Issue 251 of SOCIALIST REVIEW Published April 2001 Copyright © Socialist Review

Food crisis

Enough to make you sick

Today's crisis in the food industry is a direct result of the superprofits of a few multinationals,
argues Carlo Morelli
Glum about foot and mouth: the Duke of Devonshire and his cow
Glum about foot and mouth: the Duke of Devonshire and his cow

The current crisis in the food industry, following the outbreak of foot and mouth disease and its spread throughout Britain, is an indictment of the impact of the market mechanisms so loved by Blair. While Nick Brown, minister for agriculture, continues to maintain that the crisis is under control, it may well be the case that foot and mouth is now endemic in British agriculture. The last major outbreak in 1967-68 lasted eight months, and while the extent of the current outbreak is unknown, there is no reason to believe it will have less of an impact. The responsibility for the spread of the disease lies not simply with modern farming techniques, but with the structure of the food industry as a whole which has been created, not by the widely argued demand for cheap food, but by the demand for profit.

The modern food industry is one dominated by large firms. It is an industry which receives gigantic direct and indirect subsidies from government, and which is responsible for destroying the environment while making enormous profits out of consumers.

By the mid-1990s three multinational firms were supplying 90 percent of the fertiliser market, while three firms were responsible for 57 percent of the animal feed market. In food retailing conservative estimates suggest that the five largest firms are currently responsible for over 60 percent of the grocery market. Farming is the least concentrated aspect of the food industry. Britain, after Luxembourg, nevertheless has the most concentrated farming sector within the European Union, with 34 percent of farms over 50 hectares. It is estimated that 5 percent of farms account for around 28 percent of all land holdings.

The National Farmers Union, New Labour and the food industry as a whole all suggest this growth in concentration has been dictated by the need to reduce costs as governments and consumers demand cheap food. The reality could not be further from the truth. British governments, far from maintaining a cheap food policy, have been keen to support the food industry with a variety of subsidies.

Rich and richer

The Common Agricultural Policy results in $36 billion of subsidies to farmers across the European Union each year. Importantly, these subsidies are disproportionately paid to the larger, richer farmers. Price supports in Britain between 1973 and 2000 have risen from 1.6 percent of gross output to 14.5 percent. On top of these, in the same period farm incomes have received subsidy payments rising from 1.6 percent to 14 percent of total income. Almost 130 million alone was spent on set aside, a system of payments to farmers for not producing on farmland. As subsidies have increased, the food intake of the population has fallen. Over the last ten years the daily calorie intake has fallen by 6.4 percent.

A similar picture can be seen in the distribution of food. Government policy has been to encourage concentration and an increase in food transport through subsidies for road haulage. Over the past ten years heavy goods vehicle traffic has increased by 38 percent, of which almost 40 percent comes from increases in the transport of food, drink and tobacco. At the same time the volume of air freight has doubled. The food retailers have developed extensive logistics operations with large warehouses (regional distribution centres) close to motorway links that are connected to computer networks and fed through the electronic point of sale technology at their stores' checkouts. For the retailers this has resulted in higher profits from just in time techniques known as 'efficient consumer response' in logistics and supply chain management. British food retailers' supply chain from manufacturer to checkout is 29 days compared with 104 days in the US.

The cost of this efficiency is, however, borne by the environment. Road transport contributes 20 percent of UK emissions of greenhouse gases. New Labour published the 'Sustainable Distribution' paper in 1999 recognising that HGV transport (constituting only 7 percent of the total road transport) contributed 22 percent of carbon dioxide pollution, 32 percent of nitrogen oxide pollution and 42 percent of fine particulate pollution.

The impact of the findings from the 'Sustainable Distribution' paper, and the New Labour government's commitment to sustainable distribution and the reduction of greenhouse gases can be gauged by the fact that the government subsequently committed 60 billion to further road building programmes and increased the size of HGV allowed on British roads to 40 tonnes from 1 February 2001.

Just one look at the distribution of the current foot and mouth outbreak compared with the outbreak in 1967-68 clearly demonstrates the role played by the transportation of animals in the spread of the disease.

It is also crucial to recognise the importance of globalisation. The current action to rid the livestock industry of foot and mouth disease is not explicable simply in terms of the livestock trade lost by the loss of disease-free status. Britain is a net importer of cattle and pigs, and only exports a third of sheep produced, amounting to 32 million last year. Similarly, even if the disease were left alone, most animals would recover within two weeks, and as the disease is harmless to humans it would have no effect on the food chain. However, governments in Britain and Europe are concerned to retain the disease-free distinction within European agriculture in order to protect markets from imports from the developing world. Free trade is acceptable for western governments as long as it means freedom to export to the developing world and simultaneously restrict imports from the developing world.

Global purchasing

Britain's countryside is quarantined
Britain's countryside is quarantined

The demand to protect the profits of the large scale food industry is linked to the need to promote globalisation. British retailing throughout the 1990s gained the reputation of 'rip-off Britain'. Such a reputation was not unfounded. During the last 20 years there has been a rapid growth in Britain of international retailers eager to gain a share of the high margins available. Of the 135 non-domestic retailers in Britain by 1995, only 12 operated before 1980 and only 2 before 1970. Again, by looking at the profit margins achieved by food retailers, it is possible to see who has benefited from the high cost of food production.

Retailers are able to use high profit margins in domestic markets such as Britain in order to globalise their purchasing, distribution and retailing capabilities. In the process the centralisation achieved by retailers enables them to push down the prices of small scale farmers and producers in the developed and developing world, which further boosts their profitability. This process of globalisation is similar for seed manufacturers such as Monsanto, fertiliser producers such as ICI, and retailers such as Tesco and Wal-Mart. The globalisation of the food industry, the environmental destruction it causes and disease it spreads so effectively are all products of a profit-driven system of food production.

The solutions to the madness created in the food industry by the drive to maximise profits require a complete rethink of the market for food. While concentration is the symptom of the problem, the cause is the profit motive within the market structures. Demands for local production of food and a reduction in transportation will reduce the spread of disease and the environmental impact of transportation. However, demands for an increase in food prices to promote small scale production simply push the cost of the solution onto those least able to pay. Studies of poverty in Britain consistently suggest that between one fifth and one quarter of children live in families whose income is below the poverty line. Any increase in food costs will disadvantage the poor and act against the interest of the working class. As demonstrated above, benefits from very large subsidies to reduce production, support the price of whatever is produced, and reduce the cost of transportation for food manufacturers and retailers all currently exist, and could be redirected to support localised production. However, without removing the profit motive in the food industry these will at best be piecemeal solutions.

In the absence of such changes the costs of the present farming crisis will be borne by consumers and smaller owner and tenant farmers. It will be the tenant farmers and the farm labourers living in tied cottages who will lose their jobs and be made homeless, and the large farmers who will pick up the compensation while everyone suffers from the environmental destruction that capitalism brings.

John Lister, the Socialist Alliance candidate challenging Treasury minister Andrew Smith in Oxford East, puts forward the Socialist Alliance policy on the countryside.

'There's a slump in average farm incomes to around 4,000 last year in Wales and even lower in Scotland. While the rural rich and their hangers-on whinge about foxhunting, they ignore the real problems faced by working class people in rural areas. There is a real crisis in the countryside, one driven by agribusiness, the banks and the supermarkets.

It's a myth that our society is divided between urban and rural people. The real division is between the wealthy minority and the majority who rely on public services. Workers in the countryside, like workers in the inner city, need a higher minimum wage and stronger trade unions. They need investment in democratically controlled public services. Deregulation and privatisation have stripped public transport in rural areas to the bone--forcing more people to rely on private cars and adding to the oil companies' super-profits.

At the general election we will offer our "Rural Socialist Alliance" platform of policies, including:

  • Big grants for small farmers to switch to organic production.
  • Incentives for small farmers to form co-operatives to share and reduce costs (some are already doing this).
  • Incentives not to import or transport food that can be grown locally (energy and pollution implications).
  • Turnover tax on multinational agribusiness and supermarkets.
  • Prosecute--and nationalise--the feed manufacturers at the root of the BSE crisis.
  • Investment in cheap, efficient and widespread publicly-owned rural transport--bus and rail.
  • Investment in active and diverse rural communities--community facilities, youth clubs, primary schools and environmental projects.

The Countryside Alliance doesn't represent ordinary people. The Socialist Alliance is addressing the real problems facing the majority of people who live in the countryside. The rest is smoke and mirrors.'

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