IEG Policy is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. Please do not redistribute without permission.

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

Food companies are getting “too big” and farmers are paying the price, says report

This article is powered by EU Food Law

Mergers that create giant food companies allow the new entities to shape policies that fit their needs rather those of food producers or consumers, the European Commission has been warned in a report today.

The report, written by the International Panel of Experts on Sustainable Food Systems (IPES-Food), expresses particular concern about the planned merger of Monsanto and Bayer. “We are now in unchartered territory. If the deals on the table go ahead, three firms will control more than 60% of the global seed and pesticide markets,” Pat Mooney, lead author of the IPES-Food report, said.

“Mergers are increasingly allowing firms to control information flows along the chain and exercise huge power over the trajectory of food systems,” he added.

Also raising alarm bells for IPES-Food are the $55 billion merger in the food processing sector between Heinz and Kraft Foods, the $120 billion merger in the drinks industry between AB InBev and SABMiller, and in the retail sector with Amazon and Whole Foods joining in a $13.7 billion merger.

 “Rampant consolidation in the agri-food industry is bad for farmers, whose incomes are squeezed at one end by a handful of input providers, and at the other by processing and retail giants with huge bargaining power,” Olivier De Schutter, IPES-Food co-chair and former UN Special Rapporteur on the right to food, said.

“It is also bad for society,” he added. “Once they have cornered the market, mega-firms focus on defending their market share and shaping policies to fit their needs – not on delivering the innovation we need to build sustainable food systems.”

Big statistics

The report identifies “unprecedented levels of market concentration” throughout the agri-food sector, pointing out that, in the animal genetics industry, three companies now supply over 90% of breeding stock for broilers, layer hens, turkeys and pigs.

It also says that five companies account for more than half of the farm machinery market, and are moving towards ownership of Big Data and artificial intelligence.

DeSchutter acknowledged that the tide was “starting to turn,” with recent steps to redefine anti-competitive practices and to apply anti-trust rules more assertively.

But he said that steps to build a new anti-trust environment should be accompanied by measures to “fundamentally realign incentives in food systems and address the root causes of consolidation”.

The panel’s report calls for a collaborative assessment of agri-food consolidation and a UN Treaty on Competition, in order to deliver transnational oversight of mega-mergers.

The report also advocates a shift towards diversified and decentralised innovation, locally-applicable knowledge and urgent support for short supply chains, innovative distribution and exchange models, and ‘solidarity economy’ initiatives to “circumvent, disrupt, and de-consolidate mainstream supply chains”.

Advertisement

Topics

What to read next

UsernamePublicRestriction

Register

PL212943

Ask The Analyst

Please fill in the form below to send over your enquiry or check the Ask The Analyst Page to find out more about the service

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel