Control

All seeds Top 10 firms One-third of global market

Vegetable
seeds

5 firms 3 75% of global market

Cereal grains 2 firms (Archer Daniels

Midland & Cargill)

75% of world trade

Coffee 4 largest firms 40% of world trade

Cocoa and
pineapples

Handful of
multinationals

90% of world trade

Bananas Handful of

multinationals

80% of world trade

Sugar Handful of

multinationals

60% of world trade

Chickens 1 firm 60% of purchases in

Central America

Fewer than 40 firms 97% of the US market

Beef 4 firms 80% of packing in the US

Milk Top 5 firms 41% of global processing

Animal feed 3 firms Majority of global

production

Food retailing Top 30 grocery chains 33% of global sales

Pesticides 10 firms 80% of world market

Source: Adapted from Halweil, B. 2004. A WorldWatch topic. Norton:
New York.

There is little room for small-scale or family farmers
in a system in which the farmers' product is a commodity
in a global market controlled by vertically integrated trans-
nationals. Therefore, such farmers are increasingly forced
to sell out. Their land is eagerly bought up by developers,
or by the larger-scale farmers who have learned to adapt
to the system.
One common way of “adapting” to the system is to
grow under contract for the larger and larger corporations
formed by the mergers and consolidations that are common
in the marketplace. As Brian Halweil (2004) points out,
over the past two decades, the share of American agricul-
tural output produced under contract has more than tripled,
from 10 to 35%, and this does not include contracts that
farmers must sign to plant genetically engineered seeds
(Chapter 14). When the control of the food system becomes
so centralized, the farmer is essentially reduced to a hired
hand in a commodity chain. We end up with large-scale
farms managed by distant corporations interested in extract-
ing the maximum output at the minimum cost (Figure 23.2).
According to conventional wisdom, agricultural mod-
ernization and larger-scale farming improve the efficiency
of the food system. Bigger farms can produce more at
lower economic costs. Production and equipment costs can
be spread over greater area, inputs purchased at bulk rates,
and loans negotiated at lower interest. Such advantages are