Food chain consolidation limiting choices

One is overwhelmed by ample choices available in supermarkets. 

Pic courtesy: Gov.uk

Every time you walk into a super market or an average looking grocery store, you are likely to be overwhelmed with ample choices. The retail shelves are packed with abundant supplies of food products – coming in attractive packages and with alluring sale offers – which give you an illusion of widening choices.

In reality, the choices are getting restricted. Most of these products are being produced by a few companies, their numbers decreasing over the years. The reason, food processing and retail business is getting concentrated, dominated by a handful of companies. So much so, some agribusiness companies have been known to put on the shelves similar kinds of product under different brand names.

If you think consolidation is happening only in the food retailing industry, hold your breath. Concentration and consolidation is not only happening in food retail but across the food value chain thereby reducing choices, and leading first to monopolies and subsequently to building conglomerates that control the value chain. As Dr William Heffernan of the University of Missouri had forewarned way back in 1991, the control is going to be from ‘the gene to the supermarket shelf’.

This is exactly what has happened. With first horizontal and then vertical integration, and subsequently followed by global expansion, the very fundamental of the market economy – that more choices means more competition – has got severely limited. In fact, with increasing spate of acquisitions and mergers that the world is witnessing, more so since the mid-1980’s, competitiveness has been the biggest casualty. As Heffernan and some other economists had shown when four companies gain dominance over 40 per cent of the market, it no longer remains competitive. The choices then disappear.

The concentration of ownership leads to concentration of wealth and power. In the food value chain, it is this unwieldy concentration of power that decides what to produce, and what to eat. With the decision making shifting from the communities to the board room, even the food choices are getting limited. The romance with traditional foods is slowly fading away. The exponential growth in junk foods, leading to a spurt in obesity and lifestyle diseases, is a classic example. Lab grown food will further take away food choices and bring more corporate control over food. As if this is not enough, reports say the United States now wants the private sector to act as an educational agent for food and nutrition.

Over the years, the world is witnessing a convergence among the three major players – technology companies, trading companies, and the big retail – to exert a greater influence in drawing appropriate policies at the national as well as international level so as to help with consolidation. The policy of ‘get big or get out’ that the US pushed since the early 1970s has reframed public policies in agriculture to usher in consolidation across the entire food chain. This is perhaps what the Indian farmers are worried about, the protest actually aiming at protecting the farm livelihoods by ensuring an assured income by way of an assured price. What they are asking for holds the key to reclaiming the power imbalance in the food systems that has built in over the decades.   

Whether it is land, seed or livestock, the consolidation that has happened in the US has set a global trend. While small farmers abandoned agriculture, an interesting study entitled ‘The Food System: Concentration and its Impacts’ for the Family Farm Action Alliance in the US, tells how the share of farms above an average of 2,000 acres has doubled in 40 years, from 15 per cent to 37 per cent; and dairy farms have grown in size, with the average number of dairy cattle increasing from 80 to 1,300 in the same period.

According to the 2020 Land Report, Bill & Melinda Gates are now America’s top farmland owners with 242,000 acres. The next in the list is the Offutt family, owning 190,000 acres. Considering that Ted Turner and David Rockefeller have been recipients of massive farm subsidies in the past (they too own large tracts of farm land), it will be interesting to know how much farm subsidies the Gates family is entitled to. This also points to a different form of land consolidation.

Coming back to agriculture, with the big six seed companies seeing mergers and acquisitions, reducing their number to four, their share of the global seed market is around 59 per cent. With Trade-relate Intellectual Property Rights (TRIPs) agreement, and many countries now bringing in policies to stop or restrict the use of traditional seeds, the consolidation of the seed industry is further strengthened. IPR policies are also leading to privatisation of genetic resources. Seed biotech companies insert a gene in a plant species and it becomes a new variety, with ownership shifting to the company. The genetic uniformity that the seed industry is ushering in raises concerns over the destruction from monocultures.    

The three agro-chemical giants – Bayer/Monsanto, ChemChina/Syngenta and DowDupont – have 64 per cent of the share of global pesticides market. First, the seed industry dovetailed pesticides usage in the seed varieties developed, and now the genetically-modified seed varieties with genes for herbicide tolerance leads to increasing sales of the particular herbicides. The use of pesticides has in fact grown after the introduction of GM varieties despite claims to the contrary.

Similarly, consolidations have happened across the entire food chain.

All this leads to the question as to who controls food? Consolidation is aimed at keeping food cheap, by externalising the socio-economic and environmental costs. This is going to further exacerbate with increasing concentration of food power in the hands of a few companies. The true cost of cheap food is not only health and environment destruction, but also in the resulting sufferings for farmers who are denied their rightful income for what they produce. This leads to a worrying situation where farmers quit agriculture and the companies take over. And this is what the protesting farmers are knowingly or unknowingly worried about. #

Food chain consolidation limiting choices. The Tribune. Jan 29, 2021 https://www.tribuneindia.com/news/comment/food-chain-consolidation-limiting-choices-204874?fbclid=IwAR0bjGoBsM3_oEJ9q9eT7oLkgO8lIajOq6DK9F_763IiKsvjBGm9RsPR-2o

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From Growth Economics to Economics of Well-Being

These are cars lined up before a food bank in America 

Pic courtesy -- MotherJones

At the beginning of the coronavirus outbreak, the World Economic Forum shared on Twitter a study 

conducted by Statista, a German online portal for statistics. It listed the top ten countries where people are 

losing faith in capitalism, where people agree “capitalism as it exists today does more harm than good in the world.” Interestingly, India tops the chart with 74 per cent respondents agreeing, followed by France (69 per cent), China (63 per cent), and Brazil (57 per cent). Germany trails with 55 per cent, UK (53 per cent) and with Canada and United States at 47 per cent each.

The declining faith in capitalism comes at a time when Oxfam International in its annual presentation, timed a few days before the World Economic Forum meeting in January at Davos in Switzerland, presents the shocking report on income inequality. Accordingly, India’s richest 1 per cent carries four times more wealth than the combined wealth of bottom 70 per cent. Internationally, the report says 2,153 billionaires have more wealth than 60 per cent of the global population. Ironically, the same wealthy corporations are once again on the forefront seeking massive Covid-19 bailouts. Such economic bailouts over the period have helped shape the popular thinking that global economic system in reality supports ‘socialism for corporate, and capitalism for the poor’. The worsening income inequality, which is increasingly coming under the scanner, is enough to fuel growing dissatisfaction with capitalism. As if this was not enough, the pandemic has further widened the social and economic gulf with the poor certainly faced with a much greater risk. With massive job losses, the challenge to stay safe and at the same time the struggle to provide food for the family has further deepened the gap between haves and have-nots.

Despite market reforms being pursued aggressively over the past four decades, one better way to understand how the social and economic disparities have only widened, comes from an insightful analysis of growing food insecurity and that too at a time of plenty. Writing in the New York Times, Patricia Cohen compares the long queues for food in America at the time of the Great Depression in the 1930s with the still longer queues of cars, stretching to several miles, before food banks during the 2020 pandemic. Separated by a time gap of almost 80 to 90 years, a memorable picture taken by photographer Margaret Bourke-White (of Time Life Pictures) shows a long line of poor citizens waiting for relief below a signboard showing a happy family in a car, with the banner claiming: ‘World’s highest standard of living’.

Nothing much seems to have changed. The economic model of growth has only made the rich richer, and the poor have been driven against the wall. In a country, which is known to be the world’s richest economy, pictures of cars lined up for an average of 2 miles or so before a food bank, is only a stark reflection of ‘profound, longstanding vulnerabilities in the economic system’. Not only in America, the distressing visuals of a traumatised migrant workers in India, with children in laps and carrying family belongings on head, trudging on foot to reach their homes several hundred kilometres away, will continue to haunt the nation for quite some time. Whether it is the long queues of cars in America or the long march in India, the pandemic has laid bare the inequalities perpetuated over the decades. A serious rethink is now required to radically overhaul the economic system bringing in equity and justice at the centre of human development.

It doesn’t end here. Four decades of neoliberal economics has also unleashed an environmental havoc. With temperatures soaring, ice caps melting and greenhouse gas emissions (GHGs) rising, climate change in no longer a distant reality. Many believe that the destruction of prime natural resources, forests and biodiversity hotspots has lead to the emergence of deadly diseases. A complex web of relationship exists between industrial farming, factory farms and bushmeat markets calling for an immediate fixing of the broken food systems so as to avoid the next pandemic. Whether it is the resulting environment destruction or the rampaging economic inequalities, the Covid crisis should act as an urgent wake-up call for governments to seriously move towards an economic system where the majority population is not deprived of basic necessities, where the emphasis shifts from economic growth to economics of well-being, where Gandhi’s talisman becomes the new development mantra. 

Prime Minister Narendra Modi recently said the biggest take away from the global crisis “is to become self-reliant.” Although several newspapers editorials as well as lead articles have warned against returning to self-reliance and that too at a time when the world needs to quickly move into a trajectory of high growth, I think what the Prime Minister said is exactly what the country needs. Not only making villages self-reliant, where agriculture becomes the pivot for rebooting the Indian economy, the policy imperative has to swing to creating adequate farm, public health and education infrastructure thereby revitalising the rural economy. This has to be accompanied by a renewed emphasis on ‘Make in India’ programme – especially by revitalising the MSME sector -- given that too much dependence on global value chains is now coming under the radar.

The principle of self-reliance is based on according dignity to labour and living in harmony with nature. These two underlying principles for economic well-being come in direct conflict with traditional economics which continues to harp on productivity and growth, in short pushing for more aggressive market reforms. The bumpy road ahead however will need a clear cut change in policy direction where first providing a generous social security net for the unskilled as well as skilled industrial workers becomes an immediate necessity. Secondly, and more importantly, the focus has to shift from destroying nature in the quest for economic growth.

Staying indoors for several weeks has made people realise the importance of conserving and protecting environment. They now need appropriate policies that make it possible. Economic well-being is an idea whose time has come.#

Losing faith in capitalism. The Tribune. May 16, 2020

https://www.tribuneindia.com/news/comment/losing-faith-in-capitalism-83920?fbclid=IwAR1Zbq6RJImJNDIMvp6CK8g8M_PC5QVrqEJpi_7-ouZSY8pp2wejbVD3-P0

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Lockdown: Agriculture serves as the lifeline

When people across the country are confined to their homes the only pressing requirement they have is for food – and that too three times a day. Whether you are rich, sitting comfortably in your homes and trying out new recipes to prepare a fresh dish every other day or you are a poor migrant struggling to find a banana that you can still eat from the rotten heap lying on the banks of Yamuna river, food is after all a basic human necessity.

It is at this difficult time of a lockdown that the often repeated phrase -- agriculture is the mainstay of the Indian economy – not only becomes obvious, but is firmly established.

But imagine the chaos if the country didn't have enough food at these testing times? Imagine if we had followed the prescription of our mainline economists who had wanted food stocks limit to be reduced to feed only 20 per cent of our population? Imagine if we had dismantled the APMC mandis and done away with crop procurement as the industry had always wanted us to do? Even despite having a record foodgrain surplus – 77 million tonnes, at least three times more than the requirement -- still 96 per cent of the lakhs of migrants did not get their share of dry rations, says a study.

The avalanche of migrants heading back home after the lockdown was imposed, travelling on foot for hundreds of kilometres, without an assured supply of food, has provided a visual image to a monumental crisis that was building up for decades. The massive reverse migration, and subsequent efforts being made by the state governments to provide temporary shelter and food to those struck on the way, has brought forth another hidden dimension of the ongoing agrarian crisis. Urban centres had failed to ‘absorb’ the migrant workforce, maintaining a clear cut social distance from the migrants, and when the daily wage link was suddenly snapped the teeming work force felt abandoned.  

A majority of these migrant workers are unlikely to return soon. The fact that they took the hard decision to tread back home to be with their families, where they wouldn’t be at least facing hunger, speaks volumes of the flawed economic thinking which actually pushed people out of the rural areas to migrate into the cities because the cities needed cheap labour. With farm prices kept low to keep food inflation under control, and at the same time provide cheaper raw material to the industry, agriculture was deliberately kept impoverished. Despite being denied their rightful income, farmers continued to produce a surplus for the country year after year.

The lockdown coincided with the rabi harvest season. This year, despite unseasonal rains, production was expected to be bountiful. But with people asked to stay indoors, and with restaurants, hotels and dhabaspulling down the shutter, the demand for perishable vegetables and fruits collapsed. Reports of farmers re-ploughing fields of cabbage, cauliflower, raddish, peas and other vegetables poured in. Tomato farmers dumped the harvest in the crop fields. Premier products like strawberry had to be fed to cows. Button mushroom rotted. The demand for premier Alphonso mangoes, grapes, banana and even plantation crops like coffee, tea, cashew nuts and spices faced price crash. Poultry suffered the worst. Milk, fisheries and flowers were similarly badly hit.

Shortage of farm labour compounded the existing crisis. Even in case of wheat, where a record 106 million tonnes of grain is to be harvested, paucity of farm workers has hit harvesting operations. Although the government has for all practical purposes kept agriculture, horticulture, plantation crops, fisheries and animal husbandry out of the lockdown provisions from April 20, procurement of wheat is slowly picking up. But interestingly, while it is agriculture that suffered a severe blow during lockdown 1.0, the impression being generated is that the rural areas are relatively better off.

This crisis apart, the bigger question is whether the pandemic will change the way we look at agriculture? Whether agriculture will receive priority in public policy? Or once the fire-fighting operations are over, it will be back to square one. While the State’s role in health and education is expected to expand, will agriculture also emerge on the top of dominant economic thinking? Will a relook at agriculture bring back the focus on making agriculture economically viable? These are questions that need to be seriously deliberated because the policy changes after Covid-19 will determine the future of agriculture.

Corona virus pandemic therefore has come as a loud knock at a time when the dominant economic policies were aimed at propping up the industrial sector. Over the past few decades, agriculture had been systematically ignored in policy planning. The best reflection for this perhaps comes from the declining public sector investments in agriculture. Between 2011-12 and 2017-18, public sector investments in agriculture hovered between 0.3 to 0.4 per cent of the GDP for a sector which employs 50 per cent of the total workforce. It is futile to expect a miracle in agriculture without providing adequate investments commiserating with the population involved.

With agriculture emerging as the strong pillar of the economy at these difficult times, it should be abundantly clear that any further effort to marginalise farming will be politically suicidal. While agriculture will need a total revamp, and with huge investments the challenge will be to provide farmers with a remunerative price and being assured a monthly income. At the cost of repeating again, an OECD study had shown Indian farmers lost Rs 45-lakh crore between 2000 and 2016-17 by being denied their rightful income. Imagine if Rs 45-lakh crore (or Rs 2.6 lakh crore every year) was paid to farmers, there would have been hardly any possibility of farmers abandoning agriculture and migrating to the cities. Post Covid-19, let’s aim at Sabka Saath Sabka Vikas and Sabka Vishwas.

This is not a wishful thinking. It is an idea whose time has come. #

Saved by Plough. Orissa Post. April 18, 2020
https://www.orissapost.com/saved-by-the-plough/ 

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No need to panic; India has enough food stocks to tide over Corona Virus crisis

People throng to malls in panic to stock essential items in wake of coronavirus outbreak. 

Pic: socialnews.xyz

As European Union sealed its borders in a desperate attempt to put the brakes on the ferocious spread of the corona virus pandemic, a young Indian student returning from Italy recounted how the battle for a loaf of bread has intensified in a country which is perhaps the worst hit by the spread of the deadly virus. An Indian NRI couple returning to America a few days ago, after spending two months of holidays in India, were shocked to find that the price of wheat atta they usually would buy for $ 10 a bag has now skyrocketed to $ 90.

As hordes of worried shoppers have been stockpiling supplies of food, toilet paper and other groceries day after day amidst corona virus scare in America, the US President Donald Trump had to step in to assure people that there is no shortage of food supplies and urged them to resist from panic buying. 

In India, while Prime Minister Narendra Modi has urged the people not to resort to panic buying the Supreme Court directs all states to ensure that the disbursement of nutritional food to children and lactating mother is not affected as a result of the closure of schools, Kerala has launched a programme for delivering mid-day ration to school children at their homes. Meanwhile, reports of consumers stocking food and other essential items in panic have poured in from across the country. With Punjab closing down the weekly vegetable market called Apni mandi, and with some experts pointing to community transmission of corona virus expected to happen, which means self-quarantine will become the norm in the days to come, the scramble for buying and storing essential food commodities has only heightened. My own neighbours have already stocked their monthly household requirement of wheat atta, rice, sugar, edible oil, onion and potato.

Although there is no shortage of food globally as well as nationally, panic buying of food items at a time of crisis is nothing unusual. As far as wheat, rice, sugar and pulses are concerned, there are enough stocks available within the country. In fact, for wheat and rice, the godowns are already overflowing with the surplus over the required emergency buffer being several times more. Against the requirement of 214 lakh-tonnes of wheat and rice at the beginning of the year on Jan 1, 2020, Food Corporation of India (FCI) had 565.11-lakh tonnes, which means roughly two and a half times more than the essential requirement for public distribution. With the new wheat arrivals expected from the first week of April, India has certainly nothing to worry on the foodgrain front. In addition, India already has a buffer stock of 30-lakh tonnes of sugar, which the government is planning to raise to 40-lakh tonnes this fiscal. In the cases of pulses, the Ministry of Food and Consumer Affairs has been trying since December to offload 8.47-lakh tonnes from its buffer stock of pulses.

The abundance of food stocks within the country at a time when national borders are closing for movement of people and also expected to hit international trade is certainly a big sigh of relief. This reminds me of the global food crisis in 2007 when food prices had soared globally, and food riots had erupted in 37 countries, including countries like Egypt. While people went hungry, food companies had raked in huge profits with the food commodity prices soaring in the Chicago Mercantile Exchange, the world’s biggest commodity trading market. The UN Human Rights Council had attributed commodity futures trading to be the primary reason behind the global food crisis. Nearly 75 per cent of the blame for the unprecedented rise in food prices was directly linked to the exploitative commodity prices that prevailed.

India had escaped the global food crisis primarily because it had enough food stocks and also it had not linked its agriculture to the international futures market.

With public memory being short, the corona virus pandemic has perhaps come knocking at the right time. For past several years, mainline economists and policy makers have been seeking the reversal of the food procurement system that is primarily responsible for building the food reserves so essential for ensuring household food security. With all eyes on dismantling the network of regulated mandis under the Agricultural Produce Market Committee (APMC) Act, the government is keen to gradually withdraw from the open-ended procurement of wheat and rice. The Prime Minister Office has already written a letter to the Punjab government asking why the open-ended procurement under which whatever quantity of wheat and rice farmers bring to the mandis the government is under obligation to procure at the Minimum Support Price (MSP), is not curtailed.

The basic objective being to liberalise the agricultural markets which, in turn means not learning enough from what led to the global food crisis. Any tinkering with the food procurement system built so assiduously over the years is certainly fraught with unforeseen dangers. More so in a country which has the worst child mortality in the world, with over 8.80-lakh children succumbing to malnutrition and related ailments every year, termed by the UNICEF as – burden of death – clearly shows the problem is not with surplus food the country has but with its (mis)management. More so, at a time when the country ranks 102 among 117 countries in the Global Hunger Index.

Therefore, the policy makers need to listen again and again to what Dr M S Swaminathan had once said: “Future belongs to nations with grains and not guns.”India cannot afford to go back to the days of ‘ship-to-mouth’ existence when food would come directly from the ships to feed the hungry. #

India has enough food stocks to tide over CoronaVirus crisis. Deccan Herald. Mar 20, 2020

https://www.deccanherald.com/opinion/panorama/india-has-enough-food-stocks-to-tide-over-coronavirus-crisis-815502.html 

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