Protecting Agribusiness Profits or the Right to Food?

Without a redistribution of power away from agribusiness, real solutions to hunger and food insecurity are not possible. Far reaching reform of national and international governance is required to prioritise the right to food, says a report by Agribusiness Action Initiatives.

Link to full report (PDF): A Question of Governance: To Protect Agribusiness Profits or the Right to Food?

7th January 2010

Executive Summary

November 2009 - Agribusiness Action Initiatives

In 2009, 1.02 billion people are undernourished worldwide—more hungry people than at any time since 1970 and a steep worsening of conditions that were present even before the global economic crisis that started at the end of 2007. The World Summit on Food Security is one more of many international meetings and commitments that governments and multilateral organizations have made to end hunger. However, the solutions promoted in preparatory meetings are muddled and fail to deal with critical issues of unequal power and capacity throughout the global food system. Without clear changes in food system institutions and organizations to redistribute power from agribusinesses that currently hold disproportionate control over food availability, access and utilization, real solutions to hunger and food insecurity are not possible.

While many policymakers are proposing increases in production and productivity as the solution to hunger, this is not sufficient because increased supplies of food will not necessarily go to people who need it most—those who cannot afford to buy it. During the last decade global food production grew, even on a per-capita basis; and the sharp jump in food prices and hunger during 2007-2008 occurred despite a record cereal harvest in 2008. While much of the rhetoric in global food security initiatives is about helping smallholders, the main strategy seems to be integrating farmers into global supply chains. Farmers raising export crops to feed wealthy consumers in industrialized countries are likely to get more support than farmers raising staple food crops for home consumption and local or regional markets. The companies that control global supply chains—distributors, traders and, increasingly, retailers—will continue to benefit more than the smallholders who most need assistance.

While food prices for consumers and the total numbers of people suffering from hunger were rising rapidly during 2008 and into 2009, many agribusinesses were reporting record profits. The most rapid gains in revenue among Global 500 corporations were by food production companies. Worldwide, farmers received higher prices for their crops in 2008. However, potential income gains from the market were swallowed up by inflation and higher prices for inputs and other costs of production and transport. Reports from both the US and the EU show that supermarkets have profited much more than farmers from price increases over the last decade.

Agribusinesses have gained power in the food system in part by rapid consolidation through mergers, acquisitions, alliances and partnerships. The retail sector has been the most recent segment of the global value chain to become highly concentrated, but its concentration has proceeded rapidly. Retailers can use their power to force lower prices, require growers to meet strict quality specifications that are expensive to achieve, or demand that farmers assume all of the risk. As retailer power increases, contract sales may become the only option for growers. And smaller-scale producers who cannot meet the volumes that global buyers need can be squeezed out of their markets.

At the national level, ichanges in policy environments have facilitated the concentration of agricultural businesses and enabled agribusinesses to expand their profits and control. Corporations have been able to influence public policies through lobbying, campaign finance contributions, advertising and access to political leaders. Although most agribusinesses now report on their Corporate Social Responsibility and environmental sustainability, voluntary reporting and labeling seem to have less impact than the publicity about them suggests. Additionally, many controversial issues are still not covered by Corporate Social Responsibility commitments, such as tax evasion, advertisements to children, and lobbying in domestic and international fora.

A broad scientific consensus on investments, policies, institutional changes and agricultural practices that can end hunger; improve rural livelihoods; and promote economically, environmentally and social sustainable development has been achieved through the International Assessment of Agricultural Knowledge, Science & Technology for Development (IAASTD). A rights-based approach to agricultural development complements many of the IAASTD options. Rights-based approaches are grounded in international human rights standards and directed to respecting, protecting and fulfilling human rights. They explicitly recognize the power dynamics involved in hunger and poverty and allow people whose human rights are being violated to gain control of their lives and destinies. This requires a strong role for the government through public policy and increased national and international regulations on corporate power. This paper proposes that the IAASTD and international human rights and environmental covenants and treaties should guide policy reforms aimed at ending hunger and balancing power in the food system.