The problem with growing corporate concentration and power in the global food system

Clapp J. The problem with growing corporate concentration and power in the global food system. Nature Food. 2021/06/03. 

Relevant to: 

Dietitians-Nutritionists interested in how corporate power influences the food system.  

Question: 

This “perspective” is a commentary on the ways that corporate concentration impacts the food system, and proposes measures that can be taken to confront this concentration. 

Bottom line for nutrition practice: 

Corporate concentration of agri-food firms in the seed and agrochemical sector exceeds the 60% mark of what economic analysts consider highly concentrated. While this stifles competition and increases prices, the author also stresses that this concentration of power can have immense implications for equity, sustainability and democratic participation. Instead of regarding food as a public good or a “right”, the objective of large corporations is the short term interests of shareholders. The author also suggests that in addition to the four dominant global agricultural input firms, similar dynamics are occurring among big food companies in the processed food, commodity trading and food retail sectors. 

 The author delineates that these large corporations can shape market dynamics, technology and innovation pathways, as well as policy agendas. Strategies outlined to combat corporate power include: stronger and wider competition policies, increased public sector support for diverse food systems, and limiting corporate influence on policy processes. At a minimum, the author suggests that greater transparency and research is required to understand the problem and to develop effective measures to address it. 

Finally, the author notes that civil society has expressed concerns that the agenda of the 2021 UN food systems summit does not adequately focus on the implications of this concentration.  

Abstract:

What are the potential consequences when a relatively small number of large firms come to dominate markets within the global food system? This Perspective examines the implications of corporate concentration and power in the global seed and agrochemical industry, a sector that has become more consolidated in recent years. It outlines the pathways via which concentrated firms in this sector have the potential to exert power in food systems more broadly—both directly and indirectly—in ways that matter for food system outcomes. Specifically, concentrated firms can shape markets, shape technology and innovation agendas, and shape policy and governance frameworks. This Perspective makes the case that a range of measures are needed to ensure that corporate concentration and power do not undermine key goals for food systems, such as equitable livelihoods, sustainability and broad-based participation in food system governance. These include measures to strengthen competition policies, to bolster public sector support for diverse food systems, and to curb corporate influence in the policy process. 

Details of results: 

Corporate concentration by six global agri-food firms has been a concern since the early 2000s, and since then, the agricultural input industry has become dominated by four large firms (Bayer, Corteva, ChemChina-Syngenta and BASF); they control about 70% of the global pesticides market and about 60% of the global seed market. Further, concentration has intensified as integration of business has also become vertical (e.g., where seeds are developed to work with specific herbicides – both of which are owned by the same corporation).    

The author delineates three ways in which corporations exert power and impact food system outcomes. First, by shaping market dynamics. Strategies to maximize profit can increase prices, damage the environment, undermine livelihoods of small-scale producers, and limit choices of products (e.g., in some US markets, access to non genetically modified seed for some crops is increasingly difficult, and intellectual property protection limits farmers abilities to save seeds). Further, these corporations significantly influence working conditions and labour compensation, contributing to lower wages and job losses.  

Second, corporations shape technology and innovation agendas. While firms may argue that they require consolidation in order to allocate more funds for research and development, the author argues that concentrated markets can also limit innovation, particularly where they result in higher barriers of entry for other firms. The author also contends that attention needs to be paid to who benefits from the innovation. Firms often invest in innovations that result in profit rather than developing technologies that could benefit small scale producers, especially in the developing world. Further, “lock ins” for users (e.g., specific genetically modified seeds used with specific herbicides such as glyphosate) may have detrimental environmental and social consequences. This is worsened by the fact that governments have diminished their previously strong role in sponsoring agricultural research. Additionally, if current firms dominate upcoming digital farming platforms, this could intensify the “lock ins”, increase market power, and potentially limit farmers rights and access to data – including their own.  
 
Third, corporations shape policy agenda and governance frameworks through lobbying, public relations campaigns and research sponsorship. They can also influence policy through “structural power” (e.g., where governments may be reticent to enact policy and regulatory measures if the corporations leave the country and take jobs with them).  

The author poses various strategies to regulate and create more equitable distribution of power in food systems. First, stronger and wider competition policies are needed to focus beyond (oft employed) price impacts. Competition policies need to more broadly examine how impacts may affect society, ensuring that public policies are not undermined in the areas of environmental, social, labour and health regulations. International coordination is also needed so firms do not move to other jurisdictions with weaker regulations.  

Second, the author argues for more public sector support for diverse food systems. This can occur by means of government involvement in research and development innovation that is not driven solely by profit, and focuses on agroecology, sustainability and accessibility. Aims should include reducing technological lock-ins, and expanding choices for producers. The author also suggests that governments enhance support to production, processing and distribution infrastructure in order to benefit small and medium sized businesses – promoting diversity, sustainability and innovation throughout the food supply chain. Data collection and programs to ensure public access to data should be also supported. 

The third measure proposed is stronger policies to limit corporate influence over policy processes, including regulatory policies, scientific research and public discourse. Finally, the author argues for the creation of spaces where policy makers, producers and civil society can meaningfully engage in order to nurture equitable and democratic policy and government, as well as ensuring the rights of food system workers and the right to food. 

Of additional interest: 

UN Food Systems Summit 2021 (July 26-28, Rome) 
https://www.un.org/en/food-systems-summit 

Editor’s comment:  

N/A

Open access link to article: 

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Conflict of interest/ Funding:  

The author declares no competing interests. 

External relevant links:  

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Transparency | Diversity | Dynamism | Evidence-based |

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