Lords of the Food

Worth blogging in full (thanks Anna)

TRADE: Only a Handful Are Lords of the Food Harvest
By Gustavo Capdevila

GENEVA, Sep 25 (IPS) - The food and beverage industry is experiencing a high degree of concentration, with 10 distributing companies controlling 24 percent of the world market, according to a report being studied this week by workers’, employers’ and government representatives gathered by the International Labour Organisation (ILO).

The same trend that is seen in sales is found in other stages of the industry, such as manufacture and transformation of food products, said the report’s author, Andrew Bibby, in his presentation of the ILO issues paper being discussed by the 70 participants at the Tripartite Meeting to Examine the Impact of Global Food Chains on Employment.

Bibby said that the strategy of diversification of food supply sources is no longer a novelty in the industry, and is closely linked to the globalisation of economic and trade relations.

What is new is the emergence of integrated world food chains, which employ 22 million people and are therefore a concern of the ILO’s.

At the top of the list of food and beverage companies is the Swiss company Nestlé, with 260,000 employees, followed by the Anglo-Dutch firm Unilever with 179,000 employees, and the United States’ PepsiCo with 157,000 workers, Sara Lee with 137,000, and Coca Cola with 132,300 employees.

Among corporations dedicated to retail sales, the final link in the chain, the U.S.-based Wal-Mart is in the lead with 1,800,000 employees, followed by French firm Carrefour with 440,500, the U.S. company Kroger with 290,000, Britain’s Tesco with 273,000 and the U.S.-based Albertsons with 234,000 workers.

This quasi-monopoly situation arises from the mergers and acquisitions of giant companies that have been accentuated in recent years.

The ILO report says that "although the largest companies are huge in terms of their turnover, the sheer size and diversity of the global food industry leaves plenty of room for further consolidation."

In 2006, Nestlé grossed 74.7 billion dollars, Unilever’s business was worth 49.6 billion, PepsiCo grossed 32.6 billion, Sara Lee 19.7 billion, and Coca Cola 41.8 billion dollars.

Wal-Mart’s sales in 2004 amounted to 29 billion dollars, while Carrefour sold goods for 99.1 billion dollars.

But these gross revenues pale in comparison with profit distribution. A producer of snow peas (mangetout) in Zimbabwe receives only 12 cents per dollar earned on the peas sold in supermarkets in industrialised countries. Similarly, a Kenyan producer of fresh vegetables is paid just 14 cents per dollar of produce sold.

A study of bananas exported from Ecuador to the United Kingdom found that plantation owners received 10 percent of the share of income from banana sales, while only 1.5 percent reached the plantation workers.

The processes described in the ILO issues paper, which are changing the nature of the global food industry, will also have an impact on industrial relations and social dialogue in the sector.

"There is potential for better industrial relations and higher levels of compliance with core labour standards from which both companies and workers would benefit -- particularly through greater involvement and participation of lead firms at all stages of the food supply chain," the paper says.

"The social partners in the food manufacturing industry have a record of successful collective bargaining in companies all over the world," the document says.

"To take just one example among many, Nestlé Asia-Pacific has signed collective agreements in several countries covering a wide range of issues including respect for trade union rights and protection against victimisation for union activities, equality of opportunities, and non-discrimination of grounds of age, sex, race or religion," it adds.

But workers’ spokesman Klaus Schroeter of Germany’s catering trade union claimed that the collective agreements mentioned in the ILO paper do not comply with national legislation in the countries concerned.

Schroeter said the report was unsatisfactory, and that it is not for the ILO to make statements in line with the views of the corporations, he said.

The trade unionist objected to the part of the issues paper that forecasts increasing demand for food products in Asia and Latin America, and said he concludes from the document that the trend is worrying analysts, who fear that a global increase in food consumption will result in scarcity on a worldwide scale.

He said he found it cynical that the ILO should express such a view when thousands of children are dying of hunger, and that the author of the report should have been aware of this.

In the three tripartite meetings he has attended, he has never seen such a bad ILO document, Schroeter asserted.

Statistics released in 2007 by the U.N. Food and Agriculture Organisation (FAO) said that 854 million people, or 17 percent of the world population, suffer from hunger, and that their numbers are increasing. (END/2007)