It’s green time for agribusiness
Over the last 25 years, family farming has been transformed to corporate farming, also called agribusiness. Agriculture obtained an industry structure, a new setup in which agro-technology, efficiency and quality control are vital. Today a handful agribusiness players control the production chain from seed to feed and from the cultivation of staple foods to end consumer products.
By both global expansion and vertical integration, the agribusiness network continues to enhance its grip on the food supply chain. The last years this has been at accelerating speed. Consumers profit from this development with cheap food in a variety that is unsurpassed in history. However, not everyone is confident that agribusiness is the future of agriculture. There is growing scepticism about the sustainability of this agricultural approach and the dominance of global corporations involved in food production. More recently, the agribusiness complex has come under scrutiny in documentaries for its lack of transparency and exploitation of the world’s social-agricultural heritage. Most consumers are not yet on the alert. However, this could change, once negative publicity gains momentum.
Cheap food
Agribusiness is everywhere in the food chain, although most consumers do not realise this. Many still believe in a world where fat cows graze in alpine meadows, as shown in Milka commercials. The reality is that this type of farming, as it is inefficient and costly, is rapidly being wiped out by modern agriculture. Many traditional family farms go out of business or join the network of a small number of multinationals, like Archer Daniels Midland and Cargill. This happened in the western world and is now also occurring in the developing markets. These companies now account for a large and growing share of global agricultural production. For example today’s vegetables, grains, potatoes, soybeans, chickens and more recently also pigs in the US are primarily sold under some form of contract, a practice that in the case of pigs, accounted for only five per cent of sales in 1980.
Providing economies of scale, agribusiness has maximised crop yields and profits in the sector. The combination of global production of agricultural commodities, efficient distribution networks and concentration of food manufacturing has enabled supermarkets to offer an enormous range at relatively low costs. Some decades ago, western consumers spent a substantial proportion of their income to feed themselves. Today North Americans spend on average only 15 per cent on food purchases. In Europe, this is not much different. The benefits of ‘big agriculture’ are cheap and safe ‘quality foods’ for the masses. In this respect, agribusiness is a success story. However, critics point at the side effects of corporate farming: disruption of the family farm, environmental damage, loss of crop and life stock variety and habitat, genetic engineering, dependency on seed and agrichemical suppliers, uniformity of food products and lack of flavour and nutritional value.
A depressing message
The Austrian film ‘We feed the world’, by writer & director Erwin Wagenhofer, unveils ‘the true face of agribusiness’. Interviews with fishermen, farmers, scientists, executive managers of multinational food manufacturers and seed suppliers illustrate that cheap food for western consumers is produced at the expense of developing countries and the environment. The film is an eye-opener. For example, it shows that Austrian cows do not live on alpine grasses, but are mostly fed with soy from Central and South-America. A livestock crop grown on an area of 350,000 ha. About 60 per cent of this soy derives from genetically modified crops. Until recently, Austrian consumers were not aware of this, nor did they know about the side effects of the cultivation of transgenic soy in these regions, such as illegal deforestation, high pesticide use and disruption of local farmers’ communities.
Unsustainable flowers
Misery portrayed in Sauper's film is the result of the introduction in the fifties of the Nile perch, which is not native to the lake. This predator decimated other species, leading to an ecological disaster. The documentary was extensively reviewed in British papers in August 2005 and on television, though sales of this popular retail fish are not reported to have dropped.
Still, negative publicity about unsustainable food production may in the long-term damage the image of large retailers that sell such products. How quickly public opinion can turn against retailer’s products, became clear last October in the UK. The British consumers were alerted to unsustainably grown flowers being sold in their supermarkets. This resulted in a call to stop buying these flowers. The immediate cause was an article in The Guardian that had reported how supermarket bouquets empty Kenya’s rivers. By using river water for horticulture, no water was left for small farmers. British and European-owned horticultural companies were accused of supplying supermarkets such as Tesco, Sainsbury’s and M&S, with flowers that dry up local farmland. It was reported that blooms take up as much as 25 per cent of water normally available to over 100,000 small farmers. During this situation, no supermarket was willing to comment on the quantity of ‘stolen’ water. The storm abated finally but it again raised questions about corporate responsibility of large retailers when it comes to global sourcing.
Call for transparency
Imported African flowers and Nile perch fillets complete a long list of supermarket products with a doubtful sustainability score. Behind a prepacked chicken breast in the shopping cart lies a complex history. Most fillets come from poultry raised with soy granulates from multinationals. Livestock feed which is increasingly grown in remote corners of the world, like the deforested zones of the Amazon basin. Facts that are not mentioned on the label, nor reflected in the receipt at the checkout counter. Price is a poor indicator when it comes to sustainability. However, consumers are not stupid. A growing number of critics are becoming aware that much of the real costs of agribusiness products are not calculated in their purchase. Not included are hidden subsidies, environmental pollution by agrochemicals, energy use and CO2-emissions by heavy machinery and international long distance transport of food. But also squeezed out farmer’s wages remain invisible.
NGOs call for more transparency, a signal that is also picked up by politicians. In the UK, the Labour and Conservative parties have launched a mutual plan to incorporate the impact of ‘food miles’ in food sales. The goal is to reduce the environmental and social costs of food transport by 20 per cent in 2012. In the UK, these costs are estimated at € 13.5 billion per year [click here for full report] and still rising.
The British measure should not only check the miles the food travels, but also energy lost in production, time waste due to traffic congestion and effects of air and noise pollution. A proposed instrument to meet the goals is the adoption of best practice in the food industry. Measuring performance indicators should keep a track record of achievements and stimulate a dialogue between food industry, retailers, consumers, NGOs and public authorities.
Window dressing
For retailers that take corporate responsibility seriously, the British plan is an opportunity to offer consumers more product transparency. Supermarkets for instance could develop labels that indicate the energy impact of foodstuffs. Such eco labels of locally sourced products, such as rhubarb, will generally show a relative low environmental impact. This in contrast to strawberries that are flown in from Australia and used gallons of fuel for their transport. Here retailers can take the lead, together with a handful of food companies that are taking a more sustainable agribusiness approach seriously, like Chiquita. In 2005, the multinational was certified by the Rain Forest Alliance. A leap forwards in the history of agribusiness. However, most agribusiness companies are less ambitious. Among corporate responsibility reports there is still a lot of window dressing. Green communication is not the same as green practicing. In a speech at the World Food Prize International Symposium in October 2005, Cargill’s chairman and CEO Warren Stanley claimed the company’s commitment to help vulnerable populations in impoverished regions. Therefore, the multinational is supporting both international aid projects to relieve hunger, such as research initiatives to increase the nutrition value of soy-based food by higher protein contents or fortification with vitamins or minerals. However, this philanthropic attitude remains at odds with Cargill’s strategy to implement large soy monocultures in Central and South America. A practice that, according to NGOs, has dramatic effects on nature and local farmers, such as native Americans, in exploited regions.
| Sustainable vanilla agribusiness |
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The Vanilla Moon-project illustrates how agribusiness management can increase client smallholder sales and incomes by at least 400 per cent through the introduction and expansion of high-value crops, improvements in production and post-harvest technology and market linkages. The project in Uganda is part of the Kasese Smallholder Income and Investment Program (KSIIP), which provides assistance to more than 2,000 farmers in Uganda through partnerships with several smallholder associations. It is a collaboration between CORDAID, a catholic charity based in the Netherlands, a Dutch horticultural products trading firm (Highlow Supermarkt bv), two specialist horticultural consulting firms, Fintrac Inc., headquartered in the US and Agribusiness Management Associates Ltd.(AMA) based in Uganda. "Vanilla Moon" is the brand name for the vanilla grown and processed under this project, which is delivered to wholesalers. Farmers are trained on establishing a food safety system for EurepGAP certification. |
Small farmer's quality
An agribusiness strategy that combines aid and trade is now practiced on a project basis by several retailers. South African Pick ‘N Pay became involved in a development project coordinated by the Michigan State University to link small producers with the country’s second largest supermarket chain. The farmers supply squash and sweet corn according to quality specifications set by the retailer. The project shows that a supermarket chain can support small farmers to modernise their business in order to meet the procurement systems and high quality requirements of modern retailing. In Indonesia, Carrefour has decided to cooperate with the Bimandiri Company, a wholesale dealer of local traders and individual farmers that developed a sustainable procurement system. As a preferred fresh produce partner, the company supplies fruit, broccoli and chilli peppers of constant quality according to Carrefour standards. The co-operation has created an individual-sized Baby Black Watermelon, an exclusive product for the French retailer that is planned to be marketed to other Carrefour stores in South-East Asia. The partnership between Bimandiri and Carrefour shows that the arrival of western retailers in the developing world does not necessarily mean that traditional farming systems are wiped out and replaced by a small number of large, often monocultural farms. It also proves that agribusiness can be more sustainable, and at the same time profitable and of high quality, and that retailers can play an active role in this.
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