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The sustainability of
European food supply
chains
A report by Ethical Corporation
March 2006
1
Executive summary......................................................................................... 3
Section 1........................................................................................................ 13
Food Value Chains........................................................................................ 13
The ‘Value Chain’ ........................................................................................ 14
The first link in the demand chain ................................................................................ 17
‘Value chain governance’ … ........................................................................................ 17
How to turn a supply chain into a demand chain.......................................................... 21
‘Credence claims’ ......................................................................................... 23
Traceability ................................................................................................... 27
Standards: the codification of retailer demand. ............................................ 34
Contracts ....................................................................................................... 45
Vertical Coordination ................................................................................... 59
‘Forward Integration’.................................................................................... 67
Buyer Power.................................................................................................. 71
Private Label ................................................................................................. 88
Summary – the hourglass.............................................................................. 99
Section 2 A sustainable system?............................................................... 101
Environmental impacts of the modern food industry. ................................ 102
Agriculture .................................................................................................. 111
Impact 1 – pollution .................................................................................................... 116
Impact 2 – loss of ecosystems and biodiversity.......................................................... 123
Impact 3 – soil degradation......................................................................................... 135
Impact 4 – water stress................................................................................................ 140
Plenty more fish in the sea? ........................................................................................ 148
Distribution ................................................................................................. 159
2
Food miles................................................................................................................... 160
Production and storage................................................................................................ 174
Processing ................................................................................................................... 180
Consumption ............................................................................................... 183
Waste........................................................................................................................... 183
Human health .............................................................................................. 194
Appendix:.................................................................................................... 197
the food supply chain – in detail................................................................. 197
Retailers ...................................................................................................... 198
The Four Trends: Globalisation, Horizontal integration, Concentration and
Internationalisation ..................................................................................................... 198
Top transnational retailers: company profiles............................................................. 208
A closer look at Europe’s food retail market .............................................................. 210
Expansion into Central and Eastern Europe (CEE) .................................................... 216
Discounters ................................................................................................................. 221
Processors ................................................................................................... 228
Trends ......................................................................................................................... 228
Top transnational processors: the company profiles.................................................. 232
Processors in the US: leading the way in concentration ............................................. 236
Concentration in Europe ............................................................................................. 238
Input Suppliers ............................................................................................ 239
Agrochemicals ............................................................................................................ 239
Seed Companies.......................................................................................................... 241
Producers..................................................................................................... 245
Trends ......................................................................................................................... 245
Concentration.............................................................................................................. 246
Europe ......................................................................................................................... 247
Food Service Sector .................................................................................... 256
Trends ......................................................................................................................... 257
Concentration.............................................................................................................. 258
Executive summary
Introduction
3
In today’s European food system –
•
Large retailers are dominating...
•
Small retailers and manufacturers are going under...
•
Farmers everywhere are struggling...
•
Consumer choice is contracting...
•
Energy that produces food is running out…
•
Food is travelling thousands of miles…
•
Fish stocks are vanishing...
•
Desert is spreading into farmland...
•
Animal species and plant varieties are endangered...
•
Water is over-used and polluted...
•
Waste mountains are rising...
•
Human health is being threatened...
...and these are just some of the major problems.
4
Scope
This report examines the sustainability of European food supply chains.
It describes the structure of these supply chains and how they operate. It also considers
the environmental impacts of food production, distribution and consumption.
Food supply chains, or value chains, cover every stage of the food system from
production through to final consumption. Or all that happens ‘from farm to fork’.
This report focuses mainly on Europe. But a European food supply chain will soon be a
thing of the past. As European retailers expand internationally, the links in the chain are
lengthening. Food is sourced all year round from all over the world. We are moving
rapidly towards a global food supply chain.
The sustainability of the food system is considered in terms of its energy consumption
and emissions. It also covers the environmental impacts of intensive farming, which are
threatening long-term food production.
Actors in food value chains
Retailers – also referred to as ‘supermarkets’. They control the ‘point of sale’ where food
is sold to consumers.
Processors – food and drink manufacturers, whose business is to alter the composition of
raw ingredients to create new types of food products.
Producers – farmers who grow the food.
Suppliers – all actors in the chain who supply products for retailers to sell. Suppliers can
cover exporters / importers, wholesalers, processors and producers, depending on the
product.
Structure
The first section of this report – Food value chains – examines the relationships between
the different actors in the value chain. It describes how a few, large retailers coordinate
the activities of other actors along the chain.
Section two – A sustainable system? – looks at the broader impacts of current food
production. It considers the environmental impacts of the food system at its various
stages, from agricultural production to household waste. It provides clear evidence that
5
the current system, given its rate of energy consumption and use of natural resources, is
unsustainable.
The appendix takes a more detailed look at the food system. It provides facts and figures
on retailers, processors, producers and food service. It also highlights the consolidation
trends that are affecting the industry as a whole.
Summary
The changing structure of European food supply chains…
From supply to demand…
Retailers were once the final link in a supply chain. Now they are the first link in a
demand chain.
Power concentrates at the most strategic part of the value chain. The actor who occupies
this part of the chain is able to capture the most value from it.
Once, producers determined food supply. They decided what was produced and how.
People ate whatever food was available or in season. But after the Second World War,
power started to shift to manufacturers and processors whose brands ‘added value’ to
food products.
Now, retailers occupy the strategic part of the chain. A handful of large retailers dominate
European and increasingly global markets. Retailers are the gatekeepers to the market,
since most food sales now go through them. They can use information on customer
purchases to make demands on suppliers. It is retailers who have the power to determine
what is produced and how.
If these trends continue, global food supply will soon be controlled by just a handful of
retailers. The chairman of Royal Ahold predicts that only 5-8 value chains will survive
globally, competing against one another.
Why retailers dominate – concentration and buyer power…
Retailers today have more power than ever before. This is because the European food
industry is becoming highly concentrated. In the UK the top four supermarkets have a
75% market share. In some European countries the consolidation of retail is even greater.
In parts of Scandinavia the top three firms account for 95% of the market.
6
The leading firms are household names. In the UK it’s a simple list of four names: Tesco,
Sainsbury’s, Asda, and Morrisons. It’s the same in virtually every other country in
Europe and increasingly the world – a very short list of names.
Economists would define this system as an oligopoly – or, a market dominated by a small
number of large firms. Normally an oligopoly exists when the top four firms account for
more than 60% of the market. The top four UK retailers account for 74% of the market.
Large firms have buyer power. They can make better margins. They can also demand
lower prices from suppliers than their competitors.
Buyer power allows retailers to impose strict conditions on suppliers. These can include
demands for additional payments for access to shelf space, or discounts on orders. Buyer
power allows retailers to shift financial risk on to suppliers. For example: some retailers
delay payments by as much as 90 days. Suppliers must wait, while a retailer uses their
capital to fund its own expansion.
In this way, retailers cut their costs, boost their profits and drive competition further
down the chain. Increasingly hard-pressed suppliers are left to scrap for a share of the
supermarkets’ business.
How retailers dominate – supply chain management and vertical coordination…
Retailers are driving a new system of food production – a demand chain where they
coordinate the flow of products from the producer all the way through to the store.
In a demand chain producers deliver what they are told to produce when they’re told to
produce it. And they deliver the shape, the colour and the size they are instructed to.
Retailers use several tools to organise the value chain. They develop relationships with
small numbers of preferred suppliers. They introduce product standards and traceability
systems to chart the progress of food through the supply chain. This process of organising
the activities in a value chain is known as vertical coordination.
This report examines the tools of vertical coordination. These include:
•
distribution centres
•
factory gate pricing
•
efficient consumer response (ECR)
•
category management
•
open-book pricing
7
But the two most important tools of vertical coordination are:
•
Standards
•
Contracts
Standards are the codification of retailer demand. Standards specify what a supplier is to
produce and how. They also cover how food should be packaged and distributed.
Standards now apply to nearly every aspect of food supply: from the seeds used to grow
vegetables, the pesticides to be used, harvest schedules and even the temperature of
containers in which those vegetables are air-freighted to a supermarket outlet half way
across the world.
Contracts are an even more explicit form of vertical coordination. Like standards,
contracts are a codified expression of retailer demand. Through contracts, retailers
specify their demands: the quantity, quality, delivery time and price of food.
In fact, food production is coordinated to such an extent that the lead company in a
demand chain can dictate the size of an apple grown 6,000 miles away to within a
tolerance of two millimetres.
And as standards and contracts proliferate, retailers grow bigger and extend their control
over the supply chain.
Results of retailer domination – the food industry consolidates…
Standards contribute to consolidation of the value chain. The transaction costs associated
with monitoring and enforcing standards mean that retailers start to work with a small
number of ‘dedicated’ or ‘preferred’ suppliers.
•
In 1989, the UK supermarket share of fresh fruit and vegetable sales was 33%. By
2003 it had risen to 80% - none of which was sourced through wholesale markets.
This can have disastrous effects on small suppliers. The evidence shows that when
standards are introduced, small producers lose out.
•
In Brazil, 60,000 dairy producers went out of business between 1997 and 2000
when supermarkets started demanding that milk be refrigerated on farms.
8
•
In Kenya in the early 1990s, smallholders produced 70% of vegetables and fruits
shipped for export. By the end of the decade they were left producing just 18%.
Standards act as barriers to market entry because of the extra costs that they impose on
producers. Although voluntary, standards and assurance schemes are in effect mandatory.
And as markets mature, meeting standards ceases to guarantee a premium.
Traceability has become a key feature of the modern food supply chain. The need to
verify standards means that products must be traced through every stage of production.
Retailers are also making ‘credence claims’ about their products. Credence claims
differentiate goods by identifying characteristics that give them increased value.
Credence goods include free range or organic produce, or Fairtrade.
Credence claims and traceability go hand in hand. Retailer reputations rest on the claims
they make about their food. If products can be traced, retailers are able to back up their
credence claims.
Traceability is driving further coordination of the value chain. As the food system
consolidates, retailers switch to a small number of preferred suppliers. But this in turn
increases the risks and costs associated with failure, which demands greater traceability
and so more vertical coordination..
Private label: reification of retailer power
Private labels are retailer brands.
Private labels are a way for retailers to differentiate themselves from their competitors.
As a result of private labels, retailers are no longer identical. Instead they acquire
‘identity’.
Private label gives retailers the flexibility to source products from different suppliers,
enabling retailers to reduce their margins in the supply chain. One clear example is
supermarket own-label fresh fruit and vegetables. Retailers can source similar or identical
products from a number of different suppliers.
Private label both confirms and reinforces the buyer power and status of retailers as
governors of the value chain.
In a food demand chain, suppliers are left at the mercy of the retailers who sell their
products. Retailers hold all of the cards when deciding prices and conditions.
Environmental impacts of European food supply chains…
9
Supermarkets may be the first link in the demand chain. But the origins of the 21st
century food system pre-date their existence by several years.
Converting fossil fuels into people…
The modern food system began in 1908, when a German chemist called Fritz Haber
discovered a way to turn air into nitrogen fertilizer using natural gas. His discovery
eventually heralded the ‘Green Revolution’: a revolution that grew into a movement to
increase crop yields using new crop varieties, irrigation, fertilizers, pesticides and
mechanisation.
The Green Revolution enabled the development of intensive agriculture, which produced
huge increases in crop yields. And these yields supported a massive increase in human
population. Global population grew from 1.6 billion in 1900 to 6 billion in 2000 – and it
is currently growing at the rate of 83 million a year. All supported and sustained by the
fruits of the green revolution.
The real basis of the food system is energy. The food we eat today depends upon the
fossil fuels that go in to agriculture. Fossil fuels – in the form of fertilisers, pesticides and
petrol for farm machinery and delivery vehicles – keep the food system running.
The modern food system is essentially a way of converting fossil fuels into people. Put
simply, without oil and gas we would starve. Given that fossil fuels are an unsustainable
resource, and that world population will continue to rise, this is a problem that is yet to be
solved.
Devastating impacts – at every stage of the chain…
The seeds of the green revolution were sown on shaky ground. The fossil fuels upon
which we all depend are running out.
What’s more, their use is causing environmental damage that threatens future agricultural
production.
Industrial agriculture has damaging environmental effects: air and water pollution; the
destruction of ecosystems and loss of biodiversity; soil degradation; and water shortages.
But agriculture is just one part of the chain. Processing and distribution account for
much of the food system’s energy consumption.
Food is increasingly processed and pre-packaged before it reaches the store. What’s
more, demands for all year round supply and just in time delivery are increasing global
10
sourcing and the development of refrigerated supply chains – a major cause of climate
change.
Here are just some of the environmental impacts associated with European food supply
chains:
•
The food system as a whole expends 10-15 calories of energy for every calorie of
food energy produced.
•
Some UK fertilizer manufacturing plants use more gas than the entire City of
Birmingham.
•
The cost of cleaning up chemical pollution, repairing damaged habitats and
coping with human sickness caused by industrial farming is as much as €3.3
billion per year.
•
The external costs of intensive farming in the UK amount to as much as €300 per
hectare.
•
Today, 75% of the world's food is generated from just 12 plants and five animal
species.
•
Over 2,300 apple varieties exist in Northern Europe – but just two varieties
account for more than 50% of the current apple market.
•
To produce 1 kg of meat involves as much water as ten month’s basic household
water requirements (50 litres per person per day).
•
To produce just one egg using industrial methods takes an estimated 63 gallons of
water.
•
The food on the typical American family’s dinner table has travelled on average
1,500 miles.
•
The UK imports carrots from South Africa. Every calorie of carrot imported
requires 66 calories of energy to get it here.
•
The energy needed to fly a kilo of mange tout 5000 miles from Zambia is enough
to keep a 100-watt light bulb glowing for over 40 years.
•
The edible food thrown away in the UK is enough to feed more than 250,000
people.
•
A typical American child now gets a quarter of his or her vegetables in the form
of French fries or potato chips.
11
The current food system is unsustainable.
12
Section 1
Food Value Chains
13
The ‘Value Chain’
What a value chain is, how it works and how it is used…
"You are looking at how to re-engineer the value chain [in order] to lower
the price…There are clear rules about who sets the prices and we believe
we, as retailers, are the ones.”1
Anders Moberg, chief executive of Dutch retail group Ahold
"The future will not be one farmer competing with another farmer, one
distributor competing with another distributor, one retailer competing with
another retailer. It will be one value chain competing with another value
chain."2
Professor David Bell, Head Agribusiness Program, Harvard University
Retailers today have more power than ever before. In the UK the top four supermarkets
have a 75% market share. In some European countries the consolidation of retail is even
greater. In parts of Scandinavia the top three firms account for 95% of the market. And in
Australia the top two supermarket chains make over 74% of national grocery sales and an
even higher share of the country’s total supermarket sales.3
Supermarket dominance is now so great that the food industry can, in most countries
(even developing ones), be accurately described as an oligopoly, or “a market situation
with only a few sellers” In fact, classical economic theory states that when four firms
control more than 60% of a market it is an oligopoly (see box).
This means that routes to market for suppliers – farmers, food processors, wholesalers –
are dramatically reduced. Supermarkets are not just ‘sellers’, but ‘buyers’ further down
the supply chain. As supermarkets grow and become more powerful, suppliers are feeling
the squeeze. As one economist observes:
“Oligopoly does not result in the end of competition so much as the
redirection of competition downwards as lead companies capture more
power to set supplier against supplier.”4
Barry Lynn, Senior Fellow, New America Foundation
Oligopoly: a small number of large sellers…
An oligopoly is “a market situation with only a few sellers, each anticipating the
other’s reactions. Each firm has a sufficiently large share of the market to need to
consider those reactions of the others…” (Oxford Dictionary of Economics).
An oligopoly is a market dominated by a few large firms, each of which has control
over the market. It is an industry where there is a high level of market concentration.5
14
Normally an oligopoly exists when the top five firms in the market account for more
than 60% of total market demand/sales.6 But market competitveness begins to decline
when the top four firms reach a 40% market share.7
However, oligopoly is best defined by the conduct (or behaviour) of firms within a
market rather than its market structure.8
Key features of an oligopoly are:
•
Interdependance of firms. Firms behaviour is affected by what they believe
their rivals might do. This means that each firm must take into account the
likely reactions of other firms in the market when making pricing and
investment decisions.
•
Market dominated by a small number of firms
•
Large firms are involved in selling either identical of very similar products
•
Significant barriers to entry
•
Price may be relatively stable across the industry
•
Goods can be homogenous or highly differentiated
•
Branding and loyalty may be a potent source of competitive advantage
•
Non-price competition may be prevalent.9
But it was not always this way. Over the last century or so, control of the food system has
changed hands. Once, it was the producers and wholesalers who determined what was
produced – and how. And so there was a food supply chain, controlled by suppliers. Then
along came brand companies, manufacturing highly processed foods. As brands grew
popular, power began to shift to those leading manufacturers.
Now, as retail consolidates on a huge scale, it is the retailers that have most control. And
so we now have a food demand chain – where power lies in the hands of a few giant
multinational processing and retailing companies who control demand.
Retailers were once the final link in a supply chain. Now they are the first link in a
demand chain.
Three defining features of today’s global food industry
1. A few, large buyers dominate the market. Retail chains consolidate through
mergers and acquisition, and start to expand internationally.
15
2. Supermarkets control the supply chain, which is increasingly coordinated through
the use of sophisticated technology and product information.
3. Retailer brands (so-called ‘private label’) develop to challenge manufacturer
brands.
Food is now increasingly produced and distributed through supply chains. And food
supply chains are not markets. In fact, they rule out normal market relationships.
Supply chains are instead vertically structured and are usually controlled or managed by
just one particular company.10
Value chains: definition
Value chains are the chains that link all the activities involved in making a product.
In the case of food, the chain starts with the farmer and ends with the consumer.
At every point in the chain value is added to the product. Value is also taken away – as
each actor in the chain captures a share of the profit. The distribnution of value reflects
the distribution of power along the chain. Those actors at the most strategic part of the
chain – the parts where power is concentrated – are able to capture the most value from
the chain.
Increasingly, private – secretive - contracts and coordinated food supply chains are
replacing traditional open markets such as wholesale markets or exchanges.
“We want to turn all public markets into tourist attractions in two years
time”11
Retail chain executive, Croatia 2003
If these trends continue, global food supply will soon be controlled by just a handful of
retailers. The chairman of Royal Ahold predicts that only 5-8 value chains will survive
globally, competing against one another.
16
The first link in the demand chain
Why it is essential to be the “first link” in a value chain
“The goal of today’s powerful oligopolies has been described as ‘the oldest
in commerce – to fence in the place where deals are done and to tax
producers and consumers for the right to be there’.”12
Barry Lynn, Senior Fellow, New America Foundation
Retailer power lies in their control of the key part of the chain – the store, or the place
where deals are done. Retailers stand at they interface between the consumer, on one side
of the checkout, and the suppliers on the other. Control of this point enables supermarkets
to capture the largest share of the ‘value’ along the chain.
As supermarkets grow, they shed many of their traditional functions. Supermarkets no
longer process and package fresh fruit and vegetables at the back of the store. They no
longer have specialist knowledge ‘in-house’ (someone who knows about fish on the fish
counter, for instance). In fact, the trend for outsourcing has even extended as far as
outsourcing the choice and purchase of stock – a role traditionally regarded as central to
retailing.
What supermarkets can do - given their strategic place in the value chain – is to collect
information on customer purchases. This information can then be analysed, codified and
communicated back to suppliers. Supermarkets have market intelligence, which they can
use to make demands on suppliers, while their control of the final, most crucial stage of
the value chain means they can demand ever-better terms for themselves.
‘Value chain governance’ …
Who calls the shots?
Global value chain governance is the way a lead company, such as a food retailer,
controls all the product standards and processes along the value chain. The lead company
decides:
•
What is to be produced
•
How it is to be produced
•
How much is to be produced, and when
17
As the first link in the demand chain, retailers are in a position to tell supplier what to do.
Suppliers at the second, third and fourth stages of the chain have no option but to bow to
these demands.
Retailers codify their demands in a set of standards. These standards are monitored and
enforced by carefully selecting suppliers, whose compliance is verified by third-party
auditors, and then regular inspections to make sure the supply chain is working properly.
Preferred suppliers reveive rewards – such as higher prices and larger volumes than other
suppliers. Lead companies punish any failure to meet their standards with sanctions –
such as the threat of exclusion from the supply chain, or at the very least reduced
purchases and financial penalties.
“Value chain governance (or vertical coordination) is such a strong
characteristic of agribusiness supply systems that it is easy to take it for
granted or regard it as inherently superior to arm's-length market
relationships. However, value chain governance involves considerable cost in
monitoring and enforcement. The up-front costs of developing systems and
relationships with suppliers also lead to less flexible sourcing.”13
John Humphrey, Global Value Chains initiative,
Institute of Development Studies,
University of Sussex
This marks a complete shift in the organisation of food production and supply. The
control of the value chain by one lead company is happening for three main reasons:14
1. Retailers are trying to set themselves apart from their competitors by selling nonstandard products. The different and distinctive packaging, labelling, varieties,
processes and so on, require retailers to work directly with suppliers.
2. Retailers need to know their supply chain is working. Modern supply systems
depend upon a frequent, reliable delivery of products. Any failures by suppliers
put retailers’ reputations at risk, so a tight coordination of the chain is needed.
Retailers also increasingly use ‘credence’ claims which require systems to check
and enforce the processes that underlie these claims.
3. Any innovation in the production and supply of food requires simultaneous
changes at all the different points in the value chain.
Crucially, this process is self-reinforcing. The more vertical coordination of the value
chain there is, the greater the tendency of retailers to rely on a small number of suppliers.
This in turn increases the risks and costs if there are failures in such a consolidated
system.15
18
What’s the difference between a demand chain and a supply chain?
Producer-driven supply chains tend to be industries that are capital- and technologyintensive – for example: automobiles, aircraft, semi-conductors. The profits are greatest
for those with scale and technology – ie. the manufacturers.
Buyer-driven supply chains tend to be industries that are labour-intensive – for example:
garments, toys, electonics... and food. The profits are greatest for those with supply chain
information and marketing expertise – ie. the retailers. Retailers are in the best position to
capture the most value from these chains – at the expense of regional wholesalers, small
farmers and small processors.
“At its heart, it [modern food production] is a move from an economy
based on the production of goods to an economy based on the production
of knowledge.”16
Lawrence H. Summers, President, Harvard University
Control of these knowledge-based value chains hinges on three things:17
1. Information… the volume of information needed to flow through and coordinate
the chain
2. Standards… how easily retailer demands can be turned into usable information
for the different actors in the supply chain
3. Supplier compliance… the ability of suppliers to meet these standards, or
demands.
And the amount of information needed for the modern food system is growing. The
production of complex foods like chilled and fresh ‘ready meals’ that need to be
delivered quickly and in the right conditions demand a huge level of coordination and
control. There is much greater coordination of deliveries, product development (such as
new products, new varieties, new packaging and so on) and control over production
processes (mostly to do with product, labour and environmental standards).
And as the complexity and sophistication of food value chains grow, retailers are trying
to push down the costs of coordinating supply chains by:
1. Investing in the competences of existing suppliers and by working only with the
most competent suppliers. Both of these strategies lead to further concentration of
the value chain.18
19
2. Codifying the knowledge that flows through the value chain.19
3. Restructuring and simplifying the whole value chain so that the ‘handover’ points
between the actors in the chain are either completely eliminated through vertical
integration or reduced in complexity. The increasing use of an exporters’ own
farm production is an example of vertical integration. The introduction of
category management by UK supermarkets is an example of how information and
functions within the value chain can be transferred between agents.20
All this leads to greater concentration along the entire value chain because dealing with
just a few of these large suppliers is easier than dealing with many small ones. Large
buyers have more buying power and therefore more opportunities to enforce compliance
with their wishes. Control and governance of the value chain is therefore associated with
buyer power.21
“We punish farmers very hard if they don't deliver what we order.”22
Bernardo Roehrs, a spokesman for the Ahold chain
.
20
How to turn a supply chain into a demand chain
In double quick time
This example shows how retailers have managed to coordinate and control many of the
functions of the value chain by turning a supply driven food chain into a demand driven
food chain. The result of this change is almost total vertical coordination and the
introduction of a set of standards that apply to nearly every aspect of food supply: from
the seeds used to grow vegetables, the pesticides to be used, harvest schedules and even
the temperature of containers in which those vegetables, designated for export, are airfreighted to a supermarket outlet half way across the world.
How to take full control of the food supply chain… a ‘step-by-step’ guide
All quotes below are taken directly from a paper detailing Royal Ahold’s business
strategy for streamlining its supply chain for its TOPS supermarket chains in Thailand,
and commissioned by KLICT, an international research initiative funded by the
government of The Netherlands.
.
1 Set up a supermarket chain in a country with a low supermarket share
of food sales
“Most of the total output is sold through the traditional market outlets… In
Thailand only 5% of food sales go through supermarkets.”23
2 Assemble the major actors in the supply chain. In the case of the
TOPS Thailand project it was
“Royal Ahold (a global leading retailer)”… “Syngenta (crop solutions
company)”… “Rabobank International”…“TNT Logistics”(an global logistics
company)…“SGS (a certification and inspection company).” 24
3 Set up a logistics and distribution centre
“The strategic initiatives that were taken included: The creation of a logistic
service provider (the World Fresh Distribution centre).”25
“The formulation and implementation of the logistic strategies in Thailand was
based on the following aspects…simplification and scale exploitation.”26
4 Implement and promote low prices 365 days per year
21
“introduction of the ‘Supercheap’ pricing program with everyday low prices.”27
5 Emulate the ambience of traditional markets
“Tops uses lighting with a natural feel to highlight its food, especially the fresh
fruit and vegetable displays which have been designed to give the look and feel of
a traditional wet market.”28
6 Implement a demand-driven system
“The direction and content of the improvement strategy has been demand
oriented. Performance criteria for the fresh goods supply chain reflected the
consumer requirements.”29
7 Dramatically reduce the number of suppliers and then develop
relationships with a small number of preferred suppliers
“Improve the quality and safety of perishable goods by developing preferred
supplier relationships… The Preferred Supplier Approach reduced the total
number of suppliers from 250 to 60 after critically benchmarking their
performance and development potential.” 30
8 Be tough on suppliers
“Continuous benchmarking of the performance of these suppliers kept them
‘sharp’ and alert. Main supplier positions were no long-term guarantee and
occasionally there was a re-shuffle of suppliers.” 31
9 Develop and impose standards and certification schemes on suppliers
“Quality and safety assurance had to be guaranteed by a certification procedure.
Depending on the circumstances the appropriate certification system or command
and control mechanism had to be determined”32
10 Then take the lessons learnt and implement them in other countries
“The lesson’s learned from Thailand are being duplicated in Brazil and
Ghana. This includes the tools for a chain analysis.”33
22
‘Credence claims’
‘Most food is sold with a story’
Here’s an example of how food is sold with a story. In fact, this story uses 211 words to
sell six slices of bacon. Or 35 words per slice. This excerpt from Waitrose packaging
illustrates the value of credence claims.
Free Range. Unsmoked English Dry Cure. 6 Back Rashers. Specially selected Waitrose free range pork, produced
from Hampshire breed, renowned for tenderness and flavour is cured by hand and matured slowly, allowing the
meat to develop a fuller flavour. The gently rolling countryside of Norfolk and Suffolk, its climate and free
draining soil, is perfectly suited to rearing pigs outside all year round. The Hampshire breed, distinctive by its
markings, produces pigs that thrive in the outdoors and are allowed to roam and root freely. The curing process is
the traditional way of preserving pork. The recipe has been specially developed using the finest natural sea salt
which is carefully rubbed into the pork by hand. It is then left to mature slowly into bacon allowing the flavour to
develop before being sliced into rashers. Roger Newton supplies Waitrose with English Free Range pigs from his
farm in Norfolk. Pigs reared outside are kept in small family groups and fed on a balanced cereal diet with
vitamins and minerals. Warm shelters and straw bedding protect them from the winter, while mud baths keep them
cool in the summer. By combining Roger’s expertise over many years with the characteristics of the Hampshire
breed we can provide the best quality meat. Care, commitment and high standards of animal welfare ensure
succulent tender bacon.
Waitrose packaging for 6 bacon slices
The academic Susan Friedberg points out that ‘most food is sold with a story’.34
In an increasingly consolidated retail market, the major supermarket chains are
embarking on a strategy of product differentiation, selling their products by making
claims about how and where food is produced.
And so standards have been developed by companies to help communicate to consumers
that their products are superior to those of competitors.35
Product differentiation based upon such claims is part of a broader trend towards the
increasing importance of credence claims in the food industry. Credence goods are
defined in the following way:
“A credence good is a complex, new product with quality and/or safety
aspects that cannot be known to consumers through sensory inspection or
observation-in consumption.”36
John Humphrey and Hubert Schmitz
Global Value Chains Initiative
Institute of Development Studies
University of Sussex
Credence claims differentiate goods from competing products by identifying
characteristics that give them increased value. These claims act as a form of product
branding, so that particular labels (free range) are associated with particular
characteristics (a good bacon sandwich) which may in turn come to be valued by
consumers.37
23
How to add an extra 10% to the value of coffee
The Food Brands Group in the UK markets a variety of coffees under the "Percol"
brand name. Its top end product is called “Sanctuary”™ which claims to be a “Bird
friendly, single estate, organic Arabica coffee”. The packaging makes the following
claims:
•
The product has superior quality because it is grown on a single estate,
organically. These claims are supported by certification from the UK Soil
Association (whose logo is also displayed) as well as information about the
precise location where the coffee is likely to have been grown.
•
The product is “bird-friendly”. Shade-grown coffee does not destroy the forest
canopy, a claim supported by certification from the Smithsonian Migratory Bird
Centre.
•
The product has social benefits. A claim is made that Percol is committed “to
the coffee growing communities and environment” and that the company has “a
mission to care for the people and the environment where it is grown”.
Reference is made to “The Coffee Kids Charity” and “raising money for health
and education projects to improve the quality of life for children and their
families where coffee is grown”.
The result is a product that sells for a 10% premium over other Fairtrade organic
coffees.38
So credence claims enable retailers to economically exploit certain ‘qualities’ of food,
which are not immediately verifiable by the consumer.
•
health benefits
•
product safety
•
regional origin
•
high levels of animal well-being
•
ecological soundness
Credence attributes can describe the content of a food or the processes which made it.
Content attributes are the physical properties of a product. They can be difficult for
consumers to perceive. For example, consumers are unable to determine the amount of
24
isoflavones in a glass of soymilk or the amount of calcium in a glass of enriched orange
juice by drinking these beverages.39
Process attributes These do not affect final product content but refer to characteristics of
the production process. Process attributes include country-of-origin, freerange,
dolphin-safe, shade-grown, earth-friendly, and fair trade. In general, neither consumers
nor specialized testing equipment can detect process attributes.40
The table below shows how these credence claims come into effect.
The different guises of credence claims41
Private Voluntary Initiatives
Some are private voluntary initiatives, such as Starbucks’ ‘C.A.F.E. (Coffee and
Farmer Equity) Practices’. This programme uses independent third-party verifiers to
audit farms on environmental and social indicators. In this case, a service sector
company establishes a claim for its particular product, basing its credibility on thirdparty certification.42
Branding the Enterprise
Other claims encompass the branding of an entire enterprise. One example is the
Thandi brand, developed for wine and fruit: “Thandi’s aim is to empower previously
disadvantaged farming communities. With support and mentorship from leading
players in the fruit and wine industries, these communities export top class produce to
countries all over the world” (http:www.thandi.com). This claim is allied to one about
the quality of the product.43
Regional Branding
Claims about product characteristics, quality or production processes can also be
made at the regional level – this is known as regional branding. Examples are
Jamaican Blue Mountain coffee, the Copper River brand of wild salmon. This type of
branding can be developed through regional associations, both public and private.44
Certification Schemes
Product differentiation can also be based on schemes that are not geographically
specific. Broad certification schemes are designed to identify particular characteristics
of product or production processes originating from designated producers. Fairtrade
and organic certification schemes are just two examples.45
Consumer food choice may be influenced by product prices and product quality, but
consumer ideas about food “quality” have changed considerably in recent years. One
25
major US study finds that today’s European consumer sees food quality as something that
involves the following four features…46
• Sensory qualities are the traditional aspects of food quality: taste, appearance, and
smell, with taste being dominant. Taste is an experience that can be evaluated only
after a product has been bought and consumers use a host of market signals, like
brand, price, and quality labels, in trying to predict the taste experience.
• Health qualities have become increasingly important during the last 50 years, and
studies indicate that consumers give equal weight to health and sensory attributes.
Many health effects of food are too abstract to be experienced directly. Consumers
therefore have to interpret various signals. More recently, manufacturers have
developed ‘functional foods’. These are food products that have an added health
benefit such as yogurts with probiotic ingredients or margarine made with cholesterolreducing ingredients. These health attributes require active communication.
• Process qualities relate to the processes used in food production – even those that
have no analyzable impact on the final food product. Some consumers pay more
money for organic products or for products produced with due concern for equitable
income distribution. These products look and taste the same as products without these
attributes.
• Convenience qualities are those features of a food product that save the time or
energy that consumers spend on shopping, food storage, preparation, eating, and food
disposal.47 Microwaveable meals are a good example of ‘convenient food’, as are prewashed carrots and food which is packaged so that it can be eaten ‘on the move’.
Crucially, these quality attributes become more valuable the more marketable they are.48
In other words, if there is a large potential market for a particular quality, then there is a
big incentive for retailers to invest in the technology and resources to ensure any claim
about that product’s quality can be backed up.
But the key to monetising these credence claims is traceability.
26
Traceability
Food is worth a lot more if it can be traced from plough-to-plate, from farm
to fork. Or, from DNA to sausage (via satellite)
“Consumers in Japan can use their camera cell phones to scan a code on the
outside of shrink-wrapped fruits and vegetables that’s embedded with
information about the produce.”49
CIO magazine, 2005
Retailer reputations rest on the claims they make about their food. If a product can be
traced through every stage of production, then the retailer can back up its ‘credence
claims’. Traceability – ‘from farm to fork’ – is now tremendously important. A German
study, for instance, found that when selecting a supplier, traceability is six times more
important for a retailer than quality.50
This is leading to the emergence of traceability systems which can track food all along
the supply chain.
“Traceability is an indispensable part of any market for process credence
attributes—or content attributes that are difficult or costly to measure.”51
USDA, 2004
Because it is difficult – or sometimes impossible – to verify credence claims by simply
looking at the product, any foods subject to credence claims need to be completely
traceable and identifiable as they move along the value chain.52
The development of these credence goods requires the coordination of different agents
along the value chain, so that claims made to consumers in distant markets can be backed
up. It requires the coordinated activities of producers, certifiers and retailers.53
With existing technology it is now possible to trace information on both content and
process attributes. two types of information….. product information and process
information.
•
Product information is information about the food’s identity, location and
processing time. This information is useful for ‘recall management’ and
logistics. This form of traceability is regarded as a way to improve operational
efficiency and reduce costs.54
•
Process information offers extra information on process conditions such as
temperature. Process information can be used to provide quality assurance and
product differentiation and is often referred to as ‘quality-oriented
traceability’.55
27
Traceability systems can also provide the information to determine whether supply chains
are operating correctly.56 This is crucial. The rising profile of supermarket brands means
that that just one error in the supply chain would damage the reputation of the retailer’s
entire stock.
Traceability systems also help firms to establish the extent of their liability in cases of
food safety scares and possibly shift liability to others in the supply chain. The
traceability systems themselves do not determine liability, but because they provide
information about the production process they can provide evidence for any glitches in
production.57
In the food industry, supply chain management and infrastructure for traceability is a
crucial area of competition.
“An indispensable element of any supply management strategy is the collection of
information on each product from production to delivery or point of sale.”58
USDA
The table below shows the sophistication of the tracking and tracing systems used by one
leading UK retailer, J Sainsbury, to chart the progress of goods through its supply chain.
A ‘corporate file management’ system for instance stores data on all of the company’s
suppliers.
The table also shows how traceability systems are integrated into retailer buying
practices. A ‘sales-based replenishment’ system is used to make orders based on actual
and forecast sales in store. A ‘supply chain integrated ordering network’ generates orders
for suppliers to deliver goods to distribution centres. The result is a faster, more
coordinated supply chain.
28
RDC: regional distribution centre
59
From individual genes to checkout counter…
Today, it’s got to be traced all the way
Modern food supply chains demand a near-totalitarian control of information. Such an
information trail starts with the DNA of a cow or the genetic code of a seed…
…and is traced through the production and processing of food all the way to the checkout
counter where sales information is scanned and then stored in customer databases.
These information trails – or traceability systems – are the basis of today’s supermarket
supply chain management. A supermarket’s traceability system is essential to find the
most efficient ways to produce, assemble, warehouse, and distribute products.
The greater the level of coordination along the supply chain, the greater the benefits of
traceability systems for supermarkets.60 Technology is crucial to the generation of
information and is shaping the way retailers are taking control of the value chain. The US
retail industry now spends about 2.1% of its turnover a year on technology, up from 1.8%
in 2001.61
Nowhere is the trend towards total traceability in the food chain more apparent than in
the meat industries.
“The ultimate objective will be to track every piece of meat from plate to farm
through each step in the value chain: retail, distribution, processing,
slaughter, production, nutrition, breeding and genetics”.62
John Webb, Maple Leaf Foods (Global food processing company)
29
How animals get an electronic license plate with “Bio-tagging”
Genomics – the study of organisms and their DNA – is the fastest growing technology for
recording food quality and other attributes.63
A number of genomics companies are already developing DNA tracking systems for
meat.64 DNA tracking can link meat back to the farm of origin and so bypass the
expensive step of tracking it through a processing plant.65 Major global food processor
Maple Leaf Foods called upon Pyxis Genomics66 to help them implement a DNA
tracking system for the pork produced in their plants
“The success of identifying the gene panel significantly enhances our ability
to provide live animal tracking systems that can directly link store-bought
product back to its origin in a matter of hours, instead of days or
weeks.”….“This is critical in an industry seeking to offer the highest
standards of assurance to consumers.”
Dr. Lawrence B. Schook, President and CEO of Pyxis Genomics Inc
DNA animal tracking can track animals through slaughter and processing plants and
eventually provide consumer information through product codes and a website.67
Farm animals are already tracked and traced in a number of ways:
•
Electronic tags (bio-tagging) – an “electronic license plate” for animals. Tags
contain codes, which are scanned every time the animal arrives at a new spot in
the production chain.68
•
Retina scanning.
•
Implantable computer chips.69
•
RFID - the US Department for Agriculture (USDA) has recommended that all
livestock in the U.S. be tagged with radio frequency identification devices. The
information on each animal’s origin and location would be stored in a national
database.
•
Paper bar codes and spray-on bar codes – for tracking inside the slaughter and
processing plant is trickier. Options include paper bar codes that can be read at
each point where a cut of meat is made.70 Possibly in the future, spray-on bar
codes could be used to identify a particular cutting line.71
30
Check out your Christmas dinner while its still “alive and gobbling”
Heritage Foods already provides consumers of their turkeys with a certificate of its
origin.72 By visiting the company’s website consumers can type in the turkey’s
certificate number and find out everything from its age, farm of origin, its diet and
where it was processed. Consumers who pre-order their turkey can even access the
company’s 24-hour webcam to watch their turkey while it’s “alive and gobbling”.73
Radio frequency identification (RFID)
Where cows talk to satellites, crates talk to trucks, empty shelves talk to
suppliers. And retailers overhear everything
Retailers are well positioned to take advantage of new technology. They can also demand
that their suppliers adopt new tracking and tracing systems. And, once installed, these
systems in turn increase retailers’ ability to oversee all aspects of the chain.
Studies show that use of advanced technology is directly linked to increases in market
share. And only those retailers with a large market share can afford to adopt advanced
technology.
No technology has been as important as the development of affordable radio frequency
identification (RFID). Demands for traceability and cost-efficiency mean that RFID will
soon become standard across the food industry. Analysts believe RFID will be essential
technology for most supply chains within the next ten to 20 years.74
•
In 2004, just 35% of European retailers were experimenting with RFID, but by
the end of 2006 89% plan to use RFID.75
•
By 2015 about 900 billion food items could be RFID tagged, with a further 824
million livestock having more sophisticated tags on – or implanted in – them.76
31
What is RFID?
RFID is a tracking technology, which enables the flow of information across the
value chain.
RFID tags contain a microchip and a tiny antenna that send the price and other
information about the product to a computer.77 They contain more information than
bar codes, and can be read from a longer range (about 15ft). An RFID reader can be
placed at the entrance to a distribution centre or stockroom, allowing reading of large
quantities rapidly.78 Below is a short list of the main capabilities of RFID:
• Real time tracking of products throughout the value chain
• Access to “live” sales data (as opposed to the usual 20 to 30 days)
• Inventory management and accuracy
• Display product availability
• Monitoring when products are made and when perishables expire
• Verification of product authenticity
• Direct consumer marketing79
Customer information
Who cares when you last bought a 500g pack of muesli with real
strawberries?
The tracing of information does not just stop once food is placed on the retailers’ shelves.
The ownership and control of information puts retailers into the driving seat when it
comes to food supply.80 Every time a can of soup or a pack of fresh pasta is passed
through the check out, point of sale data is transferred from barcodes81. This data helps to
build sophisticated customer profiles and develop marketing strategies. This information
is a major source of competitive advantage both to retailers and the chain ‘insiders’ with
whom it is shared.82
32
In the UK, Tesco has led the way, gathering huge amounts of data about its customers’
buying preferences. Before the Tesco’s Clubcard came along, the largest consumer
panels that suppliers could use consisted of around 20,000 people. Suppliers now pay for
access to Tesco’s enormous database.83
•
Tesco has issued 12m Clubcards, which allow it to record exactly what, when and
where people are buying food.84
•
Shoppers each buying 20 items a week would generate more than 12 billion
pieces of data each year.85
“We believe we have one of the largest databases anywhere in the world.”86
Martin Hayward, of Dunnhumby, (who manage Tesco’s databse)
Electronic systems for tracking inventory, purchases, production, and sales have become
an integral part of doing business in the United States. A few big retailers such as WalMart and Target have even created proprietary supply-chain information systems that
they insist their suppliers adopt.
•
In the mid-1990s Wal-Mart’s database contained 7,000 gigabytes of information.
Now it contains 10 terabytes…that’s 10,000,000,000,000 bytes…. making it the
largest commercial data bank in the world.87
At the same time, retailers can access information along the entire value chain. Tracking
technologies enable retailers to control and monitor food production all the way back to
the farm. Put simply, information about consumer preferences is used to shape the
demands retailers make of their suppliers. The complex way this information now passes
up and down the value chain has stemmed from major developments in supply chain
management.
There are many barriers to achieving total traceability. The complexity of supply chains –
especially where a foodstuff is split into different parts (i.e. when a cow is made into
hamburgers) – can make it difficult to track food. Short chains with a constant series of
links obviously have an easier traceability than long and complex chains and networks
with flexible and changing connections.88 Also some food products are so small that it
does not make economic sense to track them individually. So, to maintain a traceability
system requires several companies to share commercially sensitive information.89
But larger retailers can overcome these barriers by laying down the main requirements –
in the form of contracts and private standards.
33
Standards: the codification of retailer demand.
Understanding the DNA of the food supply chain
Because retailers increasingly sell ‘food with a story’ and make specific claims about the
products that they sell it is important that these claims can be verified.
To do this they have created sophisticated traceability systems and built the infrastructure
to monitor each process along the entire food chain.
Private standards are the rules which specify what those processes are.
Whilst technology has enabled the control of information, private standards are the
codification of retailer demand. They are the rules by which retailers coordinate their
supply chain.
“… a ‘standard’ is to be understood….as a set of technical specifications that
may be adhered to by a producer, either tacitly or as a result of a formal
agreement.”90
Standards specify and harmonize product and delivery attributes, thereby enhancing
efficiency and lowering transaction costs.91 Standards can specify two aspects of a
finished product:
1. Product standards – cover the physical characteristics of the finished product. For
example a cucumber might have to be a certain colour, length, girth and wrapped in a
particular type of plastic.
“Now they are telling us that the size of a Fuji apple is ideally 65mm, not
63mm so when you are thinning you have to tell the workers to cut more
deeply … There is more skill involved, but it also takes longer and there is
more labour.” 92
South African apple farmer, commenting on European food standards
2. Process standards – cover how the product is produced, including social and
environmental practices that are not ‘visible’ in the finished product. A cucumber might
have to be produced using certain agricultural methods or treated with particular
pesticides
“Waitrose British Pork comes from pigs that are reared naturally on
carefully selected British farms. The pigs always have soft straw to sleep on
and space to roam around. Claire and Trevor Carlton-Moor produce pigs for
Waitrose on their farm in East Anglia.”
34
Waitrose advertisement
Anecdotal evidence suggests some supermarkets specify that the vegetables they sell are
produced using only mains water irrigation methods.
Some examples of private standards
There are a few main trends in standards. Firstly there is the increasing complexity and
importance of public, mandatory standards in global markets. But increasingly important
are the private, collective standards on agribusiness trade and value chains.93 Retailer
brands are hugely influential and because of their economic power, retailers are a major
force in driving quality standards.94
Although often labelled as ‘voluntary’, in that they are not imposed by regulatory
authorities, standards often act as entry tickets into the market – producers must comply
with certain standards, and demonstrate that they have done so, or their products will not
reach the supermarket shelves.95
Here are some examples of private retailer standards:
EUREP/GAP (Euro Retailer Produce Good Agricultural Practices) covers agriculture,
food-safety aspects as well as working conditions and environmental aspects
EurGAP control points
Production area Criteria assessed
1. Traceability
2. Record keeping
3. Varieties and root stocks
4. Site history and management
5. Soil and substrate management
6. Fertiliser use
7. Irrigation
8. Crop protection
9. Harvesting
10. Postharvest treatment
11. Waste and pollution management,
12. Worker health,
13. Incremental issues
14. Complaint form 96
BRC (British Retail Consortium standards) – offers an extended developed checklist for
food-safety specifically for the UK market
GMP+ (Good Manufacturing Practices) – implemented in the animal sector. It requires
traceability of feed.
35
SQF (Safe Quality Food) – emphasizes capabilities of tracking and tracing throughout
the supply chain
Private standards
Retailer rules in action
Companies at all stages of the value chain are developing high-profile standards to
differentiate products their competitors’.
Retailer standards include Tesco's Nature's Choice, Carrefour's Filière de Qualité and
Loblaw's President's Choice.97
•
Carrefour applies its Carrefour Quality Certificate to 200 items around the globe98
•
Somerfield, sets out its criteria for cauliflowers over three pages, including a
demand that all should be 12cm-16cm and uniform in colour with no more than
two spots per leaf. They must also be at exactly 6C when they are delivered to the
store’s depot.99
Processors are also introducing private standards…
Bottom of the heap: ‘Not-traced and not-controlled’
Danone is a leading European manufacturer of fresh dairy products. In Bulgaria, the
company has introduced a system of standards for its suppliers, the Danone Quality
Control System (imposed by the International Danone Group). Every year all milk
suppliers are visited and evaluated on the basis of 26 criteria relating to quality and
safety of milk production. Suppliers that pass on all 26 criteria are labelled ‘Traced
and Controlled Danone’ and are granted preferred supplier status. Suppliers that do
not fulfil all 26 criteria are labelled ‘Traced and Controlled’, ‘Traced and notcontrolled’, or ‘Not-traced and not-controlled’. 100
36
And so are fast-food companies…
Fast-food companies make the most stringent demands
Food-service companies, especially international chains such as McDonald’s, are very
demanding – much more so than even supermarkets – in terms quality attributes and
standards. They insist their suppliers control water quality, seed varieties, pesticides,
packaging, and temperature, along with rigid standards specifying the size, colour and
texture of the foodstuffs they sell in their food outlets.101
Most fast-food restaurants also demand daily microbiological control and audit
monthly the “fresh-cut” companies which supply them.102
More importantly, fast-food chains take their sourcing strategies with them wherever
they go. In developing countries small producers often find it hard to obtain
information on standards, let alone make the investments needed to meet them.103
This drives small farmers out of business which leads to bigger farms that use more
technology-intensive growing methods, as well as larger, more centralised food
processing plants.104
Assurance schemes…and retailer value
It’s best to link your credence claims to a worthy organisation.
Private quality assurance schemes are designed by third party organisations often in
collaboration with retailers. Examples include “Farm Assured British Lamb” or “Farm
Assured British Pigs”.
Third parties not only help design the schemes, they often help to enforce them. Many
retailers ‘sub-contract’ the role of source verification to the various producer-driven farm
assurance schemes in operation.105
Farm assurance and whole-chain assurance schemes lead to the production of food with
certain extra qualities – which back up the credence claims made by retailers. These
credence qualities also have extra value for the retailer, as they might be able to sell them
at a premium to a particular range of customers.
In this way, retailer product differentiation strategies in the UK impose retailer standards
further down the chain.
The consequence of this is that much of the market is closed to farmers who do not
embrace one or more of the assurance schemes designed to give added value. 106
37
For UK farmers and processors, memberships in the Farm Assured British Beef and
Lamb (FABBL) and other such schemes are voluntary. But studies suggest that failure to
comply with the standards is not really an option. Membership has become a de facto
mandatory requirement of major processors, who are in turn responding to pressure from
major food retailers, restaurants, and food service.107
• In 2000, about half of English beef producers and around a quarter of English lamb
producers belonged to Farm Assured British Lamb and Beef (FABBL). They
produced 76% of beef and 51% of lambs slaughtered in England.
• About 30% of English pig producers belonged to Farm Assured British Pigs
(FABPIGS) in 2000, but they produced about 85% of the pigs slaughtered in
England.108
In other words, it is the bigger producers that belong to these certification schemes.
How standards create private labels
Major food retailers have implemented ‘proprietary’ quality assurance schemes in
order to develop their own private label products. These schemes require
suppliers to be members of one of the generic farm-level schemes, but then
specify a variety of additional requirements – such as carcass specifications, age
limits, breed, additional feed constraints, and enhanced ability to document the
animal’s source and how it was produced.109
Retailers are driving in the spread of assurance schemes. This exerts substantial pressure
on producers who might otherwise be unwilling to bear the costs of membership and of
meeting scheme standards, but who are aware that if they don’t they will be excluded
from the market.
Furthermore, as markets mature, meeting stringent new standards is no guarantee of a
market premium for suppliers. In fact, new standards often become an ‘unfunded
mandate’ and arguably demonstrate a disproportional allocation of costs and benefits
between standards ‘makers’ and standards ‘takers’. When combined with buyer power,
the costs and efforts necessary to meet the standard, to prove that it has been met and
allow for traceability down the supply chain, are likely to fall on the producer.110
Standards and consolidation
Standards favour large farms
38
These standards also drive concentration further down the food chain.
The cost of compliance means that standards discriminate against small farms. Although
often described as ‘voluntary’, private standards can act as entry tickets or barriers to the
market.111 The stringency of the standards discourages many small farmers from entering
into contracts for supply. And in countries or regions where just four retailers can control
up to 90% of the market small suppliers are effectively excluded from everything but the
scraps. To make matters worse, emerging evidence points to a distinct preference by
supermarkets to source from larger producers.
•
In Malaysia, for example, one chain had 200 vegetable suppliers in 2001 - by
2003 this number had fallen to just 30 “preferred suppliers”.112
•
In Chile it has been found that the scale of fresh produce operations of 50 or 75
associated small growers, each with one or two hectares, is often not sufficient to
offset the cost of supermarket procurement practices.113 Only large-scale farming
operations can meet the demand.
The extra demands of supermarkets
In Ecuador, the traditional open market demands from potato growers only four criteria
be met:
1. a certain set of varieties
2. a maximum level of mechanical damage
3. a minimum size
4. a certain color
In contrast, the supermarket channel demands fourteen criteria be met:
1. a certain set of varieties
2. a certain form
3. a maximum level of mechanical damage
4. a level of cleanliness
5. a level of food safety
6. a certain odor limit
7. a certain size
8. a certain color
9. a certain maturity
10. temperature maintenance
11. specific packaging
12. a certain volume
13. timing and place restrictions
14. a specific payment period114
39
Food service companies also impose standards that shut small suppliers out of markets
and help to consolidate the food supply chain.
•
The Association of Small Irrigation Users of Palencia (ASUMPAL) is a
cooperative supplying salad tomatoes, that comply to stringent specifications, to
McDonald’s in Guatemala. Its membership fell from 330 in 2000 to 30 in 2001 to
just 6 in 2002.115 ASUMPAL’s members lacked the expertise, as well as the
money to invest in the modern greenhouses, drip irrigation and pest control that
would have helped them meet supermarket specifications116
Distribution and packaging
Standards do not just apply to production. They often specify how food should be
packaged and distributed.
Standardised packaging and supply are essential to the smooth operation of large scale
global distribution networks. Supermarkets demand standard quality of produce
(appearance, size, colour, crates, pallets) so that they can run their stock efficiently and
standardise pricing.117 So, for suppliers, understanding the right packaging, the right case
pack sizes and the right unit loads demanded by supermarkets can make or break the
profitability of their business.118
If, for example, a supplier does not use the right size crate then they cannot supply the
retailer. This means that even packaging can act as a barrier to new suppliers who want to
enter the food supply chain. Standardised packaging can also lead to discriminatory
requirements which eat into the profitability of producers.
•
Wal-Mart now demands that packages of chicken breast must weigh exactly 5lb
and that is all that the supplier is paid for.119 Because the supplier is not paid for
any extra chicken in a package, any small oversupply will mean the supplier
consistently loses out.
The traceability systems driven by retailers are forcing suppliers – manufacturer and
farmer alike – to follow suit and adapt to those new systems.
• Tesco and Metro introduced RFID at individual case level in 2004. All of their
suppliers were told to be RFID compatible from 2006.120 Wal-Mart has required its
top 100 suppliers to be RFID capable since January 2005. Its next 200 suppliers had
to put RFID tags on cases and pallets from January 2006.121
40
And so suppliers have two choices: either implement RFID across their own operations
or lose an outlet for their produce. For many suppliers a large retailer like Wal-Mart
accounts for most of their business and so suppliers have no option other than bear the
cost of this expensive technology.
• Wal-Mart suppliers have collectively spent $250 million to implement the
technology, according to AMR Research released this past winter.122 US
manufacturers will spend $400,000 per facility to become RFID compliant, plus
another $6,600 annually per $1 million in sales for the tags themselves.123
Suppliers faced a stark choice: adapt or face commercial ruin.
“It’s a significant cost to our company, but you’re either going to do it their
[Wal-Mart’s] way, or they’re going to find another supplier.”124
Tillamook County Creamery, Oregon, US
The imposition of these costs further consolidates the supply chain. The impact of new
standards can be particularly severe in developing countries, as these case studies show.
Brazil: new standards transform the supply chain… and 60,000 dairy
farmers go bust.
In Brazil, the imposition of new supermarket standards in 1997 led directly to 60,000
dairy farmers going out of business in just 36 months.
Following pressure from supermarkets, dairy processors in Brazil began to demand the
instillation of expensive refrigeration tanks on all dairy farms. However, the smallest tank
available for farmers to buy helds 200 litres of milk, requiring production of at least 100
litres a day. Since average farm production was just 50 litres a day most farms were
unable to afford the new system. In fact, fewer than 6% of dairy farmers had a daily
output of 100 litres or more, so there was an instant and massive exclusion of small dairy
farmers.
Dairy processing in Brazil is highly concentrated. In 1996 the top 3 firms (Nestle,
Parmalat, and a domestic firm) had 61% of the dairy processing market. Tetrapack, in
conjunction with the major retailers, embarked on an aggressive strategy to promote
vacuum packing UHT milk. This combined with Parlamat’s promotion of UHT milk
caused UHT to take over the fluid milk market from just a 5% share in the late 1980s to a
75% share in 2001.
“The consequences of this substitution are important. Most UHT milk is sold in
supermarkets, while pasteurised milk used to be sold by bakeries. This means that milk
retail has shifted rapidly into supermarkets, whose relentless quest for cost-cutting was
41
passed on to the dairy processors. Private standards were instituted by the leading
processors to reduce costs….”
These standards required milk cooling at the farm level which reduces procurement costs
and improves the quality of the raw material. To take full advantage of the refrigeration
system, the farmer has to invest in herds and costly equipment…
During the period 1997-2000, the number of farmers delivering milk to the top 12
companies dropped by 60,000 (35% of suppliers) and there was a 55% increase in their
average size (litres/day/farm).
Nestlé alone shed 20,000 farmers from its supply lists – a drop of 49%. Since the
demands were imposed the average scale of a supplier increased by 135%.125
It is a similar story in Kenya…
Kenya’s fresh fruit and vegetables.
swept aside
•
Fewer, bigger farms. Small-holders
In 1989, the UK supermarket share of fresh fruit and vegetable sales was 33%. By
2003 it had risen to 80% - none of which was sourced through wholesale
markets.126
The changing nature of fresh vegetables trade between Kenya and the United Kingdom
highlights a shift from market-based global value chain governance to more explicit
coordination, and it reveals the importance of the competitive strategies of UK
supermarkets in driving this change.127
Fresh produce is one of the few products that can persuade consumers to move from one
supermarket chain to another… so it is very important to retailers. To differentiate their
products retailers emphasise the quality of their fresh produce and have introduced new,
non-seasonal and processed items in a bid to attract customers. In the UK much of this
produce comes from Kenya.
Retailer emphasis on quality and variety has changed the structure of the value chain
In the 1980s, trade in fresh produce between the UK and Kenya went through a series of
arm’s-length open market relationships. Traders in Kenya bought produce in wholesale
markets or at the farm gate and exported it to the UK, where it was sold in wholesale
markets and distributed to independent shops.
Supermarkets have transformed this open market. As UK retailers grew and became more
powerful, they began to take a greater share of fresh food sales. Supermarkets then used
their buyer power to introduce a more explicit form of coordination into the chain. They
developed closer relationships with UK importers and Kenyan exporters, and moved to
42
renewable annual contracts with suppliers whose capabilities and systems were subject to
regular monitoring by third party performance auditors. Supermarkets began to inspect
suppliers prior to incorporation in the chain, and made regular spot checks at all points in
the chain, right down to the fields where the produce was grown.
Supermarkets then started to specify exactly how products should be grown, harvested,
transported, processed and stored.
These requirements were specified and monitored by
•
the use of detailed, written procedures for growing (including the use of specific
pesticides and chemicals), harvesting, processing and transport
•
swapping information with a small number of "preferred" suppliers
•
auditing and inspection of importers, exporters and farms.
Firstly they reduced the number of UK suppliers/importers for each product range. They
then adopted a system of category management, which meant the remaining suppliers
were given more and more responsibility for sourcing, product development, and even
consumer research.
Then as many processing functions as possible were transferred to exporters in Kenya,
where costs are lower. In fact, one company went so far as to fly chives from Europe to
Kenya, so that packers there could use them to tie small bunches of green beans and
miniature carrots together – to make them appeal to British shoppers. The plastic trays
these were sold in were also flown from Europe to Kenya.128
Result – smallholders excluded, as consolidation is driven further and further down
the chain
Supermarket standards have led leading exporters to increase own-farm production at the
expense of purchasing vegetables from both smallholders and large contract farmers.129
•
In the early 1990s, smallholders produced 70% of vegetables and fruits shipped
from Kenya… by the end of the decade they were left producing just 18%.
•
By 2000, 40% of fresh produce was grown on farms owned or leased directly by
the importers based in the developed countries, and another 42% on large
commercial farms.130
•
In 2002, 1,600 Kenyan growers lost their contracts.131
There has been concentration of exporters too.
43
•
The top five exporters now control over 75% of all fresh vegetable exports.
But it doesn’t stop there, these remaining exporters are now consolidating vertically.
Kenya’s largest exporter, Homegrown has entered into a joint venture with MK airlines
which flies cargo planes each night to the UK.132 And Kenyan exporters are beginning to
merge with UK importers either through outright ownership or equity participation.133
Smallholders excluded
As supermarkets transfer their global sourcing patterns to the developing world, large
numbers of smallholders will find themselves excluded from the supply chain.134
The figures show that global retailers are rapidly increasing their penetration in
developing countries (see appendix). As they do so, they switch their sourcing from the
wholesale markets used by small suppliers and retailers to a small number of preferred
suppliers and introduce their own grades and standards that shut out small suppliers.
These “preferred suppliers” are driving through the demands of multinational retailers.
They cut the retailers coordination and enforcement costs, and enforce private standards
and contracts on their behalf.135
In Nicaragua for instance, fresh produce supplier Hortifruti works on developing farmer
‘competences’. The company’s agronomists visit farms to oversee crop planning and
provide other technical assistance. Hortifruti is the ‘buying arm’ for most of the stores in
the Central American Retail Holding Company (CARHCO), which is a third-owned by
Wal-Mart.136 Through contracts with growers it has streamlined the supply chain, leading
to cost reductions on tomatoes of up to 60%.137
44
Contracts
One of the most effective ways to grow your company (with someone else’s
money)
“…development economists and agribusiness researchers generally agree
that the growing number of complex contractual arrangements replacing spot
markets is a defining characteristic of the agroindustrialisation
phenomenon”138
Agricultural Economics, 2000
“We are likely to see a continuing shift to more explicit forms of vertical
coordination, through contracts and processor ownership, as a means to
ensure more consistent product quantity and quality.”139
US Department of Agriculture
Contracts are a more ‘explicit’ way of coordinating the value chain. Like standards,
contracts are a codified expression of retailer demand.
A contract is, in essence, a formal or informal agreement between two parties that is
costly to break either because of a monetary penalty or lost future business.140 The FAO
defines a contract as, “an agreement between farmers and processing and/or marketing
firms for the production and supply of agricultural products under forward agreements,
frequently at predetermined prices”.141
In today’s food supply chain contracts are frequently used for the following products:
Product
Contractor
Fruit and Vegetables
Retailer or Preferred wholesaler
Dairy
Retailer or Processor
Poultry
Retailer or Processor
Meat
Retailer or Processor
Cereals
Retailer or Processor
Through contracts, retailers and processors specify their demands: the quantity, quality,
delivery time and price of food.
•
In Germany around one-third of the total value of agricultural production was
produced under various types of contract in the 1990s.142
45
Retailers, for example, make contracts either directly with the producer or with suppliers,
who in turn make contracts with producers. The retailer benefits from a consistent supply
and a guarantee that food has been produced in accordance with standards specified in the
contract. Suppliers and producers receive a guaranteed income.
But there is another important feature of contracts. Growth.
Contracts as a cheap way to achieve vertical integration
There are two basic ways that a company can get bigger. It can do so either through direct
ownership, by which firms “grow larger”, or through agreements, by which firms are
“effectively larger”.
The first way, known as vertical integration, is achieved through mergers or
acquisitions, where one firm purchases the assets of another firm at another stage of
the value chain.
The second way, known as vertical coordination, is achieved when firms gain
access to larger markets, a wider product line, or higher quality produce through
formal or informal agreements.143
Standards are a type of informal agreement. Formal agreements are known as contracts.
They are a more explicit form of vertical coordination. Contracts are part of what
industrial organization literature terms “vertical restrictions”, which fall short of full
vertical integration (which supermarkets and food processors usually avoid) but
approximate in certain ways the outcome of a vertical merger.
These contracts can also be established when a retailer (via its wholesaler or directly)
“lists” a supplier. That listing is an informal (usually) but effective contract—in which
delisting carries some cost, tangible or intangible.144
But, contracts do not come without risks, especially for producers. Farmers, in particular,
are at risk of becoming dependent on a sole contractor, and may lack bargaining power to
obtain fairer terms. Or, the contractor may manipulate quality standards in order to
reduce purchases.145 Yet despite their weaker position, producers still end up being liable
for the on-farm investments often specified in contract production as well as all the
environmental liabilities which can be substantial. Contracts also lead to a lack of price
transparency…
What is a contract?
A standard farming contract includes provisions for price, production practices, product
quality, and credit facilities, etc146
In agriculture, these are the areas that contracts typically cover:
46
•
Market provision: The grower and buyer agree to terms and condition for the
future sale and purchase of a crop or livestock product
•
Resource provision: In conjunction with the marketing arrangements, the buyer
agrees to supply selected inputs, including on occasions land preparation and
technical advice
•
Management specifications: The grower agrees to follow recommended
production methods, inputs regimes, and cultivation and harvesting specifications
147
In addition to this, for livestock, there are two further “sub-categories” into which
contracts fall: production contracts and marketing contracts.
.
•
Production contracts: these are where the contractor owns the animals and the
farmer is paid for feeding and looking after them
•
Marketing/pricing contracts: these are where the farmer owns the animals, but
has some prior agreement with the contractor regarding purchasing arrangements
or pricing
In the U.S. the first type predominates in the poultry sub-sector, while marketing or
pricing contracts now account for a majority of sales in the hog market.148
Contracts more and more popular
Contracts are now the primary method of handling sales of many different livestock
foods such as milk, pigs, and poultry, and also the sales of major crops such as fruit and
vegetables.
And contracts will govern a growing share of global agricultural production over the next
decade, for the following reasons…
•
Demand for differentiated agricultural products to meet specific consumer
preferences should continue to grow, and these products are generally produced
under contract.
•
Pressures will grow to ensure traceability of products for health and consumer
concerns, and contracts provide one way to ensure traceability.
•
Large farms continue to account for sharply growing shares of agricultural output.
Contracting is closely associated with farm size, and contract use can be expected
to grow along with the increase of large farms.149
47
Example: Processing Tomatoes in California
Almost all U.S. processing tomatoes are grown in California, the vast majority under
contracts. There are few participants in the California market—51 processors in the
1990s and about 500 growers. The 50 largest growers account for 40% of production.
Different processors need different tomato characteristics for the huge variety of
different tomato products: paste, juice, sauce, ketchup, soup products and so on. These
market characteristics lead to a reliance on contracts and contracts are designed to
provide incentives to growers to produce the tomato characteristics desired by
buyers.150
Example: French Fries
McCain Foods is the world’s largest french fry processor, it produces one-third of all
french fries consumed in the world and at least 40% more than any other company.
Most of McCain’s potatoes are grown by producers that enter into contracts before the
year’s crop is planted.151
US leads the way in contracts
Contracts have governed an increasing proportion of US agricultural production since the
1950s152 and now cover over one-third (36%) of the value of U.S agricultural production,
up from only 12% in 1969.153
In some sectors of US agriculture contracts are used even more widely:
•
Contracts covered nearly one half of all livestock production 2001, up from onethird just 5 years before. 154
•
Contracts dominate the production of poultry and eggs… 88% of the value of
production in 2001155
•
The number of pigs produced under contract has rocketed in a just short space of
time: in 1997, 56.6% of hog production was contracted. By January 2005 the
number of non-negotiated or non-spot purchases accounted for 89.4% hog
purchases.156
48
Source: USDA data157
Fruit and vegetables… more and more contracts too
Conventional retailers are gradually reducing the number of suppliers per product and
beginning to contract with just two or three preferred vendors capable of offering
consistent, year-round volumes, quality, and traceability systems.158
This system essentially functions as a contract between the retailer and the grower.159
How this shift takes place…
1. A private wholesaler emerges and grows the share of its business from
supermarket chains.
2. The wholesaler shifts the majority of its business to supplying just a handful of
retailer chains. It also adds services such as packaging and quality control that it
did not do as a ‘traditional’ wholesaler.
3. The ‘dedicated’ wholesaler stops buying on the open spot market or from a list of
customary suppliers and instead starts outgrower schemes where it contracts
production that meets the specific standards of the retail chain.
49
4. The retail chain often acquires or enters in a joint venture with the wholesaler
firm. This acquisition has the advantage of control, exclusivity so that it also
‘captures’ a supplier base, and making the wholesaler a profit centre.160
The result of all this is that leading supermarket chains are shifting toward ‘direct’
purchase from growers. This direct purchase is managed by the dedicated wholesaler as a
‘preferred supplier programme’. And most of these dedicated wholesalers are actually
owned by the retail firms or are run as joint ventures.161
This process is currently in action in Croatia, where the largest chains have recently
begun to buy up the specialized wholesalers so that they can run their own “preferred
supplier” programmes.162
Food processors and producers… more and more contracts
Case study: Pork under contract
The pig livestock industry – especially in the US - is a classic example of agricultural
production being increasingly carried out under contract at the behest of processors. This
is happening for three major reasons.163
1. Simplicity and guaranteed supply.Working with a fewer and larger producers
who meet tight production schedules gives processors assured supplies so that the
processors’ facilities are always kept fully utilised.164
2. Captive market. By turning independent producers into contracted pig farmers,
processors can profit by supplying the inputs into the production process (such as
feed and even the pigs themselves).165
3. Uniformity. A processor’s direct role in the management of production means it
can deliver the uniformity and productivity levels required.166
The net result of this trend for pork production in the US:
•
Pork production coordinated through production contracts or direct ownership of
production units by processors (vertical integration) increased from 11% in 1993
to 59% in 1999.167
•
The percentage of pig-to-finish production units with contracts increased from
11% in 1992 to 34% in 1998. The share of output taken by these contracted units
increased from 22% to 63%.168
And just like in other agricultural business conducted under contract, this is leading to
concentration in the industry and larger farms…
50
•
The four largest pork processing companies in the US accounted for 32% of the
market in 1985. This share had grown to 63% by 2003169
•
Production operations in the US with more than 1000 pigs raised their share of the
total number operations from 37% in 1987 to 71% in 1997.170
171
An example of how supermarkets encourage food processors to wider use of
contracts
In the US, retailers recently began demanding processors supply case-ready and branded
pork (case ready is pre-cut, pre-packed and pre-labelled meat). This in turn influences the
processors’ methods of production. This demand for uniform ‘pork products’ leads to
processors taking more control over the breeding stock and production practices.
Because, consistent inputs – as specified by the processor – can help to produce pigs of
the particular size and weight needed for a ‘standardised’ pork product.172
And, in many cases, integrated processors have now even taken control of the genetics of
pigs by retaining – through contract – the ownership of the genetics of the livestock
supplied to the farmer.173
51
Larger farms in a concentrated pork industry are having serious impacts in Europe too.
Consider the recent activities of the world’s largest pig processor.
Large processors prefer to contract with producers on large farms. But farm
concentration creates environmental risks – especially in the pig industry.
Smithfield, the largest American pork processors, has recently expanded in Europe. In
2004, the company moved into the UK, Spain and Romania.
But in Europe, Smithfield’s largest operations are in Poland.
•
In 1999, Smithfield acquired a 67% share in Animex S.A., Poland ’s largest meat
and poultry processing company for $51.2 million.174
Through Animex, Smithfield…
•
slaughters 1.2 million pigs per year.175
•
has supply contracts with 1,600 Polish farmers.176
•
owns 47,000 sows in the country – up 14,000 since 2003.177
By 2006 an additional 10,000 animals will come from farmers raising Smithfield-owned
stock under contract.178
The presence of Smithfield is drving consolidation in Polish pig farming.
•
After buying Aniemx, Smithfield closed three of the company’s large
slaughterhouses and cut nearly 2,000 jobs.179
•
Farmers contracted with Animex (Smithfield) have seen a dramatic change in
lifestyles. Where they once had 20 or so pigs, many now have 1,000 or more.180
But concentration in pig farming creates environmental risks. Smithfield’s intensive pork
production methods in the past have created a number of problems with waste disposal.
•
In the US, the Department of Justice and Environmental Protection Agency have
alleged almost 7,000 violations of the Clean Water Act by Smithfield since
1991.181
There is a danger that these waste disposal problems will be exported to Europe:
•
In 2003 Prima Farms – a Polish company funded by Smithfield – was found
guilty in 2003 of dumping huge amounts of waste without permits.182
52
The big and the less of contracts: fewer but bigger farms
Contracts go hand in hand with concentration in the farming sector. As retailers,
“preferred wholesalers” and food processors push to reduce the number of their suppliers
the inevitable consequence is fewer and larger farms are supplying the demands of fewer
and bigger customers.
“90% of our produce is supplied by 40 farms and the last 10% is supplied by
100 farms. This is simply not viable anymore.”183
Large fresh produce processor
"Working with one strawberry grower … we helped develop ways of extending the growing
season. He started with 100 acres and now has more than 1,000 dedicated to
producing just for us"
UK supermarket Morrisons184
•
In the US farms with $1 million or more in sales have nearly half their production
under contract.185
•
Research indicates that vertically integrated firms tend to rely on large farms for
contract production and are less willing to work with small or medium-sized
farms which provide less output volume.186
The net result if all this is that, for all practical purposes, producers often end up with just
a single buyer even if there are several buyers who could theoretically compete to buy
from them: buyers in effect create captive suppliers.187
53
Problems with contracts: Risk of dependency
Proponents of contracts say that they are a way of reducing most output price risks and
many input price and yield risks. But contracts also bring the new risks of supplier
dependence, insecurity and potentially unfavourable terms.
Contracts do not guarantee long-term income security. Farmers are kept on their toes by
the constant possibility of losing their supply deal with a retailer or processor.
“We don't really encourage any long-term contracts, we used to. But for both
sides it doesn't work… We have entered into longer term things, but it’s very
much the exception.”188
Anonymous retailer interview, December 2001
The example of American pork production
In the US, many pig farmers no longer own any animals. Multinational food processors
provide the animals and even the seeds to feed them. The whole production cycle –
genetics, feed rations, scheduling and procedures, and even the weight of animals at
processing – is controlled by these firms. Moreover, the buildings and equipment used by
the farmer are specified by the integrating firm.
At the end of the season, the full-grown animals are brought to the company's processing
plants, where they are weighed. Each farmer's performance is rated in pounds. Then the
company deducts all its charges – for the animals themselves, for feed, transportation,
and any other services or products it supplied, such as propane to heat the buildings.
If there is anything left over, the farmer is compensated.
The only things the company allows the farmer to own are the heavily-indebted buildings
and land where the company raises its animals.189
In many cases, the food processor that handles the farmer's product is linked (by
ownership, joint venture, or strategic alliance) with the firm that provides the farm's
inputs. These clusters of firms dominate the farmers, reducing their independence and
choice. With no one else to buy seeds, pesticides and fertilisers from – and no one else to
sell to – the farmer loses all control over price and profit.
On most American pig farms, all of the significant management decisions, such as
selection of facilities design, genetic stock, health program, breeding dates, when to place
on feed, feeding system, when to price, when to deliver, are made by the contractor – not
the farmer.190
54
This means that the grower/farmer doesn’t contribute much to a contract pig operation,
and so cannot expect to get much back in return. The contractor provides the technology,
the management and the market and so the contractor is going to make the money – not
the farmer.191
However, to get involved in contract production, the farmer must often borrow heavily to
finance the construction of the facilities – typically $200,000 to $1 million – and
generally assume the financial risks associated with raising pigs for a pork company.
Although these farmers are dependent on the contracting firm, the law regards them as
equal parties in the contract. They must therefore accept liability for anything that might
go wrong during production.
For example, it is the farmer – not the pork companies which owns the pigs – that bears
the environmental risks associated with the vast amounts of waste generated at factory
farms.192 The processor makes the big money, yet the contract producer remains
responsible for dealing with the vast amounts of waste that and for any violations, waste
lagoon ruptures, or other environmental problems.193
•
A single average factory in North Carolina has about 3,700 pigs and produces
38,480 pounds of faeces and urine every day.
•
In all, North Carolina pork factories produce 19 million tons of waste a year.
That's 2.5 tons of pig waste per North Carolina citizen per year.194
Death of the ‘wholesalesman’
Supermarket purchases now involve not only larger quantities than traditional marketing
systems, but entirely new methods of procurement.
Traditional wholesalers have been unable to supply the quantity, quality and consistency
required by supermarkets….or meet their price requirements.195
The World Bank and the European Bank for Reconstruction and Development (EBRD)
saw the need for wholesale market development in Eastern Europe and so financed the
construction of many new markets.
These markets are now redundant. It has been proposed that they could be used as
enormous banana ripening rooms or cold storage facilities for the new retailer-owned
dedicated wholesalers that dominate food supply in Eastern and Central.196
The irony of this is that the region has gone full circle in just ten years: from a centralized
communist system of agriculture and production pre 1990, to an open market system
during the 90’s and now back again to a centralized system run by retailers.
55
•
In Poland alone, 50% of local food wholesale trading companies amalgamated or
went out of business as supermarket share of retail sales increased - the meat
industry shakeout in Poland was especially severe – half of the remaining firms
expected to merge or go bankrupt. 197
•
In 1998, 42% of fresh produce handling in South Korea was done by wholesale
and conventional markets, but four years later this had dropped to 29.5%.198
•
In Mexico, raditional wholesale markets in the main cities have experienced a fall
in volumes traded by 25 - 30% between 2003 and 2005.199
•
The Malaysian supermarket, Giant, had 200 vegetable suppliers in 2001 but by
2003 this was down to just thirty.200
56
Problems with contracts: Lack of price transparency
Relationships between contractors and producers are essentially ‘closed’. Contract
details, including information about price, are not generally made public. For external
parties this means that there is less opportunity for price discovery – and this can lead to
market distortions.
Under contracts, pricing becomes subject to manipulation, and its role in regulating the
economy, by establishing equilibrium between supply and demand, is weakened. In other
words vertical coordination can bring about market closure and becomes a barrier to
pricing efficiency.201
Contracting also reduces ‘price transparency’. Contract terms are generally not published
and often vary from contract to contract. This reduces the opportunities for ‘price
discovery’ along the chain.
Price transparency is an important indicator of a well-functioning, competitive market
place. Perfect competition depends on a free flow of price information between market
participants. This of course is rarely realized, but open and wholesaler markets come
reasonably close. In a market scenario where there is an arms-length relationship between
seller and buyer, there is more opportunity for suppliers and buyers alike to find out how
much is being paid for food, as everyone shops around for the best price.
‘Perfect competition’ does not occur in buyer-driven chains.202
Farmers should have access to similar price information as the processors and retailers –
but increasingly, they do not.
Some of the ways that contracts cause problems for farmers
•
Contracts make it difficult for producers, particularly smaller-sized ones and those
that want to use open cash markets, to determine a ‘fair’ market price203
•
In America, many livestock farmers, not under contract, say that they are unable
to obtain the data needed to quickly and easily compare bids from different buyers
in order to negotiate the best possible price for their livestock204
•
Farmers wishing to enter into contracts may find it difficult to compare prices
across contracts, because contract terms may contain language specialized to the
farmer or circumstance of production, and—particularly in livestock—terms are
not generally publicized.205
The tail that wags the dog. Contracts can now distort open market prices
57
“In the old days I would have been able to offer you $67.50 for these cattle
(on a $66 market), but now paying more would screw up
20,000 formula cattle.”206
Cattle buyer to a cattle feeder, quoted in US Department of Justice / Federal Trade Commission
Workshop on Merger Enforcement
The cattle feeder, mentioned above, did not receive a fair price (in this case $67.50)
because the price for animals farmed under contract is tied to the price of cattle sold on
the open spot market (in this case $66). The buyer could not offer a fair price because to
do so would increase (“screw up”) his costs to other contracted farmers by $30,000.
Even with pricing information, contracts make it harder for producers to receive a fair
price. This creates a ‘distorted incentive’ – where contract farmers are not rewarded for
producing animals of superior quality, because their price has been fixed in advance. And
farmers not under contract have less incentive to produce better quality because,
indirectly, the open market price is linked to the contracts price.
Contracts lack the flexibility of spot markets. Unlike spot markets, contracts fail to reflect
the fluctuations and seasonality of supply.
Typically, growers expect to receive high spot market prices when there are shortages,
which compensate for periods of low prices. But this potential for higher returns in
periods of short supply is lost under contracts. Suppliers that have forward-contracted
with buyers at a lower average seasonal price may be unable to return the temporary high
prices (to their growers) which other growers may receive when marketing through
suppliers who sell mainly on the spot market.207
Moreover, the lack of transparency in prices also creates the potential for large firms –
whether buyers or sellers – to unfairly wield market power.208 This ability to distort the
market, by keeping prices down or imposing extra costs on other parts of the chain, is
explored in the next section.
To summarise, in a vertically coordinated chain, the head of the chain controls the
information flows and information is shared between ‘chain insiders’. ‘Chain outsiders’,
those suppliers who are not contracted to major retailers or processors, lose out.
58
Vertical Coordination
Retailers are now driving a new system of food production – a demand chain in which
they control the flow of products from the producer all the way through to the store.
The use of standards, contracts and the development of preferred suppliers as ways of
organising and governing the chain is set to continue.
These changes turn the food system into a vertically coordinated supply chain.
This section looks in more detail at the retailer infrastructure – distribution centres – and
management practices – factory gate pricing, efficient consumer response (ECR),
category management and open-book pricing – that make such governance possible.
It also shows how, as these trends continue, all aspects of the food system are becoming
more integrated.
Distribution and Logistics
“Centralization proceeds in steps, with a shift from by-store procurement to
use of distribution centers handling distribution in a zone— then a country,
then a region, then globally”209
Supermarkets have rendered traditional wholesalers and wholesale markets redundant by
replacing them with their own Distribution Centres (DC’s).
And these Distribution Centres are crucial to the vertical coordination of food supply
chains. They are also crucial to the development of private-label products.
A DC is effectively a huge warehouse owned by the supermarket chain. Primary
producers and food manufacturers deliver their products directly to DC’s 210 and the
supermarkets then distribute them to their individual stores.
•
Carrefour, the world's largest supermarket chain, owns a huge distribution centre
in São Paulo, Brazil. It serves a market of more than 50 million consumers.211 To
put this into perspective, a single Carrefour DC serves a market greater than the
combined populations of: Switzerland, Luxembourg, Netherlands, Belgium,
Denmark and Sweden.
•
Ahold in Poland operates over 180 outlets, all of which are supplied via five
distribution centres.
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•
Tesco opened a 40,000 m2 distribution centre on 6 January 2004 for the
distribution of all processed/packaged food for all its stores in Poland. It is now
building a second, for fresh food.212
•
Companies consider a network of 20 hypermarkets is necessary to justify a
distribution centre.213
And as supermarket control reaches further and further back along the supply chain
retailers are now beginning to take over parts of the upstream distribution network,
collecting products directly from their suppliers and taking them to their distribution
centres. This gives them further control of the coordination of food production.214 Today
almost 30% of the cases delivered to Tesco's distribution centres arrive on Tesco trucks.
215
Increasingly, DC’s are being used not for storage but simply as transfer points where
trucks are simply unloaded and reloaded.
•
A German study notes a trend towards distribution centres with no storage space,
where most of the goods are directly reloaded in a process known as cross
docking.216
This means that the big retailers warehouse space is effectively becoming trucks on the
roads.
Factory gate pricing
Factory gate pricing (FGP) is a supply chain technique which aims to iron out all
‘unnecessary’ transportation costs and improve the general efficiency of distributing
food. By asking their suppliers to release product costs “at the Factory Gate” (that is
product costs excluding the cost of delivery to the retailer) supermarket chains are able to
take further control of food distribution.
The national port of entry might be the best place for the retailer or the retailer’s logistics
provider to collect food products form the supplier. On the other hand, the site of
production might be the desirable pick up point for the retailer’s distribution network. If
cost efficiencies demonstrate that the original place of production is the most economic
point to take control of the goods, a further link in the supply chain can be removed.217
Distribution centres are now often selected as the most efficient site for goods removal.
According to one report farm gate pricing has the following effects:
- Reduces overall transport and product costs
- Increases the retailer’s control of the supply chain
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-
Increases the operating costs of competitors, such as smaller retailers,
convenience operators, food service operators by removing crosssubsidisation.218
A 2005 PricewaterhouseCooper survey of the Australian grocery retail market estimates
that by 2010, 30-40% of Australian grocery retailers and wholesalers will implement
factory gate pricing for inbound goods.219
A respondent in a PricewaterhouseCoopers survey notes that “As always these programs
are designed by the retailers to lower their costs and are not always in the best interests of
suppliers”.220
•
By 2003 Tesco had contacted 90% of their Scottish suppliers about factory gate
pricing.221
Efficient consumer response (ECR)
These developments in the architecture of the supply chain – distribution and information
technology – work hand in hand with the retailers’ theories of supply chain management
– which also lead to a more coordinated system of food supply.
It’s called “Efficient Consumer Response”.
Wal-Mart is generally regarded as the pioneer of Efficient Consumer Response. The
company has developed its own integrated supply/demand chain. At its core is the
concept of sharing information about retail sales with suppliers. This enables Wal-Mart to
squeeze more costs out of the supply chain and lower prices. It forced the rest of the
industry to adopt a similar system and forge closer links with their suppliers. The data
scanned every day at the check out is the beginning of the information chain for these
relationships.222
“On the supply side, the ECR concept reengineers the whole supply chain.
Currently, the flow of goods in the supply chain is based on the push
principle. [But] by creating a seamless information flow among all key
players in the supply chain, it is possible to transform it to a supply chain that
is based on the pull principle”223
M. Lagace, Harvard Business School
61
Background: Efficient Consumer Response (ECR)
The concept – of sharing information about sales with vendors and developing a
continuous and coordinated flow of products – was introduced to “non-Wal-Mart
retailers” in 1992. It was institutionalised by a coalition of trade associations (the Food
Marketing Institute and the Grocery Manufacturers of America), food manufacturers
and suppliers, and a handful of big chains under the name of Efficient Consumer
Response (ECR) in 1992.224
‘Efficient Consumer Response’ does not actually have much to do with consumers.
Essentially, its all about tracking consumer purchases at the point-of-sale and then
sharing that data with suppliers, retailers can now tailor the delivery of goods to match
the volume being sold.225
ECR has been constantly tweaked and improved upon since it’s introduction.
Collaborative Planning, Forecasting, and Replenishment (CPFR), is another development
fathered by Wal-Mart. It takes the ECR vision and implements it through the use of better
information technology which allows for a greater, vertical exchange of information
between retailers and manufacturers.
By sharing retail information with the food manufacturer every day and working with a
historical record of consumer sales, the manufacturer and the retailer can each forecast
sales over some future time period, share their forecasts, and negotiate anticipated future
sales if necessary.226
The basic goal of ECR was to copy Wal-Mart by implementing electronic data
interchange (EDI) so as to control the supply of goods and reduce the product lines in
each category in order to streamline delivery and their associated costs.227
With CPFR too, manufacturers deliver food products on a prearranged schedule and
manage the inventory of their own products in each store.228
The next evolutionary step from ECR is ‘category management’.
Category Management
Category Management is the practice of outsourcing the buying function from retailer to
supplier.
Supermarkets select suppliers to look after a specific category of products, such as cereal,
pet food, fresh fruit and vegetables etc. These suppliers are known as ‘category captains’.
They are often the supermarket’s leading suppliers or brand leaders. Category captains
recommend brands for the store to sell and give advice on how they should be marketed.
62
For suppliers there are clear benefits to being appointed as a category captain. Category
captains have access to information, including pricing and promotional plans, about all
the products in the category. With this information they are then able to develop
comprehensive sales and marketing plans for the retailer (including shelf-allocation
plans, pricing, and promotions). This gives them enormous knowledge about their direct
and potential competitors.229
Retailers argue that category management is necessary because they do not have the inhouse expertise to cover thousands of specific products. They claim suppliers are better
placed to know the times of year when a product will sell best, the most effective
promotions, or the kinds of complementary goods that could be displayed in adjacent
space.230
But category management as practised today – with sometimes just one supplier in
charge of each category – raises competition concerns.
Category management: a potential threat to open – and free – competition
"As an antitrust matter, it seems rather strange that you'd have one
company advising a store on how to handle the product of its
competitors"231
US Federal Trade Commission member Thomas Leary
Category captains have control over the products of their direct competitors. They also
have preferential access to commercially-sensitive information, including access to
competitor sales data.232 They have the power to make decisions about product
placement, promotions and pricing – not only for their own category-dominating brands,
but also for those of their competitors.233
•
In the extreme, Wal-Mart (Asda in the UK) nominates just one supplier for each
category, in a mutually exclusive deal. Most other supermarkets divide each
category among two to four suppliers, giving each 30% to 40% of the business.234
Category management is another feature of co-ordination along the value chain. Through
alliance – or ‘partnership’ – with preferred suppliers, retailers can reduce management
costs associated with purchasing and merchandising.
Category management is a further example of supermarket oligopolies driving costs and
competition further down the chain. Supermarkets have successfully engendered a
competition among suppliers for "Category Captaincies." Leading suppliers have built
huge and expensive infrastructures to develop category strategies for each category in
which their brands compete, and for each major retailer who they think will pay out on
this investment 235
63
In practice category management benefits the leading suppliers, since they are the ones
who can afford to invest in the technology required. This leads to further consolidation –
or the entrenchment of a few vertically coordinated relationships as the preferred means
of organising the flow of products along the value chain.
Open Book Pricing
This is a buying strategy where price is based on the supplier’s costs – rather than a price
chosen by the supplier. The price the supplier eventually receives is the sum of its costs
plus an agreed profit margin.
Open book pricing is usually used for long term supply contracts. But the supplier must
agree to allow the buyer free access to his accounts, which are checked regularly to make
sure that all the cost are genuine and that there is no unnecessary expenditure.
•
Retailers often use open book pricing to source private label products. Spanish
discounter Mercadona has integrated 110 suppliers into what it calls its ‘inclusive’
philosophy. This relationship is characterised by an open book policy based on a
‘contract for life’.236
•
McDonald's has four core suppliers. One of them is OSI, which supplies 25% of
its beef in the US, and 85% internationally. These four suppliers meet every
quarter to discuss and share best practices. McDonald's pays them on a cost-plus
basis with an open-book system, whereby the fast-food chain can inspect
suppliers' costs at any time.237
But open book pricing is not without risk.
Canadian studies report cases that “border on abuse” where open book is being used as
just another tool to cut suppliers’ margins. In the extreme case this can remove all
incentive for suppliers to reduce costs since any savings achieved are simply captured by
the buying company. 238
From a wider economic perspective open book pricing essentially enables the retailer to
decide and dictate returns on capital for each participant in the supply chain. Some may
regard this as an unhealthy development.
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Vertical Integration
In a vertically integrated supply chain the profits always gravitate to the top, which is
why they are attractive to retailers.
The companies that are best at coordinating all the activities of the food chain to
guarantee the specific qualities they believe are demanded by consumers are either:
•
•
Vertically integrated firms
Or firms that coordinate activities along the supply chain – for example, through
the use of contracts.
These organisations can coordinate the production, transportation, processing, and
marketing of food239 and are able to respond to consumer preferences for consistent and
specific product qualities.240
Profits go up the chain
“We have a high level of vertical integration in the fresh foods side of the
business… one of the things we have always prided ourselves on is buying
direct from farmers and growers…The more we can deal directly with
farmers, the better” 241
Morrisons
Here are some ways in which retailers are able to create vertically integrated supply
chains:
•
•
•
Alliances with farmers, farm input suppliers and food processors or distributors
Acquisition of food processors or distributors
Development of their own wholesale distribution facilities
Vertical integration benefits retailers in the following ways:
•
•
•
Cost savings – the suppliers' profit margin can be seized by the retailers
Competitive advantage – the retailer can enforce a uniform set of standards across
the supply chain and produce goods of a homogeneous quality
Dependency on individual suppliers is reduced or eliminated
However there are drawbacks. By developing one-on-one relationships with the dominant
manufacturers, and by gaining control over producers and distributors – the retailers
threaten to smother the smaller members of the food supply chain. And, just as
importantly, they make it difficult for new companies to enter into retailing.
65
Vertical integration ….it happens in developing countries too
The trend towards global retailer ownership of their own suppliers also extends to
developing countries.
• Wal-Mart owns one-third of Central American Retail Holding Company
(CARCHO).242
• CARHCO owns the Corporación de Supermercados Unidos (CSU) – which is a
discount store, supermarket, and hypermarket operator in Costa Rica, Nicaragua,
and Honduras
• And finally CSU fully owns Corporación de Compañias Agroindustriales (CCA),
which supplies the supermarket chain with all of its fresh produce….
….CCA also develops private label items. It works throughout the agricultural sector
sourcing and distributing fruit, vegetables and grain purchased from more than 1,000
producers in Costa Rica and other Central American countries. CCA participates in the
poultry industry through more than 450 independent producers.243
US meat production… a prime example of vertical integration
• 95% of U.S. poultry is produced under vertically integrated conditions, entirely in the
hands of less than 40 firms. The four-firm concentration ratio for broiler slaughter was
56% in 2003244
• In the 1980s vertical integration spread to pig production. But the major change was in
the 1990s when Smithfield became the largest producer and processor of hogs in the
US and around the world. In 1994 processor-owned hogs accounted for 6.4% of US
hog production. This share shot up to 27% in 2001, in part reflecting Smithfield
Foods’ purchases of two leading hog producers.245
• Vertical integration is also increasing in the beef sector; a GIPSA report indicates 32%
of all US beef marketed in 1999 was under captive supply – meaning that the
processors own the cows.246
Vertical integration in the food supply chain is becoming the norm. And in many areas of
food production large retailers in particular are driving this vertical integration. That is to
say, they are extending their control back along the supply chain to food production,
processing and distribution… as well as forwards to the consumer.
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‘Forward Integration’
The importance of the “last 10 feet”
"I want to help customers make choices about what is good to buy."247
(Anders Moberg, chief executive of Ahold)
Consumers are also part of this increasingly vertically coordinated food chain. Retailers
do not simply control the many stages of supply, they are also intimately involved with
influencing consumer demand. Retailers gain influence over shopping decisions in two
ways: by marketing and by their control of vital in-store media.
“The medium is the message”
Not any more, today “the message is the medium”
Control of the shopping space is especially important. According to marketing lore, the
“last 10 feet” within a supermarket is where up to 75% of buying decisions are made.248
Retailers own and control the very media that can influence consumers as they make their
shopping decisions.
It is becoming more and more apparent that the supermarket floor itself is one of the most
effective advertising media. Nestle’s former marketing director, Andrew Harrison, has
suggested that supermarkets are the real ‘new media’ and “the next natural evolution in
close relationships between brand owner and store owner”.249
In recent years there has been a general decline in advertising revenue across most
traditional media – but retail as a medium is going in the opposite direction. The reach of
the supermarkets is huge.
“there is a clear opportunity to talk to lots of people in a short space of time
in a very suitable environment.”250
John Owen, Starcom Motive
And this medium is exactly what retailers take advantage of…
•
In 2003 the in-store radio station of UK supermarket Asda reached 12.4 million
listeners – that is more than Capital Radio, the UK’s largest commercial radio
station.251
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Shoppers equal viewers. And Tesco TV is equivalent to a top-rating TV programme
One of Tesco’s latest marketing developments in the UK is Tesco TV. By the end of
2004, it was ‘available’ at Tesco’s 300 largest UK stores, which account for 530 million
shopping trips each year and 10 million shopping trips per week.
The supermarket can make big money by charging companies for showing their products
for 2.5 or more seconds on its screens. According to Tesco, companies advertising on
Tesco TV have seen their sales of advertised products increase 10%.252
Fully one quarter of the €24.5 billion spent on advertising in the UK each year is on
goods available in supermarkets.253 But food marketeers have discovered an effective,
new, way to influence consumers, retailers in-house magazines.
Supermarket ownership of media is designed to drive sales and most importantly, it
creates a closer link with consumers.254
The in-house retail magazine industry has grown exponentially by 244% over the last 10
years with the UK market now valued at £385 million and is set to increase past the £531
million mark by 2009.255
Readership Estimates for UK Food and Entertainment Magazines (October 2003February 2005)
Magazine
%ge of population
ASDA Magazine
4.4
2,169,000
BBC Good Food
1.5
764,000
Family Circle
1.0
482,000
Observer Food
0.9
443,000
Sainsbury's Magazine
3.5
1,742,000
Somerfield Magazine
2.8
1,392,000
Tesco Magazine (from Sep04)
7.3
3,614,000
Waitrose Food Illustrated
1.4
675,000
Readership
256
Disparities in the figures above are down to differing assessments of what has been ‘seen’
or ‘read’.
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The power of supermarket media
•
Supermarket magazines are now seen by over half of all UK adults.257 In 2003 the
combined readership of Asda, Safeway, Marks & Spencer, Tesco and Sainsbury's,
totaled 25.65 million – more than 54% of all UK adults.258
•
The ABC Consumer Concurrent Release in the UK shows that Asda Magazine –
with over 2.5 million readers – is the magazine that is second most-widely-read
by British adults (after Sky Magazine).259 Tesco’s Club Card magazine is not
listed but early 2005 estimates put its readership at just over 3.6 million.260 It is
carefully divided into five versions to appeal to different segments of its
audience.261
•
General consumer magazines have struggled to get advertising in 2002-2003. But
Asda Magazine, Safeway Magazine and Sainsbury's Magazine increased
advertising revenues during the period by up to 50%.262
Advertising that is effective
•
Research by the Association of Publishing Agencies has shown that 60% of
consumers read a customer magazine from cover to cover.263
•
Waitrose says it has seen sales growth of up to 25% for products featured in its
free in-store title, In Season.
But, you maximise your impact when you combine the magazine with a loyalty card
•
Data that retailers collect from loyalty cards is also used to measure the impact on
sales of products featured in their magazines. This data is also useful to suppliers,
who help fund the magazines. For example, Tesco agreed in 2003 to share
customer data with catfood supplier Felix – in order to create a campaign aimed at
cat owners.264
Then, you drive the message home… with 20 million emails a month
•
Tesco is currently dispatching 16-20 million marketing emails per month to 4
million consumers.265 This is greater than all of its supermarket rivals combined
and is proving hugely effective. According to a major digital marketing company,
60% of Tesco's online revenue comes from emails.266
•
www.tesco.com is the UK’s fourth busiest retail website, behind Amazon, eBay
and Argos. In the US, supermarket companies Wal-Mart and Target are the third
and fourth busiest retail sites respectively.267
69
•
In October 2005 Tesco sent 44 separate messages, each promoting a different
offer. In comparison, Sainsburys sent 2, Asda 7, M&S 4, Waitrose 3 and Lidl 8.
So, Tesco accounted for 58% of the supermarket sector's emails268
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Buyer Power
In a 2005 survey, only 35.6% of retailers chose ‘retailer-supplier relations’ as an issue of
importance. But, for suppliers, 67.1% thought it was an important issue.269
‘Buyer power’ is the power lead firms in the value chain have, to exert a disproportionate
influence on the market. Large retailers are able to distort prices and information. They
can also use their power to demand better terms and conditions from suppliers than their
smaller competitors.
As food retail consolidates, the remaining supermarkets begin to acquire buyer power.
They not only dominate the chain through standards and contracts. They can also use
their position – as the link between producers and consumers – to capture extra value
from the chain.
One of the other ways they can do this is to shift costs onto and extract additional value
their from suppliers. The UK Competition Commission, in 2000, identified a total of 50
supermarket practices concerning relationships with suppliers that it considered to be
against the public interest.270
Definition: Buyer Power
[A] retailer is defined to have buyer power if, in relation to at least one supplier, it can
credibly threaten to impose a long term opportunity cost (i.e., harmful or withheld
benefit) which, were the threat carried out, would be significantly disproportionate to any
resulting long term opportunity cost to itself. By disproportionate, we intend a difference
in relative rather than absolute opportunity cost, e.g. Retailer A has buyer power over
Supplier B if a decision to delist B’s product could cause A’s profit to decline by 0.1%
and B’s to decline by 10%.271
For suppliers, retailers are not just customers. They also act as suppliers
and competitors
For suppliers, retailers have three interlinked roles: customers, competitors and suppliers
1. Retailers as Customers
The major UK multiple retailers typically account for 10 - 30% of a supplier’s total sales.
2 Retailers as competitors
71
Retailers private label products compete head-to-head with suppliers branded products.
And because retailers control stocking, shelf allocation, and retail pricing they have the
power to promote own-label products at the expense of manufacturers’ brands.
The threat to a branded goods supplier is twofold: the retailer can, if it chooses,
undermine the supplier’s branded products (i.e. raise the price) or simply substitute the
branded product with a private label one.
3. Retailers as Suppliers
Retailers supply shelf space and advertising space to their suppliers. This role is
especially important in concentrated markets because it puts retailers into a position
where they are able to “sell” their shelf space. They do this by making widespread use of
listing fees, shelf space (“slotting”) fees, promotional support (“pay to play”) payments,
specific promotion payments (e.g., for “gondola ends” and funding the cost of “multibuy” promotions), required discounts for the range or depth of distribution of products,
and even mandatory contributions to the cost of store refurbishment or the opening of a
new store.
‘Exit power’
The power to say “get lost”
‘Exit power’ is the ability to turn elsewhere for cheaper produce. As a retailer, exit power
is the power to hurt a supplier more than they can hurt you.
If a retailer delists a supplier it might only suffer a small loss because it can easily find
replacement suppliers and products. But if a supplier is delisted it will find it harder to
make up the lost business elsewhere.
Even the very largest suppliers usually account for only 1–3% of a major supermarket’s
sales. But for a supplier, losing of a single contract with one of the top four UK grocery
retailers would mean sales-losses of 10 - 30% – around ten times more than a
supermarket might lose.272
Many suppliers now have little choice but to conform to retailers’ demands. Their access
to regional and global supply networks means retailers can always obtain lower prices.
•
In western Europe, 85% of the total retail food sales go through just 110 buying
desks.273
•
In 2000, the big three chains in the UK (Tesco, Sainsbury and Asda) had a cost
advantage of between 6% and 8% compared to some of the smaller chains.274
72
•
The UK Competition Commission’s 2000 report on supermarkets shows that the
largest supermarket, Tesco, can consistently obtain discounts from its suppliers
4% below the industry average, while the smaller players have to pay more.275
And this imbalance in the bargaining power between retailer and producer is leading to –
and perpetuating – a situation of supplier dependency….
•
The largest grocery supplier in the UK provided less than 3% of Tesco’s total
purchases and the average supplier provided less than 0.01% of their purchases276
•
For some food processors, 90% of their business comes from an individual
grocery retailer.277 For all practical purposes, producers and suppliers/integrators
can often end up with just a single buyer even if there are several buyers who
could theoretically compete to buy from them.278
•
In 2002, Kraft Foods – at the time the world’s second largest food manufacturer generated more than $3.6 billion (12.2%) of its revenues from Wal-Mart alone.279
Retail buyer power can be very significant (to the extent of distorting competition) even
if the retailer controls as little as 8 percent of the total market.280
Extra retailer rewards
Large retailers in concentrated retail markets are able to get much more than just low
prices from their suppliers.
Buyer power also gives them the ability to impose strict contractual obligations on
suppliers.
Demand extra payments
These can include demands for additional payments or discounts, including “listing
charges,” where buyers require payment of a fee before goods are purchased from the
listed supplier; “slotting allowances,” where fees are charged for store shelf-space
allocation; retroactive discounts on goods already sold; and unjustifiably high
contributions to retailer promotional expenses.
Restrict competition
Other practices benefit retailers in other ways. For example, contracts which prevent the
supplier from selling to another retailer at a lower price. Or, exclusive supply
arrangements which lock other retailers out and allow the retailer the advantage of
product differentiation.
Transfer risk to suppliers
73
Buyer power also means retailers are able to shift financial risk onto suppliers. Retailers
may force sale-or-return conditions on suppliers, demand compensation for product lines
that fail to meet expected sales targets, or negotiate retrospective discounts where targets
are met.
Appropriate suppliers capital
Or the retailer may simply make late payments knowing that the supplier will not
discipline such action because of its fear of losing future contracts.
The following table was originally published by the UK Competition Commission in
2000 and outlines some further practices used by supermarkets to exert their bargaining
strength over suppliers.
281
Retailer fees
In the US, retailer fees for fresh-cut produce account for approximately 1-8% of sales and
it can now cost up to $2 million to acquire business from a national chain.282
Retailer fees are, in effect, compulsory. Supermarkets in the UK have claimed that many
of the practices listed above are simply ‘requests’ to suppliers, but the UK’s Competition
Commission concluded otherwise, holding that such practices are in effect ‘requirements’
given the extent of buyer power.283 These restrictive practices are not unique to the UK,
they happen elsewhere too. Especially as retail markets become consolidated.
Suppliers are often left at the mercy of the retailers who sell their products. Because of
the way they manage their supply chains, the development of private label and their
74
knowledge of – and proximity to – consumer demand, retailers hold many of the cards
when deciding prices and conditions.
“Wal-Mart has the critical mass to exact all kinds of concessions from the
suppliers they deal with, and they have the demand side of the equation
covered as well, because they bring the demand to the suppliers.”284
Paul Ritter, US online retail strategy consultant
The power to punish
Power is something which is usually derived from the ability to enforce one’s wishes.
Generally, those wishes are complied with for fear of punishment if they are not met.
Food retail is no exception to this rule:
•
In one UK supermarket, if the barcode on a chicken reaching a checkout cannot
be scanned the processor is warned. If it happens a second time, there is a fine of
£500. A third ‘offence’ incurs a £1,000 fine, a fourth offence will cost the
processor £3,000 and if it happens a fifth time, the processor is subject to a
‘possible volume restructure’.285
Carrefour in Thailand
Carrefour opened its 23rd hypermarket in Thailand in December 2005,286 but
commentators noted that the French-owned global retailer has recently become more
aggressive in dealing with local small and medium-sized manufacturers.
The company issues 12 page contracts and suppliers now have to pay various costs.
These include ongoing ‘slotting costs’ dependent on the number of items and the
number of stores, rebates of 1-6% of monthly or annual sales to maintain the business
and promotion fees. Not to mention a wide range of other contributions extracted by the
chain for advertising, new store openings, store remodeling and so on.
One commentator estimates that in the mid-1990s a medium-sized firm might have to
pay 44% of its total deal with Carrefour as additional fees (26% transparent, 18%
hidden expenses). And at the same time the supplier would often sell its products at a
loss.”287
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A ‘virtuous circle’ if you’re big. But a ‘vicious’ one if you’re not
As a retailer, the bigger you are the more buyer power you have to get better prices from
suppliers. These lower prices can be used to undercut smaller retailers who cannot obtain
the same discounts.
This allows the bigger retailers to get into a “virtuous circle” where size equals
discounts… discounts equal undercutting smaller chains… weaker chains fail… bigger
chains grow market share… more market share equals bigger discounts… and so on.
In principle, this could carry on to the point where it becomes impossible for any small
retailer to survive in the market.288
The knockout blow
The smaller retailers are hit twice. Firstly, they don’t get the lower prices big retailers get.
And secondly, the low prices that suppliers get from big retailers force them to charge
higher prices to smaller retailers in order to cover their fixed costs.289
Retailer power pushed to the bottom of the chain
Retailers with heavy bargaining power are putting enormous pressure on food
manufacturers. The manufacturers, in turn, are putting pressure on the farmers. This is
because manufacturers are more interested on serving the interests of the powerful
retailers. And also because the farmers have the least power – they are at the bottom of
the food supply chain and cannot pass the costs onto anyone else. But, in some cases, the
farmers also get pressure directly from the retailers.
And therefore, the farmers are getting the hardest squeeze of all.
They are squeezed by a limited number of big buyers, a limited number of big suppliers
(of animal feed, etc.), and global oversupply. Moreover, they are squeezed by cost cutting
and the profit-improvement strategies of the dominant firms. Most importantly, farmers
can only access the market through a few multinational companies.
Buyer power goes global
The potential for sharing price information is increasing for retailers. With inter-linkage
between buying groups and cross border alliances, and with multinational mergers and
acquisitions becoming more common – a massive communication network for retailers is
created... And this is on an international level.
•
Ahold and eight other European retailers have formed an alliance that negotiates
with private-label manufacturers when purchasing hundreds of products, from
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paper goods to soft drinks that are sold under the brand name Euroshopper.290
As the search for low prices becomes increasingly global, retailers are investing in online
exchanges that allow business-to-business transactions via the Internet, at lower
transaction costs.
GlobalNetXchange (GNX) was set up early in 2000 by Sears, Carrefour and Oracle, and
was quickly followed by the establishment of the WorldWide Retail Exchange (WWRE)
by 17 international retailers. These two networks have since joined to form Agentrics.291
This consultancy serves over 50 global retailers and provides online auctions and
‘solutions’ for streamlining supply chain management and the collaboration of retailers.
Before the Agentrics merger, more than 50,000 suppliers made $80bn worth of electronic
transactions every year through the GlobalNetXchange.292
The WWRE is the premier Internet-based business-to-business exchange for retailers and
suppliers. Designed to facilitate and simplify trading between retailers, suppliers, partners
and distributors, the WWRE currently consists of over 230 members from Asia, Europe,
North America and South America. To date, the WWRE has cut costs for its members by
over $2 billion on more than $12 billion transacted through the use of its solutions.
Members include: Ahold, Auchan, Casino, Coop Italia, Dairy Farm, Dansk Supermarked
Gruppem, Delhaize, Edeka, El Corte Inglese, Laurus, Markant, Marks & Spencer, Publix
Supermarkets, Rewe, Safeway, Tengelmann, Tesco
Shift towards cross-border procurement systems.
•
Central Europe, home of the “first wave” of retail transformation in Central and
Eastern Europe, is also the cradle of “regional procurement”. Ahold announced in
October 2002 the formation of Ahold Central Europe (ACE), which integrated its
operations in Poland, Czech Republic, and Slovakia. ACE, based in the Czech
Republic merges “backroom functions” such as product procurement and
administration for 400 Albert supermarkets and Hypernova hypermarkets in
Central Europe with combined 2001 sales of approximately Euro 1.3 billion.
•
In south eastern Europe (the Balkans), Metro is setting up a Southeast Europe
Business Unit. It will serve as the buying desk for all Metro stores in the Balkans,
sourcing from several countries293
77
Value capture
“The economic gains by one player usually represent redistribution of
income from other players in the (food) sector, particularly with market
concentration”294
Democratic Staff of the Committee on Agriculture, Nutrition and Forestry United States Senate
Some economists view wide variations in rates of return within a given industry as one
indicator of the disparity of economic power among participants. In America, for
instance, the overall profitability of the food and agriculture sector ebbs and flows over
time, but it is clear that certain sub-sectors have consistent ability to earn substantial,
often double-digit returns on equity. 295
•
US Farmers’ return on equity averaged just 1.1% per annum between 1995-1999
•
In 1999-2000, the average return on equity in the food processing sector was
22.6%, up from 13 .5% in 1993
•
Returns on equity for American food retailers from 1980 to 2004 have fluctuated
between 12% and 22% (2004 it was 18%) 296
Profits go up the value chain
Across the world, retailer profits are increasing. But these increases are coming at the
expense of suppliers further down the chain. To increase margins, retailers not only
impose fees on their suppliers. They also offload risks (especially financial risk) and shift
processing costs further down the chain. While, their market dominance means that they
can also keep producer prices low.
•
In 1950, the world’s agribusiness was worth $420 billion, and more than 30% of
this was value added by farmers. By 2028, the worlds agribusiness market could
be worth $10 trillion, and Dr Ray Goldberg, now Fellow of the American
Agricultural Economic Association estimates that the farmers’ share of that will
fall to just 10%.297
Where does all the money go?
In 2000 US farmers received just 19% of the amount consumers spent on food. The
remaining 81% went to pay for the marketing bill (see table below).
The marketing bill is the costs associated with processing, wholesaling, distributing, and
retailing foods298.
78
Between 1990 and 1999, the marketing bill rose by 45% while, during the same period,
the farm value of food purchases climbed only 13%.299
Growth share matrix of the food supply
chain
Retail food price
What farmers get
1950s
1990s
Retailers’ share
Manufacturers’ share
Farmers’ share
79
Total food marketing bill USA percentage allocation
Percentage allocation (rounded)
1967
1987
2000
Percentage received by farmer
33
24
19
Marketing bill 3
67
76
81
Labor 1
28
36
38
Packaging materials
8
8
8
Transportation
5
5
4
Fuel
n/a
4
5
Corporate profits
4
3
5
Other 2
24
22
22
Source: Calculated by ERS based on data from government and private sources.
1 Includes employee wages or salaries and their health and welfare benefits. Also includes estimated earnings of
proprietors, partners, and family workers not receiving stated remuneration.
2 Includes depreciation, rent, advertising and promotion, interest, taxes, licenses, insurance, professional services, local
for-hire transportation, food service in schools, colleges, hospitals, and other institutions, and miscellaneous items.
3 The marketing bill is the difference between the farm value and consumer expenditures for these foods at both food
stores and restaurants. Thus, it covers processing, wholesaling, transportation, retailing costs, and profits.
•
An investigation by the UK’s National Farmers Union in 2002 found that a basket
of farmed produce, including beef, eggs, milk, bread, tomatoes and apples,
typically cost £37 at retail; however, farmers only received a value of £11 for it at
the farm gate – only 28% of the retail value.300
•
According to a recent United Nations trade conference, annual export earnings of
coffee-producing countries in the early 1990s were US$10–12 billion and global
retail sales about $30 billion. Now, retail sales exceed $70 billion, but coffeeproducing countries receive only $5.5 billion.301
•
In 2005, US growers of perishable foods received the equivalent of only 19% of
the retail price.302
•
In Florida tomato growers have seen the real price paid for their tomatoes fall by a
quarter since 1992, but US supermarkets have raised the real price to consumers
by 46% during the same period.303
•
In Tasmania, Australia, 6,000 potato farmers rely on just two buyers. The price
per tonne of prime potatoes has not risen in ten years. Moreover, fast food outlets
get €10,000 Australian dollars per tonne of fries they sell. Only €120 of that goes
to the grower.304
80
US Farm value share for selected foods
% Farm Value Share of Retail Price
Milk (½ gal)
Pork (1 lb)
Cheese (natural cheddar, 1 lb)
Potatoes (10 lbs)
Grapefruit (1 lb)
Corn (1 lb)
Green beans (cut, 1 lb)
98
99
2000
41
25
39
15
18
8
7
39
25
32
19
18
8
6
34
31
29
17
16
7
5
Source USDA
Fresh fruit and vegetables – ripe for value capture
Fresh fruit and vegetables are good for supermarket profits as they typically provide
retailers with 30-40% gross profit margins. This is among the highest in the food retail
business.305
Supermarket produce buyers typically manage a product category for 12–18 months.
They have to prove themselves fast and are judged, rewarded, and promoted on the
overall profit they make.306
A report using data from the Deciduous Fruit Producers Trust and interviews from
importers and exporters, estimates the breakdown of the price of South African apples
in UK supermarkets. It finds that supermarkets take a 42% share in retail, whereas the
costs paid in farm labour account for only 5% of the price and farm income only 4%.
Shipping the apples accounts for 12% of the price UK consumers pay for apples. The
remaining 27% of apple price is down to customs, farm inputs and packaging, import
commissions and UK handling costs. 307
At the same time the farmers have seen their revenues fall sharply. In the ten years
since 1994 real export prices paid for South African apples have fallen by 33%.308
81
Costs pushed down the value chain
In addition to cutting the prices paid to suppliers retailers are also offloading processing
costs.
A good example of this is the switch to ‘case-ready’meat, this is meat which is delivered
to the retailer pre-cut, pre-packed and pre-labelled. This practice shifts the cost of cutting,
packaging and labelling from supermarkets to suppliers.
Structural change in the food system requires a new division of labour along the value
chain.
“Now about 90% of our dry groceries are shipped through our DC
[Distribution Centre]… when we started up our fresh DC it was about 60%
processing and 40% receiving and shipping. Now it’s about 80% receiving
and shipping and 20%, maybe even less than 20% actual processing. It’s now
being processed off site” 309
Anonymous industry interview, January 2002.
This trend is also prominent in the fast-food industry. The transfer of peeling, cutting, and
blanching of potatoes from restaurant workers to processors, reduces labour costs and
leads to cheaper and standardized supplies of French fries.310
82
The case study below looks at the UK dairy industry. It exhibits the consolidation trends
that are affecting the food industry as a whole. The timeline is taken from industry media
sources from January 2004 to March 2006. It clearly shows the steps of buyer power in
action:
•
Retailers switch to preferred suppliers
•
Dairies close as suppliers feel the squeeze
•
Farm gate milk prices fall (in some cases farmers receive less than the cost of
production for a litre of milk)
•
Retail milk prices rise (consumers pay more)
•
Retailer profits increase
83
We pay you less
Buyer power in action… when
markets consolidate, competition
gets pushed to the bottom
of the supply chain
The take-over of Safeway by Morrisons
in 2003 further consolidated the UK
retail landscape.
Inevitably, it also set off a further round
of consolidation amongst their suppliers.
This is what happened to milk prices…
Jan 04
Asda plan to cut milk suppliers
Asda announced that it would
consolidate its milk supply chain. Under
its Total Category Management scheme,
Asda plans to source all fresh milk from
a single ‘dedicated’ supplier.311
June 04
Asda select single milk supplier
Asda selects Arla Foods as its sole
supplier. “This move means that for the
first time in 40 years we will have a
direct relationship with every single
farmer who supplies us with milk. … a
segregated supply chain using a
dedicated group of farmers. This will
enable us to trace our fresh milk from
the farm through to the bottles in our
customers' trolleys.”312
June 04
Asda aim for cow-to-consumer
tracebility
Asda say that the move to single supplier
was prompted by concerns that farmers
were not being paid enough for their
milk. It emphasises the importance of
Arla providing a direct link from “cow
to consumer”. Arla set about selecting
dedicated milk suppliers for Asda.313
Aug 04
Tesco and Sainsburys de-list milk
suppliers
Three months later Tesco and Sainsbury
reduced their fresh milk suppliers from
three to two. Tesco chose Arla and
Robert Wiseman, while Sainsbury’s
opted for Wiseman and Dairy Crest.314
Sep 04
Retailer milk margins up by 25%
Milk Development Council announce
that retailer margins on liquid milk and
dairy products have increased
significantly over past 10 years. “As a
result, the six pence per litre fall in the
farm-gate milk price between 1994 and
2003 has generally increased retailer
margins.” From 2003-04 report.315
Nov 04
Asda supplier to close plants
Arla announce plans to close two
production facilities in London and
Newcastle.316
Dec 04
Tesco/Sainsburys supplier to cut farmgate milk price
Robert Wiseman announces it plans to
the “slash” price it pays to dairy farmers.
The move will reduce the price paid by
0.5ppl (pence per litre). To 19.16ppl. 317
Jan 05
Asda supplier to cut farm-gate milk price
Arla announce that it will consider
cutting milk prices in a review scheduled
for 1 April. It also announces the closure
of its east London distribution center.318
Jan 05
De-listed Asda supplier to close plant
Dairy Crest – de-listed by Asda –
announce the closure of its Yeovil
84
factory, the only remaining UK factory
dedicated entirely to the production of
fresh dairy products.319
May 05
Asda supplier in price cut rumours
Reports circulate that Arla Foods are to
cut their milk price by 0.35ppl from 1st
June.320
May 05
Morrisons to cut milk suppliers
Morrisons announce plans to consolidate
its supply chain and reduce suppliers
from three to two. Arla and Dairy Crest
retain contracts. Wiseman is de-listed.321
June 05
Another farm-gate milk price cut
Joseph Heller announce milk price cuts
of 0.6ppl from June. Reasons include
increased costs of fuel and packaging.
They also claim competitiveness of
pricing from other cheese manufacturers
Over the last 8-10months they claim
their margins have been eroded simply
to maintain their market share. However,
consumer data shows that there has been
around a 5% increase in territorial
cheese price (Heler's predominant
product) over the past year. This would
suggest that if the processors are not
receiving this price increase then it is
potentially increasing retailer margins.322
Asda supplier requests “secret”
price negotiations
Arla say that as their arrangement with
Arla Foods Milk Partnership (AFMP)
accounted for 60% of volumes, price
negotiations should be able to take place
outside of the public arena.324
June 05
Tesco/Sainsburys supplier announce
farm-gate milk price cut
Wiseman announce that it is to cut its
milk price from July, there has been a
decrease of 0.25ppl for Wiseman's base
price as well as changes to its
seasonality profile payments, with a
further increase in penalties during
spring and further reductions down to
0.3ppl for autumn milk. 325
Aug 05
Another farm-gate milk price cut
Golden Vale creameries announce
0.3ppl price cut on contracts from 1st
September.326
Sep 05
Asda supplier enforces farm-gate
milk price cut
Arla Foods announce that its farm-gate
milk price is to be cut by 0.35ppl from
10 September. The proposed price cut
was put to the 1,600 contract farmers
who comprise the Arla Milk Partnership,
but was rejected by them. As a result the
price cut has been enforced by Arla.327
June 05
Asda supplier justifies farm-gate price
cut
Arla announce it will cut the price paid
to farmers for milk by 0.35p to 19.65ppl.
It said the cut was necessary to “recover
the exceptional cost increases from the
marketplace”. NFU say that farmer’s
average cost of milk production is
20ppl.323
June 05
Sep 05
Farm-gate milk price at lowest since
2002
DEFRA provisional farm-gate milk price
for July is 17.98ppl. The lowest July
farm-gate price since 2002.328
Sep 05
Another farm-gate milk price cut
First Milk announce a milk price cut of
0.2ppl from 1st October. The company
85
cited recent downward pressure on milk
prices as well as increased cost of
transporting milk due to high oil prices
as reasons for the cut.329
“the development of a more powerful
supply chain” Dairy UK also warns
contract farmers, unhappy with low
prices, not to break contract agreements
by striking.335
Sept 05
Retailer profits for liquid milk up 25%
The Milk Development Council reveal
that retailer profits for liquid milk have
risen by 25% in 10 years, growing more
rapidly since 2003.330
Sept 05
De-listed Asda supplier issues
profit warning
Dairy Crest, de-listed by Tesco and
Asda, say profits for the six months
ending 30 September will be
significantly lower than in the first half
of the year.331
Sept 05
Tesco/Sainsburys supplier hints at
more price cuts
Wiseman express concern over rising
derv, plastic and energy costs,
suggesting further price cut.332
Oct 05
More farm-gate price cuts
Dairy Crest announce price cut of
0.275ppl.333
Oct 05
De-listed Spar supplier closes diary
Longslow Diaries to close of 50 million
litre Welsh dairy, and possibly close
Manchester depot. Spar’s decision to
consolidate supply chain to single
supplier is given as reason.334
Nov 2005
Dairy UK critical of OFT
Dairy UK Chairman complains of
“incessant and rigorous scrutiny” by the
competition authorities and says OFT
will jeopardise the sector if it prevents
Dec 05
Asda supplier warns: farm-gate price to
drop, but consumers to pay more
Arla chairman says the group is seeking
to increase milk selling prices to reflect
the realities of “increased packaging
and fuel costs”. He also warns that
market competition spells “downward
pressure” on farm-gate milk prices.336
Jan 06
Retail milk prices up by 2.2ppl
and up by 12% in last 12 months
All major supermarkets confirm they
have raised the retail price of milk
2.2ppl. There has been a 12% increase in
the retail price of milk in the past 12
months. A 4 pint-polly bottle now costs
£1.16.337
Jan 06
Tesco/Sainsburys supplier benefits
from retail milk price rise but
warns farm-gate prices to fall
Wiseman benefits from some of the
2.2ppl retail price rise being passed back
to help with higher costs but warns farmgate prices under pressure.338
Jan 06
Asda supplier cuts farm-gate prices
Arla Foods announce 0.3ppl price cut
from February. Plus an extra 0.6ppl price
cut for February and March.339
Mar 06
Tesco/Sainsburys supplier
cuts farm-gate prices
Wiseman announces 0.65ppl farm-gate
price cut effective 1st March.340
86
Mar 06
Farm-gate milk prices
Contractor
March Price(PPL)
DC Sovereign
19.5
Wiseman
19.15
Arla-Asda
18.80
Arla
18.30341
In June 05 the NFU claimed that farmers
average cost of milk production was
20ppl..
972 English and Welsh dairy farms
closed in the 12 months to December
2005. (Ref. Dairy Hygene Inspectorate)
The power of private label
Buyer power enables retailers to develop their own brands. The development of private
label goods is discussed in the next section. The key point is that private label offers
retailers a double benefit: increased sales and customer loyalty while also obtaining lower
supplier prices.342
Private label goods allow retailers to drive down supply prices by playing off one
supplier against another or using closed – private - online auctions to determine contract
winners.
This, in turn, allows for higher gross margins on these products, especially because retail
prices are typically set with reference to the “umbrella price” for the leading brand
stocked. This puts pressure on branded goods manufacturers to reduce their supply prices
in order to secure shelf space.343
87
Private Label
100% capture of the value chain
"From time to time, I am sorry to say, some suppliers might not understand
customer needs and sentiment the way they should do… There are clear
rules about who sets the prices and we believe we, as retailers, are the ones.
We will continue to do so and use our private label as a very efficient
weapon."344
Anders Moberg, chief executive of Dutch retail group Ahold
Private label is both the realisation of retailer power over the food supply chain and the
future of food production….
Retailers are taking more control of the food supply chain by developing their own storebrands (from now on referred to as ‘private label’). The rapid growth of private label does
not just signal the emergence of a new, strong retail brand. It does more. It both confirms
and reinforces the buyer power and status of retailers as governors of the value chain.
And as retailers develop their own products to compete with branded goods they are able
to use their buyer power to determine the prices of increasingly diverse food products.…..
•
Private label product now account for 21% of global food sales and are expected
to grow to 30% by 2020.345
•
In less than 15 years’ time, nearly a third of global food sales will be private
label.346
•
Wal-Mart’s ‘Great Value’ brand - the best selling store brand in the U.S. grocery
market – is the first truly global store brand….. available in Argentina, Brazil,
Canada, China, Germany, Mexico and South Korea.347
•
The retail share of private labels among food products is high in many European
countries, reaching 50-60% in Switzerland and 20-40% in most other Western
European countries.348
Private label: Retailer brands
Private label is a way for retailers to differentiate themselves from their competitors. As a
result of private labels, retailers are no longer identical. Instead they acquire ‘identity’.
Importantly, this shifts the basis of competition away from price. They are now also able
to use “identity” as a competitive weapon. And “identity” is something which it is not
possible to put a number on.
88
Private label products shift brand identity from the food manufacturer to the retailer.349
And. the company that controls and defines the brand is in a stronger position to capture
the value of the food supply chain.
“The point in the value chain at which a brand is defined has an impact on
the options for the different companies in the chain, and through this the
returns they can expect to obtain.”350
Humphreys, 2005
Depending on who defines the brand, the supply chain can be organized in completely
different way. So if a bottle of wine is branded by the producer (Chateaux Margaux), a
geographical area (Champagne), a manufacturer/wholesaler/distributor (Taylor’s port,
Gilbey’s gin), or a retailer (Tesco Shiraz)….it has major implications for the chain.
The location of brand control has many potential consequences….
When a brand is controlled by the retailer
Retailers can develop own label produce, giving them the flexibility to source product
from different suppliers, this therefore enables them to reduce margins in the supply
chain. One clear example is supermarket own-label fresh fruit and vegetables. Multiple
suppliers can be used to source similar or identical products.351
So private label brings some major advantages for the retailer. But the strategic
development of private label can only be achieved once retailers have a significant
market share. Only when retailers control enough of the market to pose a direct
competitive threat to branded goods, can private labels succeed and grow.
Another essential ingredient for private label is the Distribution Center. Without DC’s
retailers would be unable to handle and distribute their private label products. Traditional
wholesalers would not become an instrument of their own demise by getting involved in
private label products.
Concentrated food retail markets are clearly linked to the growth of private label.
“Euromonitor believes that the single most important factor in the rise of the
global private label market has been the development and consolidation of
chained grocery stores”352
Euromonitor, 2005
The table below refers to all retail (food and non-food sales), but it gives an idea of how
retail concentration correlates with private label. Of the ten most developed Private Label
countries, nine had retailer concentrations over 60% - meaning that in nine of those ten
countries the top five retailers had a market share of over 60%.353
89
COUNTRY
REGION
Switzerland
Germany
UK
Spain
Belgium
France
Netherlands
Canada
Denmark
United States
Europe
Europe
Europe
Europe
Europe
Europe
Europe
North America
Europe
North America
354
PRIVATE
LABEL
SHARE
45%
30%
28%
26%
25%
24%
22%
19%
17%
16%
RETAILER
CONCENTRATION
86%
65%
65%
60%
80%
81%
64%
62%
89%
36%
Generally, when retailer concentration was low, the share of private label was also low,355
thereby confirming a link between concentration and private label.
As the big chains are greatly expanding their private-label offerings, private label is set to
grow and take an increasingly large share of the food market.
•
Own-label manufacturers have become huge concerns in their own right.
Hazlewoods, a private label manufacturer, for example, has over 10,000 staff and
plants stretched across Europe making ready meals, sandwiches, pizzas, cooking
sauces and cakes.356
And in Europe, private labels are growing their market share faster than in any other
region. Private label value sales (including non-food categories) have a 23% share across
17 markets and had a growth rate of 4% between 2004 and 2005. This growth rate is even
faster in the emerging markets of Croatia, Czech Republic, Hungary, Slovakia and South
Africa where private label sales grew by 11%.
•
Consumers in the UK were found to have private label products in their shopping
basket on 82% of their shopping trips.357
Private label share of sales, by country and by store
UK
Safeway
Tesco
Sainsbury
Asda
47%
51%
54%
54%
90
Somerfield
National Average
36%
45%
Germany
Aldi
Rewe
Tenglemann
Metro
Markant
National Average
90%
22%
19%
14%
6%
33%
France
Carrefour
Auchan
Intermarche
Leclerc
Casino
National Average
20%
16%
29%
18%
23%
22%358
91
Manufacturer brands lose out
By developing supermarket own-brands, retailers are absorbing the market shares of food
processors and increasingly taking the role as coordinator of the food chain.
Studies show that national brand manufacturers are hit hard when store brands are
introduced. Retailers use their power to market their own private label products and
national brands in a way that favours the private label brand. 359
And so just as private label is on the rise, the brand owners share of food retail is falling:
•
Nestlé’s food sales in Europe slipped 0.4% in 2004 and sales of its bottled waters
such as Perrier and Vittel dropped by 8.4%.360
•
Global brands’ share of Europe's bottled water market plummeted from 53% in
1997 to 40% last year, as retailers turned to private-label producers.361
•
Private label sales in Slovakia grew by 14% in 2004-2005 compared to a fall by
6% of manufacturers’ sales.362
In response to the challenge of private label, manufacturers are changing their strategies –
reducing the number of products in their portfolios and heavily marketing their bestperforming brands.
•
Heinz – once famous for its ‘57 varieties’ – is now focusing on what it calls its 15
power brands.363
•
Unilever had a five year programme to cut about 1,200 under performing brands
by 2004.364 In the same year the company’s European sales dropped by 2.8%.365
In 2003 it was estimated that if the US closes the private label development gap with the
UK by half, brand manufacturers would loose an additional $20 billion in sales. This
would mean an operating profit loss of between $2 billion and $4 billion.366
92
Source: The changing face of the global food industry, presentation OECD conference the Hague 6 Feb
2003, Jan-Willem Grievink
And so the balance between traditional brand-owners and retailers is shifting. Retailers
are no longer beholden to the brands. And there are many ways that retailers are able to
speed this process along. The retailer introducing a store brand can ‘create room’ for the
store brand in the market in many different ways:
•
•
•
By providing the best location in the aisles (in the centre of the aisle or beside the
best selling brand in the category)
By reducing the promotions of national brands
By raising the relative prices of national brands compared to the store brand.367
And retailers go to great lengths to promote their private label products…..
“because 90% of people are invariably right handed, the retailer invariably
places the store brand to the immediate right of the leading national
brand.”368
Meza and Sudhir, 2003
93
The development of private label
The development of private label has two distinct phases: ‘low cost, high value’ private
label goods, and ‘premium’ private label.
The two types of private label
1. ‘Low cost, high value’: these products undercut the manufacturers’ brands.
Retailers use their dominant position within the value chain to set suppliers
against each other as they demand ever-lower prices.
2. ‘Premium’ private label. These products challenge the more up-market
manufacturer brands. Retailers use their control of the value chain to set
standards and back up credence claims about ‘niche’ products.
‘Low cost, high value’
Retailers begin by offering a product under their own label in the easiest categories, such
as those categories with weak brands or low investment in brands, for example, fresh
food and meats.
Then they push their own-label brand into categories not typically associated with private
label.
Finally, after moving into as many categories as possible, they stretch their brand within
categories, which allows them to appeal to a diverse customer base. At this stage the
supermarket will offer good, better and best food products within the same category.369
Discounters demonstrate the power of private label
Aldi, which already accounted for 16.7% of the German grocery retail market in 2003,
relies almost exclusively on its own store brands.370 Private Label products account for
approximately 95% of its sales.371 Below is a quick run-down of the status of private
label among some European discounters.
•
•
•
In Germany’s Lidl and Penny, private labels account in both instances for over
60% of total grocery sales.
Spain’s Dia and Mercadona are not only the country’s largest discounters, but
also the two most important Spanish grocery retailers. They both rely heavily on
private label brands. Mercadona is a particularly interesting case as it increased
its private label share from about 3% in 1997 to 51% in 2002, while its market
share increased from 3.5% to 12.6% over the same period.372
In the UK, KwikSave’s private label sales represent over half of total grocery
94
sales.373
Discount style operations are on the rise across developed food systems.
But the ‘low cost, high value’ model, epitomised by Aldi and other discounters, is just
one form of product differentiation.
Once a supermarket’s brand is recognised and trusted, it becomes well-placed to launch
new niche products to target the increasingly precise and diverse demands of consumers.
‘Premium’ private label
The approach of retailers to private label, particularly in more developed markets, has
advanced far beyond simply meeting the consumer demand for lower priced products the more traditionally perceived role of ‘value’ store brands.374 Private retailer labels are
now critical to providing and meeting the highly differentiated demands of wealthier
consumers, particularly in Europe.
“Strategically, retailers worldwide seem to be placing more and more of an
emphasis on branding and marketing their private label wares to match the
lifestyles and values of their shoppers”375
ACNielsen Report, 2005
Retailers are now starting to differentiate themselves on the basis of their private label
offering.376
•
Tesco was one of the first supermarkets to sell it’s own branded produce. Since
then it has launched Tesco Value, Tesco Finest (spanning most product areas in
the store), Tesco Organics (launched over ten years ago), Tesco Free From (150
products which are gluten, wheat or milk free), Tesco Healthy Living, Tesco Carb
Control, Tesco Fair Trade and Tesco Kids377
•
Carrefour introduced a line of low-priced private-label goods in 2003 that now
generates $1.6 billion in annual sales.378
•
U.K. retailer Tesco now sells caviar under its own name, and “charges a really big
premium”.379
Competition pushes Sainsbury towards premium private label
When Sainsbury’s realised it was being outperformed by rival Tesco, the company was
forced to rethink its strategy on low-priced own label products. Sainsbury's worked hard
95
to turn itself around and create an image of quality, partly with the help of celebrity Chef
Jamie Oliver. Now the UK's two leading retailers, Sainsbury's and Tesco, offer premium
ranges under the "Taste the Difference" and "Finest" private labels respectively, as well
as a number of other value added ranges, such as organic products.380
As their customers’ trust in the brand increases, retailers are able to shrink the price gap
and improve the economics of private label. They reduce space for manufacturers’
brands, eliminate ‘second tier’ (lesser-known) brands and invest in their own proprietary
merchandising.381
This means that the private label food products developed by retailers can be sold at a
premium to consumers.
•
The organic private brand of Auchan (a major French retailer) carries the highest
premium, about 40% over the price of standard products, but accounts for less
than 10% of the total beef shelf space.382
•
All beef sold in France must adhere to nationally required safety and quality
standards, but private label beef is promoted as being safer and higher in quality
than the standard product, which is unlabeled and generally sold at a lower price.
To promote sales, retailers allocate most of their beef shelf space to the brand.
This product may carry up to a 5% premium over prices of standard beef
products.383
•
Danish retailer, Dansk Supermarket, offers a series of different private brands for
dairy products as higher quality alternatives to the major manufacturer Arla brand
commonly seen in the market. The Dansk brands are advertised as being superior
in quality due to the use of local production under traditional cultural practices
with due consideration given to food safety concerns.384
Private label increases vertical coordination
The use of private retailer labels places full accountability for product quality and safety
on the retailer.
To ensure that these retailer-branded products meet the desired quality and safety
standards, it is essential that retailers coordinate and develop relationships with other
upstream sectors in the food supply chain. The level of coordination and cooperation
depends on the desired level of product differentiation.385 The more differentiated the
product the greater the coordination.
Private labels are essential to retailer strategies of product differentiation. And as retailers
make ever greater credence claims about their food products, they need traceability
systems and standards to back up these quality claims about their goods.
96
Private label is both the vehicle for communicating the retailer’s product claims and the
means to deliver them.
From the food retailers’ point of view, this implies managing relationships with
processors and producers to ensure demands for product traceability and the long-term
relationships with these supply chain members.386
Retailer control of the supply chain makes the development of private label possible; and
the success of private label depends upon retailer control of the supply chain.
Is private label better value?
As the quality and acceptance of European goods has improved, their price gap with
manufacturers’ brands has narrowed. In the 1970s, private label (food and non-food
goods) sold at a 40% discount to name brands. By the 1990s, the price gap had narrowed
to between 5% and 20%.387
More importantly, a recent private label report by AC Nielsen found a number of
examples where private label products had an average price that was actually higher than
the manufacturer brands388
As retailers began acting as marketers, they embraced private label because overheads are
low, the marketing costs are miniscule, and consequently….the margins are on average
10% higher than branded goods.389
The UK Competition Commission has estimated the basic cost differences between
brands and private label……
Suppliers Cost Saving
Lower Supplier Margin
Retailers Purchase Saving
Lower Retail Price
Higher Retail Margin
10.6%
18.8%
29.4%
19.3%
10.1%390
The results of this are clear. Retailers with strong private label programmes make higher
profits.
97
Retailers with strong private label programs make higher profits
Sales
WEAK Private Label
%
$B
STRONG Private Label
%
$B
100%
$30.00
100%
$30.00
5%
95%
$1.50
$28.50
30%
70%
$9.00
$21.00
35%
$0.525
35%
$3.15
25%
$7.125
$7.650
25%
23%
($6.90)
23%
$5.25
$8.40
($6.90)
2.5%
$0.75
5.0%
Division of sales between
Private Label and Branded
% Private Label
% Branded
Gross margin Private
Label
Gross margin Branded
% of operating expenses
Operating profit
$1.50
Source: Globalization: Who's Winning? Coriolis Research
This also means that retailers are able to earn high margins on national brands in
categories where private label has a high share…
As private label starts to dominate a product category, the price differential between
private label and manufacturer brands drops. This means that as the trend towards private
label increases, cost-savings to consumers shrink.
In the ‘frozen meat/poultry/game’ category, private label has a market share of 39% and
is only 2% cheaper.391
Once consumers trust and purchase significant volumes of private label products within
any given category of food, retailers can raise the price of the private label products.
Studies have shown that retailers often increase the prices of national brands after private
labels are introduced. Prices rise in aggregate despite the appearance of lower priced
private labels. The launching of private labels also stimulates higher advertising on the
part of the manufacturer.
In America studies show that retail prices and retail profit margins tend to increase after
the store brand introduction.392
98
Summary – the hourglass
Increasingly the food supply chain begins to resemble an hourglass. The diagram below
refers to 85% of the food retail trade in Western Europe. At the bottom of the hourglass is
the produce from a huge number of farmers. Before this produce can reach the top – the
millions of consumers in different countries – it must first pass through a small number of
processing firms and an ever-diminishing number of retailers.
393
99
100
Section 2
A sustainable system?
101
Environmental impacts of the modern food industry.
Foreword…
Section one showed how retailers coordinate food value chains. Here we consider the
environmental impacts of the food system at its various stages, from agricultural
production to household waste. The food system consumes vast amounts of energy, while
its emissions have a huge impact on the environment.
This section is divided into three main parts: agriculture, distribution and consumption.
There is also a fourth section on the food system’s effects on human health.
Agriculture looks at the rise of energy intensive farming and its environmental impacts.
These are: air and water pollution, the destruction of ecosystems and loss of biodiversity,
soil degradation and water shortages.
Distribution covers all stages of the value chain between farm and store. It examines the
energy consumption and emissions of food transportation, storage and processing.
Consumption looks at the waste created by the food system and the environmental
problems associated with its disposal.
But first, the energy requirements of the modern food system…
102
From fuel to food
“Modern agriculture is a device to convert large amounts of fossil fuel into
human food.”394
Folke Gunther, ‘ecosystem consultant’
The modern food system converts fossil fuels into people.
The food system depends on fossil fuels. Increases in food production since 1950 are
directly attributable to fossil fuels. This has lead to rapid increases in world population,
which is projected to reach nine billion by 2050.395 More people require more food,
which means more fuel.
Humans have always drawn their energy from the food they eat. But we did not always
rely on oil as the source of food energy. Before the industrial revolution, all food energy
was derived from the sun through photosynthesis. Either you ate plants or you ate
animals that fed on plants, but the energy in your food was ultimately derived from the
sun.396
•
In 1850, the United States relied on biomass wood or solar power for 91% of its
energy.397 Now that situation has reversed. Fossil fuels account for 92.3% of total
energy consumption, with solar energy sources making up the remainder.398 As
much as 20% of total energy consumption is attributable to the food system.399
Today’s food system relies heavily on fossil fuels to produce, process and transport food
to consumers. Ever since the Green Revolution (see box) crop yields have been
maintained or increased because of the availability of cheap fossil energy for inputs like
fertilizers, pesticides, and irrigation.400
Background: The Green Revolution
The Green Revolution is the name given to the vast increases in food production after the
Second World War. Per capita production has now increased every year since 1950
thanks to the use of improved strains of wheat, rice, maize and other cereals.401
•
In the 50 years since 1950, global agricultural production increased by 60%
whereas the 1950 level of production had been reached only after 10,000 years of
agricultural development.402
•
Between 1950 and 1984, world grain production increased by 250%.403
But higher yields come at a cost. The energy for the Green Revolution is provided by
fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon-
103
fuelled irrigation.404New crop strains are geared towards fossil fuel inputs. These strains
are developed to be more efficient at exploiting chemical fertilizers and easier to harvest
mechanically.
Agriculture today runs on energy-intensive technologies that require heavy fossil fuel
inputs. The flow of energy input in modern US agriculture for instance is 50 times higher
than in traditional agriculture.405 The current U.S. daily diet would require nearly three
weeks of labour per capita to produce.406 And not all this energy is converted into food.
Between 1945 and 1994, energy for agricultural use has increased about 4-fold while
crop yields have increased about 3-fold.407
Energy for food – the US example
In the US, an individual consumes 400 gallons of oil a year in food - about 17% of all
energy used in the country each year.408 This percentage is similar in other developed
countries. In Sweden, as much as 20% of energy consumption goes towards supplying
food.409
The following table gives a breakdown of energy consumption in the US food system.
The largest single contribution comes from food processing. This is because to preserve
shelf-life, food is either heated or dehydrated. Much processed food is now also chilled.
All of these processes require large amounts of energy.
410
104
The food system uses huge amounts of energy…
•
The U.S. food system consumes around ten times more energy than it produces in
food energy. 411
•
The U.S. food economy uses as much energy as France does in its entire
economy412 - 10,551 quadrillion Joules.413
•
One hectare of land uses 1,000 litres of oil.414
•
One pound of beef requires 3 litres of oil.415
It also ‘loses’ a great deal of energy…
•
The average U.S. farm uses 3 kcal of fossil energy in producing 1 kcal of food
energy416.
•
If one considers the whole supply chain, including processing and transport – the
food system expends 10-15 calories of energy for every calorie of food energy
produced.417
105
A sustainable system?
Sustainable development is “development that meets the needs of the present
generation without compromising the ability of future generations to satisfy
their needs.”418
Energy consumption in the food system continues to rise. Research on thirteen European
countries (Europe-13) in the period 1970-2002 showed that agriculture, food processing
and transport have increased their energy consumption at a rate of 1.6%, 1.8% and 2.3%
per annum respectively.419
World population is also rising. Turning fossil fuels into food has lead to a massive
increase in the number of mouths to feed.
World population growth since the 13th century:420
Current population levels are sustained by our ability to turn fossil fuel energy into food
energy. We would be in grim trouble if we had to derive our energy needs from current
basic photosynthetic production, as our ancestors did.421
For the United States to sustain itself using solar energy – given its land, water, and
biological resources – its population would have to fall from 250 million to less than 100
million.422
•
The US currently consumes 40% more energy annually than the total amount of
solar energy captured yearly by all U.S. plant biomass.423
106
•
Without fossil fuels, the US would have to need to use four times more land than
it does at present.424 Almost three-quarters of its land area is already devoted to
agriculture and commercial forestry.425
•
For the UK to meet its energy demand using solar power, it would have to convert
10.8% of its land to solar panels.426
Put simply, without oil and gas we would starve. Given that fossil fuels are an
unsustainable resource, and that world population will continue to rise, this is a problem
that is ahead of us rather than behind us.427
Peak oil
‘Peak oil’ is a theory that tries to predict when worldwide petroleum will peak.
US oil production peaked in 1971 and has been devreasing since then.
As oil runs out it becomes harder to extract. The peak signals the moment when oil
extraction becomes mnore costly and less energy-efficient.
There is no question that oil will peak. The question is when. According to some
estimates, we may have passed it already.
Predictions of the size of oil reserves fall into three broad groups based on how the
authors see future oil production.428
Group 1, which mostly comprises geologists, calculate that global oil production will
peak sometime between the years 1996 and 2020, and thereafter decline.429
Group 2, mainly government agencies, anticipate that there will be enough oil to meet
demand to at least 2030.430
Group 3, mainly economists, dismiss the possibility of a hydrocarbon peak occurring in
the near or medium term. They see no need to quantitatively assess future oil
production.431
There is no simple technological fix to the problem of depleting natural resources and a
growing population. Technology can be used to manage and exploit natural resources.
But it cannot increase the flow of natural resources available for exploitation.432
107
Environmental impacts
The current food system is unsustainable. The energy that supports it will soon run out. In
addition, food production and distribution are damaging the environment – and human
health as well.
Climate Change
As we have seen, the modern food system runs on fossil fuels. Burning these fuels
increases levels of greenhouse gases in our atmosphere – which in turn drive temperature
changes and, more importantly, increase the risk of climate change.
ATMOSPHERIC CO2 CONCENTRATION (PARTS
PER MILLION)
Atmospheric CO2 Concentrations, 1750-2000
380
360
340
320
300
280
260
1700
1800
1900
2000
Climate change: facts
•
The global average surface temperature in the year 2003 was nearly 0.8 °C above
the average temperature at the end of the 19th century, making it the third
warmest year in recorded history.
•
The 10 warmest years have occurred since 1990, including each year since
1997.433
•
Scientists project that the global average temperature will rise an estimated 1.4 to
5.8 degrees Celsius by the year 2100, according to the United Nations Framework
Convention on Climate Change.434
•
In the event of climate change, floods, droughts and storms are likely to become
more frequent and severe. The results? Loss of lives, dangers to harvests, and a
108
threat to global economic stability.
What does the production of food have to do with it?
The food system is one of the single largest sources of greenhouse gases, contributing an
estimated third of global emissions. And some studies suggest that most climate change
policy overlooks the trends of the food system which are increasing those emissions.435
Agriculture especially has a major impact on global warming. The chart below
summarises the contribution of agriculture to global warming. The contribution includes
fossil fuel usage on farms and is not solely due to the nitrous oxide and ammonia
produced by agriculture.
436
•
One study estimates that 20% of all greenhouse gases in the world come from
agriculture.437
•
In terms of energy use and CO2 emissions, the food industry is the UK’s third
largest industrial energy user.438 One report estimates the food system’s
contribution to greenhouse gas emissions to be ‘at least’ 22% of the UK total.439
•
Each year, the average family of four in the UK emits 4.2 tonnes of CO2 from
their house and 4.4 tonnes from their car. But the food they eat – due to
production, processing, packaging and distribution – would account for as much
as 8 tonnes of CO2 emissions.440
The ecological results of an industrialised food system are problematic – short term and
long term. Here are just a few of the main issues:
•
Air pollution
109
•
Water pollution
•
Loss of ecosystems and biodiversity
•
Soil degradation
•
Pressure on water sources
The price of food may be falling – between 1975 and 2000 the price of food fell in real
terms by 31% when compared with the All Items Retail Price Index.441 But consumers
pay the price for the food system in other ways.
“The myth of cheapness completely ignores the staggering externalised costs
of the food, costs that do not appear on supermarket checkout receipts.” 442
Given the environmental and social destruction involved in industrial agriculture, the real
price of modern food production for future generations is incalculable.443
110
Agriculture
Energy-intensive farming
There are two ways to increase agricultural production: either increase the amount of
land, or increase the amount of yield per land unit.
The first method – increasing the area of land under cultivation – puts pressure on natural
resources. It can threaten ecosystems and biodiversity.
The second method – increasing land productivity – requires large amounts of fossil fuel
inputs, in the form of chemicals and farm machinery.
Intensive farming in the UK: bigger yields at environmental cost
Almost 77% of the UK’s land surface has been managed for agricultural production. But
it has not always been managed efficiently:444
•
Since 1945, poor farming practices have damaged about 550 million hectares – an
area equivalent to 38% of all farmland in use today.445
•
The external costs of UK intensive farming are as much as €300 per hectare.446
Farming is energy-intensive. Agriculture is ultimately a process of energy conversion:
converting solar energy, along with various chemical and fossil energy inputs, into food
energy that will sustain a human population.447
Agricultural energy consumption is broken down as follows:
•
31% for the manufacture of inorganic fertilizer
•
19% for the operation of field machinery
•
16% for transportation
•
13% for irrigation
•
8% for raising livestock (not including livestock feed)
•
5% for crop drying
•
5% for pesticide production
•
8% miscellaneous.448
Since the Green Revolution, the amount of energy used in agricultural production has
111
risen by an average of 50 times more than the energy input of traditional agriculture.449 In
the most extreme cases, energy consumption by agriculture has increased 100 fold or
more.450
Producers use energy directly for operating machinery and equipment on the farm,
transporting products to market and indirectly in fertilizer produced off the farm. In the
US:
•
Average energy-related expenses for rice, sugar beets, and peanuts were about
$128, $108, and $97 per acre, respectively.
•
Energy-related costs for corn, sorghum, and wheat averaged $66, $51, and $34
per acre, respectively.
Expressed as a percent of per acre total US farm expenses, which includes land and
depreciation, energy-related costs are the highest for sorghum, 23%; rice, 21%; corn,
19%; and wheat, 18%.451
Fertilisers spur soil revolution
Fertilisers put nitrogen – the essential plant nutrient – into the soil. Crop production now
relies on fertilizers to replace soil nutrients, and therefore on the fossil fuels needed to
mine, manufacture, and transport these fertilizers around the world452
The manufacture of inorganic fertilizer is the single largest contributor towards
agricultural energy consumption – accounting for 31%.453
• Just one kilogram of nitrogen for fertilizer requires the energy equivalent of 1.4-1.8
liters of diesel fuel.454
• According to The Fertilizer Institute, in just one year between June 2001 and June
2002 the US used over 12 million tonnes of nitrogen fertilizer – requiring the same
energy to produce as that provided by 96.2 million barrels of diesel fuel.455
• Fertilizer is effectively manufactured from natural gas: some fertilizer
manufacturing plants use more gas than the entire City of Birmingham.456
In fact, it is estimated that fertiliser production consumes approximately 1.2% of the
world’s energy and so is responsible for approximately 1.2% of total greenhouse gas
emissions.457
Specialisation
A key aspect of industrial farming is specialisation – when production focuses on a
limited range of crops or animals, also known as monocultures.
112
Not so long ago, the small farms of a region would produce a wide range of products for
nearby consumers. In today's globalised food system, however, every region is pushed to
specialise in whichever commodity its farmers can produce most cheaply – and to offer
that product on global markets.
Specialisation tends to go hand in hand with concentration, as farmers seek to maximise
efficiency and productivity through economies of scale.
•
33% of Germany's poultry is bred in just a few districts to the north of the
country.458
•
A cattle feedlot with 20,000 cows – modest by industry standards – processes as
much sewage as a town of 320,000 people.459
•
Some European piggeries have up to 62,000 pigs on a single site, with pen density
of 0.7 square metres per finisher pig.460
•
In the early 1970s, there were some 36,000 family farms rearing pigs in Ireland.
By 1996, only 700 pig farmers remained.461
•
In Sweden, half of the farms are expected to go out of business in the coming
decade.462
•
In 1988, when the drive for industrial pig farming began, there were about
690,000 pig farmers. Now there are fewer than 100,000 independent pig farmers
remaining. Moreover, in North Carolina there were 28,000 pig farmers. In 1998,
there were only 3,000. And today there are so few pig farmers that you could
almost count them on your fingers.463
•
Twenty years ago, 60,000 Danish farms produced around 13 million pigs. Now
some 13,000 farmers produce nearly twice as many.464
•
Two decades ago there were an estimated 27,000 family farms in North Carolina
today 2,200 remain – most of them pig factories of the kind pioneered by
companies such as Smithfield, producing genetically engineered pigs.465
Monoculture – is it really efficient?
It has been argued that the old agricultural system – with many small, unspecialised
farms – can in fact be more efficient than the globalised and concentrated system
dominating today.
It may seem that large monocultural operations are more efficient and productive...
113
But – “that is in large part a myth.”
“...the small farm doing traditional polyculture (raising more than one kind of crop, using
different root depths or soil nutrients on the same piece of land) makes more intensive
and efficient use of resources and can produce significantly more food per overall acre.”
466
Concentration in agriculture means larger farms. In the middle of the 20th century,
agricultural structures began to change radically – and they are still evolving today.
Before, the farm and its infrastructure were part of a decentralised system – the
traditional family farm was the norm. Now, the system is one of centralised ownership
and control. The 21st century farm has become industrialised.
Average size of European farms in terms of full-time workers
1989 to 2000
number of
full time
workers Year:
0 - <4
4 - <6
6 - <16
16 - <40
40 - <100
100 and
more
1989
1991
1992
1993
1994
1,111,430 1,139,930 1,142,380
833,440 828,920 828,810
776,350 777,430 776,240
865,370 862,950 857,280
464,230 459,700 457,620
972,910
761,350
752,720
820,620
468,870
923,490
761,510
755,560
811,630
463,910
816,140
726,900
721,630
748,240
456,270
134,980
133,400
146,860
92,900
1990
100,120
103,530
Total
4,143,720 4,169,040 4,165,860 3,911,460 3,849,500 3,616,030
number of
full time
workers Year:
1995
1996
1997
1998
1999
2000
0 - <4
4 - <6
6 - <16
16 - <40
40 - <100
100 and
more
Total
737,040
706,690
779,490
829,770
483,400
842,970
742,740
755,650
820,680
515,660
808,590
750,990
751,650
821,920
519,620
820,740
741,580
745,810
819,720
517,160
729,860
671,270
682,680
767,670
527,760
760,650
689,260
679,850
768,730
525,720
153,850
181,870
184,360
184,190
231,130
232,550
3,690,230 3,859,580 3,837,120 3,829,200 3,610,370 3,656,770
Source: EU FADN Public Database
•
The six founding members of Europe's Common Agricultural Policy had 22
million farmers in 1957. Today that number has fallen to just seven million.467
114
•
In Poland, farmers are being forced into competition with the more 'efficient'
large-scale farmers from Western Europe. If that trend continues, 1.8 million
Polish farms could disappear in the next few years.468
Environmental impacts of intensive farming
Industrial agriculture may be more productive. But this productivity comes at a cost, both
financially and in terms of environmental impacts.
•
The cost of cleaning up chemical pollution, repairing damaged habitats and
coping with human sickness caused by industrial farming is as much as €3.3
billion per year.469
•
The external costs of intensive farming in the UK amount to as much as €300 per
hectare.470
•
It has cost the British government over €1.4 billion to install the equipment
necessary to remove nitrates and pesticides from water.471 Water companies now
pay between €195 and €290 million a year to remove chemicals from UK
drinking water – costs that are paid for by consumers, not the polluters. 472
Intensive farming is associated with the following environmental problems:
•
Pollution (air and water)
•
Loss of ecosystems and biodiversity
•
Soil degradation
•
Water shortages
These four impacts are discussed in turn below.
115
Impact 1 – pollution
Air pollution
Agriculture is a major contributor to climate change. The use of fertilisers releases
greenhouse gases such as nitrous oxide into the atmosphere. The rise in global meat
production means larger quantities of methane are emitted through natural animal
digestive processes.473
•
Agriculture alone accounts for approximately 10% of total climate-changing
greenhouse gases.474 But other estimates estimate that approximately 20-35% of
global greenhouse gas emissions originate more generally from agriculture.475
•
Agriculture produces 40% of human-related emissions of methane.476
•
Agriculture produces more than 50% of total human-related emissions of nitrous
oxide.477
Nitrogen
Nitrogen is an essential, if not, the essential plant nutrient. The majority of nitrogen in the
soil is in forms which are unavailable to plants, so growers have to use other sources –
either inorganic fertilizers or organic manures to feed their crops.478
•
Levels of nitrous oxide – a harmful greenhouse gas – have risen by 16%, mainly
due to more intensive agriculture.479
•
Treatment of agricultural soils – such as fertilizer application and other cropping
practices – are the largest source of U.S. nitrous oxide emissions, accounting for
67%, according to a 2003 study.480
During growth, most crops recover only 50% of applied nitrogen, meaning that 50% is
wasted. Before the crop reaches the supermarket, another 25% of the nitrogen is
discarded as trimmings and crop residues. Of the nitrogen fertilizer applied to the
growing crop only 25% is contained within the final product 481
How the unused 75% is managed can have both financial and environmental costs. 482
Methane
116
Methane is a dangerous greenhouse gas and a major cause of global warming.
Methane concentrations in the atmosphere have more than doubled over the past 250
years. This increase is due to agriculture, leakage during fossil fuel use, as well as the
burning of trees and other vegetation483
•
Large, confined livestock operations generate vast amounts of manure, which releases
methane, a potent greenhouse gas with 20 times the heat trapping power of carbon
dioxide.484
•
Of all domestic animal types, beef and dairy cattle were by far the largest emitters of
methane. Rice cultivation and agricultural crop residue burning were minor sources
of methane.485
486
117
Water pollution
Water pollution from massively intensified agriculture is a major worry today.
As European agriculture has industrialised, its negative effects have increased on inland
waters. Our rivers, lakes and ground-waters are now endangered by pollution from
nitrates, pesticides, heavy metals, and so on. Moreover, as inland waters become
increasingly polluted, human health is put at risk.
•
In the UK, nearly half of nationally protected lakes are threatened by pollution487
•
Many rivers in the south of England rely entirely on treated sewage for their
summer flows.488
•
Danish pig slurry, for instance, would fill 90,000 average-sized swimming pools a
year.489
What is going into the water?
There are four main ways in which agriculture pollutes water – the use of nitrogen and
phosphorous fertilisers on the soil; the use of pesticides on crops; and the use of
antibiotics on animals.
Nitrates
Nitrogen, in the form of nitrogen compounds – such as ammonium nitrate – is used in
60% of all fertilisers.
Problems arise when these compounds diffuse into the water supply. Unless fertiliser and
manure are absorbed by crops or removed during harvesting, excess nitrate can be
118
washed into groundwater as well as surface water bodies.490 Nitrates and phosphates act
as food for algae, producing algal blooms that ‘suffocate’ other plant life and fish in a
process known as eutrophication (see box).491
Nitrogen from agricultural sources accounts for between 50% and 80% of the nitrates
entering Europe's water. 492
Eutrophication
Excess nitrogen in water can cause the growth of algae and other plants – in a process
called “eutrophication”. Algae blooms are damaging in two major ways:
•
First, when the plant matter dies and decays, it can rob the water of its dissolved
oxygen – suffocating large amounts of sea-life.
•
Second, algae blooms block the sunlight needed by bottom-living animals and
fish, and by vegetation such as sea grass – and without sunlight, this life migrates,
or dies.
Agriculture is the major reason for ‘nutrient loading’ through the application of nitrogen
fertilisers such as ammonium nitrate.
Nitrogen pollution is blamed for more than 40 “dead zones” worldwide, where nitrogenfuelled algae blooms consume the oxygen in the water, killing or driving away all living
things.493
•
As a result of these intensive agricultural practices, total nitrogen output to the
Gulf of Mexico has increased 3 to 7- fold compared to pre-settlement outputs. The
Gulf of Mexico is now the third largest hypoxia zone (oxygen deficient “dead
zone” due to nitrogen input) in the world, with the area uninhabitable by most
aquatic organisms varying between 12,000 to 18,000 square kilometers in midsummer.494
Nitrate concentrations are increasing in Europe:
•
Over 20% of groundwater in the EU and between 30 and 40% of lakes and rivers
are showing excessive nitrate concentrations.495
•
Nitrate concentrations are increasing in 19% of individual groundwater bodies in
Europe. The most marked rises are in Hungary, Sweden, Finland and Germany.496
•
Water quality figures from the RSPB show that over half of UK rivers suffer from
too many phosphates and a third from too many nitrates.497
119
High levels of nitrates in water pose serious risks to human health. Drinking water can be
affected unless concentrations of nitrogen are filtered out. Nitrate has been shown to be
toxic to human babies.
•
Maximum allowable levels of nitrates in drinking water are exceeded [in some
places] in every country in Europe. 498
•
It is estimated that 800 000 people in France, 850 000 in the UK and 2.5 million
in Germany are drinking water with nitrate concentrations above the permitted
EU limit 499
•
In some parts of Africa nitrate loads in some suburban groundwater wells are six
to eight times higher than WHO acceptable levels 500
Clearing up the nitrogen in our water will take a long time. It takes about 20 years for
nitrogen discharges to diffuse fully into water.501 And the clean-up will cost millions.
•
The ‘denitrification’ of UK drinking water costs £19 million a year
•
The projected cost of achieving the EU nitrate standard for drinkable water is
£199 million over the next 20 years.502
Phosphates
Phosphorous, like nitrogen, is commonly used in fertilisers.
But phosphate fertilisers are a major cause of excess concentrations of phosphorous in
European waters. Phosphates are the main cause of eutrophication in freshwater. They
also make a significant contribution to the pollution of coastal and marine waters.
•
In the UK, most rivers have phosphorus concentrations higher than ecologically
acceptable levels.503
Phosphate pollution mostly comes from agriculture:
•
In the UK, agriculture is responsible for 50% of phosphates found in water.504
•
The cost of treating water contaminated with phosphates from UK agriculture is
£52.3m per year.505
Pesticides
120
In virtually every country where agricultural fertilizers and pesticides are used, they have
contaminated groundwater aquifers and surface waters.506
The term pesticide also applies to herbicides, fungicides, and various other substances
used to control pests. Pesticides are in common use in agriculture:
•
Each year the world uses about 3 million tons of pesticides, formulated from
about 1,600 different chemicals.507
•
Only 0.1% of applied pesticides reach the target pests, leaving the bulk of the
pesticides (99.9%) to impact the environment.508
•
Many pesticides have not been tested for their toxicity, and testing in the past has
focused on acute effects rather than long-term effects.509
Although it is difficult to measure their exact levels, there is no doubt that pesticides pose
serious risks to human health. More than 1 million US citizens drink water laced with
pesticide run-off from industrial farms.510
And pesticides also endanger animals. Studies have shown the link between exposure to
pesticides and developmental abnormalities in amphibians. Researchers observed frogs
with extra legs growing from their abdomens and backs, stumps for hind legs, or fused
hind legs.511
GM crops and pesticide use
Research shows that GM crops actually lead to an increase in the use of pesticides.
A 2003 report found that since 1996, the 550 million acres of GM corn, soya beans and
cotton planted in the US have led to 50 million pound increase in pesticide use.512
These results undermine one of the central claims of the supporters of GM farming – that
the crops are better for the environment because they require fewer chemicals.
The report, which was commissioned by Iowa State University, the Consumers' Union,
also found that:
•
In 2001, 5% more herbicides and insecticides were sprayed on GM crops
compared with crops only of non-GM varieties. In 2002, 7.9% more were
sprayed, with a rise of 11.5% in 2003.513
•
In total, £73m more agrochemicals were sprayed in the US during 2001-2003
because of GM crops.514
Although GM crops needed up to 25% fewer chemicals for the first three years after their
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introduction in 1996, afterwards they required significantly more. During 2002-2003, for
example, an average of 29% more herbicide was applied per acre on GM maize than on
non-GM varieties.515
Since the report’s publication the trend towards increased pesticide use on GM crops has
continued. In 2004 farmers sprayed an average 4.7% more pesticides on GM crops than
they did on the identical conventional crops.516
Antibiotics
Antibiotics are used in agriculture as medicine, and also to increase the growth and power
of animals.
Industrialised agriculture leads to increased use of antibiotics. In factory farming, the
large number of animals makes individual treatment impossible. So antibiotics are given
out en masse. A pig might receive up to ten different antibiotics – by injection, in water
or in food.
Anti-microbial use by poultry producers has risen 307% per bird since the 1980s. Beef
cattle are given 28% more antibiotics than they were 15 years ago, and pigs are fed 15%
more.517
Every year, around 5,000 tonnes of antibiotics are given to animals in the EU.518 Many of
these antibiotics pass straight through into the animals’ manure, before moving on into
our water. As much as 80% of the antibiotics that are fed to the birds go unmetabolized.
And the drugs end up in chicken faeces, or litter, in highly concentrated amounts and
much of that waste ends up as fertilizer on nearby fields.519
•
Danish and Swiss researchers have found 68 types of drugs in soil and water
samples, mostly derived from pig manure. Some soils used for absorbing pig
waste contained concentrations of the antibiotic tilosin, up to 40 times the current
limits.520
•
In the worst case scenario farm animals would be responsible for 15% of the
oestrogens contaminating UK waters. 521
•
In 2002 the U.S. Geological Survey's Toxic Substances Hydrology Program
published the results of a study that searched for pharmaceuticals in 139 streams
in 30 states, including New Jersey. Fourteen antibiotics used in both human
medicine and animal agriculture were found in 48% of the waterways.522
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Impact 2 – loss of ecosystems and biodiversity
The healthy balance of ecosystems and biodiversity is being increasingly threatened – by
over-specialised agriculture, overuse of natural resources, and the outputs of industry.
The food production system has been globalised and industrialized to lower costs and
boost outputs. The food system now follows the most economically efficient routes for
production. As a consequence, fewer varieties and breeds are being farmed – and much
agricultural land is now farmed more intensively than ever before.
The main results are:
•
Loss of ecosystems through the destruction of landscapes by agriculture.
•
Loss of biodiversity through the over-exploitation of natural resources.
•
Loss of agro-biodiversity through more industrialised and mono-cultural
farming.
All over the world, land is being converted to agriculture:
523
•
Half of the world's wetlands were lost last century.
•
Logging and land conversion have shrunk the world's forests by as much as
524
half.
•
Some 30% of the world's original forests have been converted to agriculture,
resulting in extensive species and habitat loss. Agriculture is still encroaching on
525
many national parks and other protected areas.
Ecosystems
Ecosystems are communities of species that interact with each other and the physical
settings in which they live. They are natural assets and are vital for agriculture and
fishing.
Biodiversity
Biodiversity means the variety and variability of life on our planet.
Agro-biodiversity
Agricultural biodiversity means the variety and variability of animals, plants and micro-
123
organisms that are used (directly or indirectly) for food and agriculture. Furthermore,
these are necessary to sustain key functions of the agro-ecosystem – in other words, they
support food production and its future security.
Agricultural biodiversity is the result of human activity – but human life is dependent on
it. In the short term we need it for our food, and other goods. However, it must be
maintained properly so that we can have food in the future – and so that our environment
will survive.
What is happening?
Intensive farming changes the face of the landscape. Land is cleared and then cultivated
in a way that will maximise productivity. But the pursuit of productivity has a destructive
effect on natural habitats and the animal and plant varieties that depend on them.
Direct effects of intensive agriculture on natural habitats include:
•
Drainage of wetland and removal of woodland
•
Removal of boundary features (hedgerows and stone walls)
•
Drainage, ploughing and reseeding of upland indigenous grasslands and
moorlands
•
Loss of mixed, rotational farming systems, with a shift to autumn tillage and
winter grazing of heaths
•
Pesticide effects on non-target plants and invertebrates of managed land
Indirect effects include:
•
Nutrient enrichment of adjacent land and water (encourages pernicious weeds)
•
Insect and plant mortality from pesticide drift into adjacent land and water
•
Removal of plant and insect food supply of farmland bird and mammal species by
changes in cultivation and grazing practices.526
124
Three main impacts of intensive farming are:
•
Loss of ecosystems
•
Loss of biodiversity
•
Loss of agro-biodiversity (genetic erosion)
These are outlined below.
Loss of ecosystems
Virtually all of Earth’s ecosystems have now dramatically transformed through human
actions. Although the most rapid changes in ecosystems are now taking place in
developing countries, industrial countries historically experienced comparable
changes.527
Natural ecosystems most at threat from the food system include forest land, wetlands and
coastal areas. As agriculture has expanded across the globe the demand for land has led
to the conversion of natural ecosystems to land suitable for agricultural production.
The world has 14 major biomes – major regional ecosystems supporting plants and
animals – and the majority of these biomes have been greatly modified.
•
Between 20% and 50% of nine of the world’s biomes have been transformed to
croplands.528
The case of forests
Forests worldwide cover some 3.9 billion hectares—almost a third of the earth’s land
surface excluding Antarctica and Greenland. Any changes to this woodland has enormous
impacts on the environment:
•
Of the carbon currently stored in terrestrial systems, 38-39% is stored in
forests.529
•
But 20-30% of the world’s forests areas have been converted to agriculture,
resulting in extensive species and habitat loss.530
125
•
Some 9% of the world's tree species are at risk of extinction. Moreover, tropical
531
deforestation probably exceeds 130,000 square kilometres per year.
•
43-46% of the potential areas of temperate broadleaf, mixed and tropical
deciduous forest is now agricultural land. This accounts for 34% of total
agricultural land.532
The demands of the modern food chain are leading directly to deforestation, as the
following case studies show.
Palm oil – and deforestation in Indonesia and Malaysia
Palm oil now accounts for a 21% share of the global edible oil market making it the
second most consumed edible oil in the world after soy oil.
Indonesian palm oil exports have increased by 244% in the past seven years. Between
1995 and 2002 alone, palm oil usage in the European Union increased by 90% and the
EU now accounts for 23% of Indonesian palm oil exports.
As much as 87% of all the deforestation in Malaysia between 1985 and 2000 can be
attributed to palm oil plantations. Companies often consider that the most efficient way to
prepare the land for an oil palm plantation is to burn the existing forest and scrubs –
although the Indonesian government officially banned such practices in 1997533
European animal feed – and the destruction of the Brazilian rainforest
Meat production today is highly intensified. It is also highly inefficient. For every
kilogram of beef, five kilograms of feedstuff is needed.
Europe imports 55 million tons of feedstuff every year from Brazil, Thailand and other
534
southern countries.
And this is one of the main reasons why rainforests in Brazil are being destroyed at such
a high rate:
•
Between August 2001 and August 2002, 25,500 square kilometres of Brazilian
535
rainforest was cut down – an area roughly the size of Belgium.
These figures are at least 30-40% higher than historical averages.536 Increased soya bean
demand for feedstuff is a major factor here.
•
Soya bean production takes up 1.2 million acres in Argentina and 8 million acres
in the US. However, Brazil is expected to overtake US soya production in a few
537
years.
126
•
•
Soya beans, along with other imports such as cassava and soya cake, make up
538
about 30% of all European animal feed.
It is estimated that, for every acre farmed in the UK, two more are farmed
539
overseas to feed the UK's intensively farmed livestock.
Loss of biodiversity
It is not possible to conserve biodiversity by managing it directly. Instead,
the causes of biodiversity loss – namely human activities – must be
managed.540
European onvention on the conservation of European wildlife and natural habitats
The food system is so large that in itself it supports a wide range of biodiversity.
Millennia of agricultural expansion means that much of the remaining earth-based
biodiversity survives on land dedicated to food production.541
“Agriculture is dependent on biodiversity for its existence and, at the same
time, is a threat to biodiversity in its implementation.”542
Leo Horrigan, Robert S. Lawrence, and Polly Walker
Johns Hopkins Bloomberg School of Public Health
But as agriculture becomes mono-cultural, this biodiversity is being lost. Species, breeds
and varieties of animals and plants are disappearing. Extinction rates are now around 100
times greater than they were in the fossil record.543
Loss of biodiversity – the facts:
•
Nearly 26,000 plant species worldwide are under threat of extinction – that's
544
about 10% of all plant species.
•
More than 1,100 mammal species, 1,200 birds, 700 freshwater fish, and hundreds
545
of reptiles and amphibians are also threatened with extinction worldwide.
•
20% of the world's freshwater species are extinct, threatened or endangered. At
546
least 10,000 freshwater fish species are endangered or threatened globally.
127
•
Birds that depend on agricultural fields have fallen in numbers by as much as 50%
since 1970 in the UK as a direct result of the intensification and specialisation of
547
farming.
•
Overall, approximately 75% of the world's agricultural biodiversity has been lost
in the last century, according to the FAO.548
549
There is a strong correlation between intensive farming and the loss of animal species.
For example:
•
Farmland holds nearly 60% of the threatened species in Europe, and agricultural
intensification is the most common single threat, affecting over 40% of the
declining species.550
128
•
Across Europe, declines in farmland bird diversity correlate with agricultural
intensity.551 Pesticides almost killed off the otter and many birds of prey, since
they were introduced in the 1950s.552
•
Bees are in decline due to pesticides. In France, honey production has dropped by
a third in the last decade, and by up to 90% in some areas.553 But bees provide an
essential ‘natural service’ for farmers. In the US, for instance, bees pollinate $10
billion worth of crops per year.554
Less intensive farming:
According to a large-scale survey by the British Trust for Ornithology (BTO) and other
wildlife research organisations, organic farms in lowland England with cereal crops
support:
•
•
•
32% more birds
35% more bats
as well as 109% more wild plants
In addition, there was a far greater diversity of wild plant species, with 85% more species
in the organic field cropped areas.555
Loss of agro-biodiversity - genetic erosion
Genetic erosion is the loss of genetic diversity – including the loss of individual genes,
and of particular combinations of genes (gene complexes).
Intensive farming leads to genetic erosion. As 'wild', uncultivated areas – such as forests
and wetlands – are converted to agriculture, animal species and plant varieties are lost.
The impacts of agriculture on seas, lakes and rivers also contribute to genetic erosion.
Monocultural farming narrows gene pool
Farming was once polycultural – small farms would produce a large variety of animals or
crops. That system guarded the genetic pool for future agriculture and so maintained
biodiversity.
129
Now, farming is increasingly monocultural. For example, a whole region may now be
devoted to the production of a single type of crop. This will lead to a loss of biodiversity
worldwide and damage the basis of future agriculture. Moreover, future generations will
have fewer food choices.
Main causes of genetic erosion in domestic animals are:
•
Intensification – multipurpose local species and breeds have been replaced by
those with higher production levels (including cross-breeds and pure-bred
exotics).
•
Cross breeding – a few selected breeds used in widespread cross-breeding
programmes can lead to loss of specialised characteristics.
•
Changes in knowledge – the idea that 'modern/imported' is best has led to the loss
of traditional farming knowledge... and to the erosion of domestic animal
diversity.
•
Changes in technology – animal production and transportation by machinery have
changed the farming system. Artificial insemination and embryo transfer, for
example, have led to rapid replacement of indiginous breeds.
•
Changes in economy – traditional livestock production systems are now seen as
uneconomic.
Genetic Erosion: Animals
The uniformity of the animals we eat is startling:
•
Just 15 species account for over 90% of global livestock production.556
•
Up to 30% of mammal and bird livestock breeds (i.e., 1,200 to 1,500 breeds) are
currently at risk of being lost and cannot be replaced.557
•
The FAO estimates that at least one breed of traditional livestock dies out every
558
week in the world.
•
On average, two breeds of domestic animal are lost every week.559
130
Many farmers now have little or no control over the breeds they raise or the mating of
their animals. Instead, they get them from breeding facilities run by large companies who
dominate the farmers. These companies now have increasing control over livestock
genetics.
Facts…
•
Of the 3,831 breeds of cattle, water buffalo, goats, pigs, sheep, horses and
donkeys that are believed to have existed in this century, 16% have become
extinct, and a further 15% are rare.560
•
617 livestock breeds have become extinct since 1892.561
•
Worldwide, at least 1,500 of the 5,000 or so domesticated livestock breeds are
now rare, and are represented by less than 20 breeding males on the planet or less
than 1,000 breeding females, according to the FAO.562
•
In the 1920s, more than 60 breeds of chicken were raised in the US. Today, five
breeds supply nearly all of the chicken meat and brown eggs, while almost all
white eggs now come from a single breed – white leghorns.563
Top-heavy turkeys
Over 90% of all the commercially produced turkeys in the world come from just three
breeding flocks. This increases the risk of new strains of avian flu – against which these
564
birds have no resistance.
Today's most popular turkey breed grows its meat where producers want it – but its huge
565
breasts barely allow it to move, let alone reproduce naturally.
Reasons…
Certain species or breeds are more economical and easier to farm – saving time and
money for the producer. Here are some of the main reasons why smaller numbers of
livestock breeds are being farmed:
•
increases in growth performance pest and disease resistance
•
ease of handling
•
adaptation to current levels of technology
131
•
consumer choice
Breeds become rare, either because their characteristics do not suit the demand at the
time, or because their qualities have not been recognised.
Genetic Erosion: Crops
As with livestock, genetic diversity of food crops is in decline. Modern crop varieties are
taking on more uniform characteristics, and these varieties are planted over large areas in
monocultures.
This tendency is not limited to high income countries where the commercialisation of
agriculture is most prevalent. Modern crop varieties are displacing traditional varieties
throughout the world, threatening the loss of an enormous genetic resource and
increasing the vulnerability of large areas of homogeneous crops to pest and disease
attack.566
The Green Revolution has promoted the growth of just a few strains of cereal crops – the
ones that are developed to absorb commercial pesticides and fertilisers, and are easier to
harvest mechanically.
•
Today, 75% of the world's food is generated from just 12 plants and five animal
species.567
•
More than 90% of the world’s caloric intake comes from just 30 crops, and only 120
crops are economically important at a national scale.568
•
Just three plant species - rice, maize and wheat - contribute nearly 60% of calories
and proteins obtained by humans from plants.569
•
•
570
More than 90% of crop varieties have disappeared from farmers' fields.
Although there are 2000 species of potatoes, commercial production is almost
completely restricted to just one species, solanum tuberosum. Twelve varieties of this
one species dominate 85% of the U.S. potato harvest.571
These trends can be seen all over the world:
•
In the Philippines, thousands of traditional rice varieties were once cultivated by
small farmers. By the mid-1980s, just two varieties accounted for 98% of all rice
572
production.
132
•
In India, three-quarters of all rice fields are planted with just 12 varieties of the grain,
573
compared to 30,000 just a few decades ago.
•
In Germany, 500 plant species are endangered or extinct as a result of agricultural
574
practices.
•
In the US, the entire commercial potato crop is made up of just six varieties, and
75% of it from just four closely related varieties – chiefly the Russet Burbank that
575
McDonald's uses for its fries.
Consolidation of the seed industry is causing a reduction in the number of different crop
varieties.
Large seed companies tend to rely on first-generation hybrids because they force growers
to buy new seed every year. As the industry has consolidated, traditional varieties have
been removed from seed catalogs at an alarming rate. In 1981, nearly 5,000 non-hybrid
vegetable varieties were being sold through mail-order catalogs; by 1998, 88% of those
varieties had been dropped 576
•
In the USA, beef, more than 40% of all production comes from 2% of the
feedlots.577
•
37% of the world’s grain, and 66% of U.S. grain production, is fed to livestock.578
•
And four of the major crops used in animal feed—corn, soybeans, cottonseed, and
wheat—account for 80% of the pesticides used in the US. 579
133
Consumer impact – loss of food variety
The loss in genetic diversity means a contraction of food choice for future generations.
Industrialised agriculture uses only a few varieties of crops – the ones that allow for the
most efficient harvesting, processing and packaging. As a result, tens of thousands of
crop varieties are being lost.
Variety loss in numbers:
•
According to the FAO, 95% of all the calories we eat come from only 30 varieties
580
of plant.
•
Over 2,300 apple varieties exist in Northern Europe – but just two varieties
581
account for more than 50% of the current apple market.
•
Since 1970, over 60% of UK apple orchards have been destroyed.
•
In 2000, 73% of all lettuce grown in the US was iceberg lettuce.
•
The US has lost nearly 93% of its lettuce varieties, and...
•
over 96% of its sweetcorn varieties
•
about 91% of its field corn varieties
•
over 95% of its tomato varieties
•
95% of its cabbage varieties
•
91% of its field maize
•
94% of its pea varieties
584
•
and almost 98% of its asparagus varieties.
582
583
134
Impact 3 – soil degradation
“The sustainable use of soils is one of Europe's greatest environmental,
social, and economic challenges” 585
Klaus Topfer, executive director United Nations Environment Program (UNEP)
Agricultural land under threat
Our food comes from the soil. FAO Food Balance sheets show that 99.7% of human food
(calories) comes from agricultural land, while less than 0.3% comes from the oceans and
other aquatic ecosystems586
Agriculture depends on soil quality. However, large areas of productive land have been
degraded by human mismanagement and climatic effects. When agricultural land is
degraded, food production and livelihoods are threatened.
The main causes include erosion, soil compaction, nutrient depletion, acidification and
other types of pollution.
Damage to the soil is not an easy problem to solve, because new soil takes so long to
form, soil is considered a limited and non-renewable resource if viewed over 50-100
years.587
The basics
In 2000, arable and permanent cropland and pasture covered 38% of the total available
land surface.588 Worldwide, 67% of agricultural land has been degraded.589
135
United Nations Environment Programme590
There are several main types of soil degradation relating to food supply.
Soil Erosion
Soil erosion is a major cause of soil degradation; erosion is mostly caused by water, as
flowing water has more power to displace soil than wind.591
A recent study shows that soil erosion is a particularly serious problem in the Europe –
more than half of Europe’s land has suffered various degrees of erosion by water, and
about a fifth has suffered erosion by wind. A recent UN-EU report described this as the
continent's “silent disaster”.592
The chemicals and cultivation methods characteristic of large-scale monocultures change
soil consistency, making it more prone to water and wind erosion.
Bulgaria: a lesson in erosion
Bulgaria’s risk of soil erosion is due to natural conditions and agricultural land use.
Natural risks:
• over 80 % of the country is hilly or mountainous and therefore susceptible to
surface run-off and erosion during heavy rainfall;
• many soil types are naturally vulnerable to erosion.
Before 1946 most small scale farmers in practiced anti-erosion techniques, such as
contour cropping and terraces on sloping land. Eroded slopes and vulnerable river banks
were planted with trees to control the risk of water erosion. Shelter belts were planted in
136
larger fields to reduce the risk of wind erosion.
In the late 1940s and 1950s, the introduction of large-scale agriculture meant field sizes
were increased dramatically by destroying and ploughing-up the traditional field
boundary strips and shelter belts. As a result wind and water erosion increased
dramatically. In less than 20 years, about 10 % of arable land had been eroded so badly
that it was no longer suitable for cropping or afforestation.
Now
•
•
over 78 % of cultivated land and 15 % of forests are highly susceptible to water
erosion and over 38 % are susceptible to wind erosion
the total average annual soil loss from all types of land in Bulgaria is
approximately 136 million tonnes per year, of which 30–60 million tonnes are lost
by wind erosion.
Source: Stefanova (2002)593
Some facts:
• Nearly 60% of agricultural land in Ukraine is affected by or at risk of erosion594
•
Water erosion is also the dominant form of soil erosion in France, where it affects
about five million hectares of agricultural land (about 17% of the total). In fact,
soil erosion is reported to affect most of the main cereal growing areas in
France.595
•
Erosion is most serious in central Europe, the Caucasus and the Mediterranean
region, where 50–70% of agricultural land is at moderate to high risk of
erosion.596
•
In Spain, over 50% of the agricultural land is classified as having a medium to
high risk of erosion, and in its southern region this figure reaches over 70%.597
If trends continue, the European Environment Agency anticipates an increase in the soil
erosion risk of 80% in EU agricultural areas by 2050598
Soil erosion: the international context
US
•
In eastern Washington, each pound of grain costs twenty pounds of topsoil.599
•
The US has lost half of its topsoil since 1960, and continues losing topsoil 17
times faster than nature can create it600.
Worldwide
• Research estimates that soil erosion has reduced Africa’s grain harvest by 8
137
million tons, or roughly 8 percent. This loss is projected to double by 2020 if soil
erosion is not reduced.601
•
30% of the world's arable cropland has been abandoned because of soil erosion in
the last 40 years.602
The statistics on soil erosion are debatable603, but the IFPRI estimates soil degradation
has led to a 13% fall in cropland productivity over the past 50 years604
Soil Compaction
Soil compaction is one of the major problems facing modern agriculture. Put simply,
compaction is the packing down of soil particles605. This reduces the pathways available
for water and so leads to flooding and poor water retention. Compaction is caused by the
overuse of machinery, intensive cropping, grazing and dairy farming606, short crop
rotations, and poor soil management.607
By reducing the larger pathways in the soil, soil compaction limits air supply and
damaging the habitats of soil organisms. This changes the types and distribution of soil
organisms, creating nutrient deficiencies to plants and reducing root growth608
A growing problem remains unclear
•
A 1994 study estimated that soil compaction was responsible for the degradation
of an area of 33 million hectares in Europe609.
•
More recent studies indicate that the problem is growing. Soil compaction is the
main form of soil degradation in Central and Eastern Europe, where it has now
affected over 62 million ha - 11 % of the total land area.610
Attempts to counter the effects of soil or subsoil compaction – such as improving
drainage and irrigation - can lead to lowering of groundwater levels the excessive use of
water and nutrients and general water pollution.611 (See following section on ‘water’ pg?)
Europe’s climate is changing: higher rainfall in winter are expected, coupled with short
periods of high rainfall and longer periods of drought in summer612. Compacted soils will
make crops more vulnerable and increase the risk of flooding and water erosion. This will
result in the pollution of surface water with soil, nutrients and the chemicals used in
agriculture.613
Salinisation
138
Salinisation can be caused by excess water from irrigation which raises the water table,
bringing salt to the surface. It results in completely unproductive soils, which are
currently found mainly in the Mediterranean region and central and eastern Europe.
•
Salinisation affects 25% of irrigated cropland in the Mediterranean614.
•
In the US and India, 4 to 6 million acres of productive farmland lost due to
salinisation annually.615
•
In California, where over 8 million acres of cropland are irrigated, roughly 4
million acres are affected by salinisation.616
Desertification
Sahara spreads into Europe
Desertification, caused largely by industrial agriculture, is now a big danger for the four
southernmost EU countries – Spain, Portugal, Italy and Greece. The European Space
Agency’s Desert Watch project reports that 300,000 square kilometers of Europe's
Mediterranean coast - an area larger than Britain - is threatened by desertification617. A
European Environment Agency report warns that areas are becoming so degraded that
they are no longer able to support any “profitable cultivation” – and as a result, leading to
abandonment of land and depopulation.618
The affected regions rarely get any of their vegetation back – and thereby add to the
growing volume of degraded drylands. 40% of the Earth's surface is already drylands and
70% of this is degraded.619
Spain – the next desert?
One-fifth of the land in Spain already is so damaged that it is turning into desert,
according to figures presented at a UN conference in 2000. It has been calculated that the
country loses the equivalent of the rock of Gibraltar into the sea every year. Andalucia’s
olive plantations alone lose an estimated 80 million tons of topsoil every year620 – as
much as 40% of Andalucia is prone to severe erosion.621
139
Impact 4 – water stress
Water – in plentiful supply – is fundamental to the development of human life, and
central to the maintenance of our ecosystems and biodiversity. When water resources are
running scarce – are under pressure – we can be said to be suffering ‘water stress’.
In the year 2000, there were 29 countries under water stress according to the World
Meteorological Organization. The number is predicted to rise to 34 by 2025. According
to the World Bank, 22 nations have ‘severe’ water shortages and a further 80 are
considered ‘serious’.622
Like other industries, the food system is heavily dependent on water. All of the food we
eat requires water to grow, and water is a necessary part of much food processing.
However, water supplies are now being damaged. Overuse and pollution mean that
usable water is now growing scarce.
Modern agriculture is water intensive. In the United States, close to 19% of agricultural
energy use is for pumping water.623 And US agriculture uses about 85% of all freshwater
pumped from storage sources.624
It is also expensive. Irrigation costs two to five times more per acre than rain-fed crop
production in both equipment and fossil energy needed to power the application of the
water.625
140
Overuse
Water is not an unlimited resource. Only 3% of the water on the planet is fresh, and more
than two thirds of that is tied up in glaciers and ice caps.626 To meet our needs, and the
needs of the ecosystem, we must rely on less than 0.5% of all of the world’s water.627
The following table shows where this tiny but significant percentage of the world’s water
comes from: aquifers, rainfall, natural lakes, reservoirs and rivers.
628
Worldwide, the demand for water is rising:
•
In the last two decades, while world population rose by around 40%, water use
increased by 300%.629
Demand is now so great that several major rivers – including the Colorado, Ganges and
the Indus – no longer reach the sea for all or most of the year.630
Groundwater sources are also running out. Groundwater supplies about one-third of the
world's population, and is the only source of water for rural dwellers in many parts of the
world. Excessive withdrawal of groundwater, in quantities greater than the ability of
141
nature to renew the aquifers, is now widespread in parts of the Arabian Peninsula, China,
India, Mexico, the former Soviet Union and the United States.631 In some parts of China
the water table has dropped 300 feet in 40 years.632
•
The depletion of groundwater reserves means that water withdrawal across
Europe is expected to decrease by about 11 % by 2030.633
•
The groundwater that provides 31% of the water used in agriculture is being
depleted up to 160% faster than its recharge rate.634
•
The overdraft of U.S. ground water averages 25% greater than its rate of
replacement.635
Food and water use
Pressure on water resources comes from increases in population and reduced rainfall due
to climate change. The food system makes a significant contribution too.
Worldwide, agriculture accounts for more than 70% of freshwater consumption, mainly
for irrigation of agricultural crops. In Africa and Asia, agriculture accounts for nearly
80%.636
In Europe, agriculture accounts for almost two-fifths of all water use.
Water withdrawal by sector in Europe:637
•
•
•
•
Industry – 45%
Agriculture – 39%
Households – 13%
Evaporation – 3%
Food production has always been highly water-intensive. But intensive farming and
changing consumption patterns are putting more and more pressure on this limited
resource:
•
To produce a healthy human diet requires 3,500 litres of water – that’s 70 times
more water than the 50 litres recommended for daily household use.638
•
Agriculture accounts for 70% of global human freshwater usage.639
•
Within the European Union agriculture represents around 30% of total water
abstraction.640
142
Crops for instance transpire enormous amounts of water. During the growing season,
high-yield corn will transpire about 4.2 million litres of water per hectare.641
Some foodstuffs are more water-intensive than others. To produce one pound of corn, for
example, takes 100 to 250 gallons of water, while to produce one pound of corn-fed beef
requires 2,000 to 8,500 gallons. It takes 1,000 tons of water to raise one ton of grain,
while it takes 15,000 tons of water to raise one ton of grain-fed beef. 642
The table below shows the extent to which meat is more water-intensive than cereals:
(Source: Let it Reign643)
•
Producing a pound of animal protein requires, on average about 100 times more
water than producing a pound of vegetable protein.644
•
For each kilogram of boneless beef, it is about 6.5 kg of grain, 36 kg of
roughages, and 155 litres of water (or about 15,000 litres of water on average per
kilo of boneless meat).645
•
1 kg of meat involves as much water as 10 month’s basic household water
requirements (50 litres per person per day).646
•
To produce just one egg using industrial methods takes an estimated 63 gallons of
water.647
Basic water usage figures for selected foodstuffs (litres/kilo produced):
•
•
•
•
•
•
•
•
•
Potatoes - 500 litres
Wheat - 900 litres
Alfalfa - 900 litres
Sorghum - 1100 litres
Maize - 1400 litres
Rice - 1910 litres
Soya beans - 2000 litres
Chicken - 3500 litres
Beef (feedlot) - 100,000 litres.648
143
As incomes rise and consumers start eating more meat, more water must be used further
down the food chain.
Irrigation
•
Globally, roughly 15-35% of irrigation withdrawals are estimated to be
unsustainable.649
As demand for water continues to rise, so too will the need for irrigated agriculture.
Irrigation is crucial for overall food production – no more so than in southern Europe
where the number of irrigated fields has increased steadily since the 1980s.
•
Spain, Italy, France, Greece and Portugal account for 85% of the total irrigated
area in the EU.650
•
Water used for irrigation in Spain, Portugal and Greece exceeds 70% of total
usage.651
In 1995, 134 billion gallons per day of freshwater were withdrawn for irrigation purposes
(39% of total freshwater withdrawal), 49 billion gallons per day of this from groundwater sources.652
But irrigation has negative effects. In addition to competition over surface water rights, it
also contributes to salinisation and the depletion of aquifers.1 Moreover, in some parts of
southern Europe in particular, water extraction exceeds the natural supply. As a result, the
natural ground water levels get lower. This leads to a decrease in the number and size of
wetlands – and the possible intrusion of sea-water.
Aquifers are a common source of the water used in irrigation. But in many parts of the
world, irrigation is depleting underground aquifers faster than they can be recharged.
In other cases, agriculture depends upon “fossil aquifers” – aquifers that mostly contain
water from the last ice age. These ancient aquifers receive little or no recharge, so any
agriculture that depends upon them is inherently unsustainable.653
•
In the US, 95% of the United States' fresh water is underground.654 About 66% of
irrigation water in Texas and 38% in California is pumped from ground water.655
1
An aquifer is an underground layer of water-bearing permeable rock, or unconsolidated materials (gravel,
sand, silt, or clay) from which groundwater can be usefully extracted using a water well.
144
•
North America's largest aquifer, the Ogallala, is being depleted at a rate of 12
billion cubic metres (bcm) a year. It will likely become non-productive within the
next 40 years.656 Total depletion to date amounts to some 325 bcm, a volume
equal to the annual flow of 18 Colorado Rivers.657
Large-scale irrigated agriculture in Spain
In Spain, irrigated agriculture accounts for 56% of total agricultural production,
occupying only 18% of the total agricultural surface.658
The area of Spain where the most damage has been done to the soil is the Almeria
province, in Andalucia. The region's underground water supply has been severely
depleted, due to the use of vast amounts of water for irrigation.
The explosive growth of greenhouse agriculture has made Almeria one of Europe's most
remarkable economic success stories – every day, hundreds of trucks take produce
directly from Almeria to supermarkets in Germany, Scandinavia and Britain. But it has
also turned the province into a vivid picture of desertification.
Almeria has more than 30,000 hectares of cultivated greenhouses.659 Most of them are on
sand soil. Hydroponic agriculture is practiced in Almeria – in other words, the growth of
plants in a nutrient solution, with or without soil. This type of agriculture uses more water
than the environment can provide, steadily draining ground-water supply.
Here are some of the main consequences for Almeria:
• depletion of ground-water
• intrusion of sea-water, causing high salinity
• water and soil contamination by pesticides, fertilisers, etc.
• destruction of crops by insects and disease
• loss of soil
• loss of inhabitable land
Loss of ground-water and intrusion of sea water:
As ground-water is lost, the threat grows of an influx of sea-water. Sea-water intrusion
into aquifers is estimated at four million metres squared per year in Almeria.
Approximately 80% of the aquifers have some sea-water intrusion – but people keep
taking out the water. And what's more, the cost of water supplies generally accounts for
less than only 5% of the total expenses of greenhouse agriculture in the region.
Water and soil contamination:
In the use of water and fertilisers on crops, between 20% and 50% of nutrients are wasted
due to lixiviation (i.e. separation into soluble and insoluble constituents). Nitrate levels
are very high in Almeria – typically over 100ml per litre. In a single year in the region,
greenhouses generate about 60 tons per hectare of vegetable residue, about one tonne per
hectare of plastic, and a lixiviated volume (water and fertilisers) of about 300 m2 per
145
hectare – about 0.6 tons per hectare of fertilisers.660
Now, Almeria is beginning to get a number of competitors. Morocco is already producing
competing products – and with even fewer environmental restraints than in Almeria. And
soil degradation is already beginning to happen in the oases there.
Water and food security
Today 852 million people, or 15% of the world’s population, are undernourished. Every
year, 5 million people die from hunger. What’s more, with world’s population projected
to increase to 9 billion by 2050, extra pressure will be placed on areas where food is
already scarce.661
Since all of the food we eat requires water to grow, there is a clear danger that the
overuse of water will threaten global food security:
•
If present water consumption patterns continue, two out of every three persons on
earth will live in water-stressed conditions by the year 2025.662
If current consumption levels continue, there may not be enough water to produce the
food that we need:
•
To eliminate hunger and undernourishment by 2025, the additional water
requirements may be equivalent to all blue water withdrawn and used today for
agricultural, industrial and domestic purposes.663
•
Based on today’s water productivity and a projected diet of 3000 kcal/day, an
additional 5600 km 3 /year of water needs to be appropriated by 2050 to eradicate
undernutrition and feed an additional 3 billion world inhabitants. This is almost
three times as much as the present global consumptive water use in irrigation.664
The table below shows the amount of extra water needed to produce a healthy diet for all
today, and in 2050. Food production today uses 6,800 km3 of water per year. By 2050,
water use will almost double to 12400 km3/yr. The ‘challenge’ represents the additional
need for water that will have to come either from new green water resources (horizontal
expansion) or from turning evaporation into transpiration (vapour shift).
146
(Source: Let it Reign)
147
Plenty more fish in the sea?
Fish – an industry in crisis?
Trends in the fish industry are typical of the food system as a whole. The processing
market is dominated by a small number of firms. While most fish sales pass through
familiar retail outlets, not local markets.
The case of fish also highlights the dangers of intensive and unsustainable agricultural
practices.
Around the world, demand for fish is rising. But fish stocks are falling – often faster than
they can be replenished. Over two-thirds of global fish stocks are now fully or overexploited.665
Global consumption of fish has doubled in the last thirty years666 and there appears to be
no sign of a slow-down. Seafood provision alone will need to double by 2020 to keep up
with demand.667 At the same time, the exploitation of fishing stocks threatens the very
survival of many fish species.
Most of the world’s fish stocks are over-exploited. This is destroying aquatic biodiversity
and ecosystems as animals at the top of the food chain are removed.
In addition, fish farming – or aquaculture – is transposing intensive farming methods
from the land to the sea. Fish farming is the world’s fastest growing type of food
production, growing at an average rate of 10% every year.668
Unfortunately, the environmental impacts of fish farming are also varied and worrying.
Farmed salmon, for instance, are packed into floating cages, where parasitic infections
such as sea lice can spread rapidly. Large amounts of waste from fish farms can also
pollute nearby waters. What’s more, fish farming does not prevent the exploitation of
smaller ‘wild’ fish, such as sand eels and shrimps, which are turned into pellets for feed.
The global fish market
The global fishing industry - which is worth around $80 billion a year669 - is responding
to an enormous demand for fish:
•
The average consumption of fish per person has almost doubled in under half a
century.670
148
•
In 2000, the world’s fisheries netted nearly 95 million tonnes of fish - their largest
annual catch ever.671 A large proportion of this – around 15 million tonnes – is
caught by China. 672
•
The illegal, unregulated and unreported fishing market is worth an estimated $2$15 billion annually.673
Figure 3.2: Household consumption of fish
Source: DEFRA, 2003
Fish on the shelves
A look at the UK fish market reveals the same consolidation trends that are affecting
other sections of the food industry.
Concentration:
•
UK supermarkets saw their share of fresh fish sales rise from 21.4% in 1990674
to 75% in 2000.675
•
Now, their share accounts for a staggering 90% of the £1.8 billion UK retail
market for seafood.676
•
Tesco buys 80-90% of its white fish from a single supplier (Seachill in
Grimsby).677
One of the key reasons for the dramatic increase in concentration ratios is the success
of private label goods, such as processed, frozen, “ready-meal” and conveniencedriven fish products (such as pies and sauce-covered microwaveable meals).678 Less
than a quarter of Tesco’s UK stores now have fresh fish counters.679
Concentration at the retail level is leading to concentration amongst fish processors:
149
•
One company, Young's Bluecrest, controls 40% of the seafood processing
market in the UK.680
•
In 2000, the fishmongers’ retail market share fell to only 20.3%.681
Globalisation:
•
Less than 20% of the UK’s cod consumption is supplied by the UK catching
industry; the rest is imported from Iceland, Russia, Denmark, Norway, China
(processed) and the Faeroes.682
•
Around 50% of UK catch by value is exported (mainly due to high value
shellfish exports to France and Spain),683 but 75% of UK demand is met
through imports.684
But global fish stocks are approaching exhaustion
•
In 2003, 76% of the world’s assessed fisheries stocks were either fully exploited
(52%), overexploited (16%) or depleted (8%).685
•
In the North-East Atlantic, 100% of fish stocks are fully exploited. 686 Of those,
41% are overexploited or depleted.687
•
60% of European fish catches exceed safe limits (levels above which the volume
of fish caught are no longer replaced by population growth). Half of open sea fish
catches are outside safe limits.688
Fish are being taken from the ocean faster than they can replenish themselves.
The most threatened seas in Europe:
•
The North Sea (over-fishing, high nutrient and pollutant concentrations)
•
The Iberian seas (i.e. the part of the Atlantic along the eastern Atlantic shelf,
including the Bay of Biscay: over-fishing, heavy metals)
•
The Mediterranean Sea (locally high nutrient concentrations, high pressure on the
coasts, over-fishing)
•
The Black Sea (over-fishing, rapid increase of nutrient concentrations)
150
•
The Baltic Sea (high nutrient concentrations, pollutants, over-fishing)
Environmental costs of over-fishing
We are consuming our marine biodiversity. Enormous quantities of fish are simply
discarded because they are of an unmarketable species or size, or because a vessel does
not have a quota for that species:
•
On average, a quarter of catches are discarded. In the southern North Sea, beam
trawlers discard over half the fish caught, and the discard rate can rise to 90% in some
fisheries.689
•
For every tonne of Dublin Bay Prawn landed from the Irish Sea trawl fishery just
under half a tonne of whiting are discarded as by-catch.690
Fishing methods - such as the practice of ‘bottom trawling’ - are having huge impacts on
marine ecosystems:
•
For every 1kg of North Sea sole caught by beam trawl on the seabed, up to 14kg of
other animals are killed691
•
30-50% of the cold-water coral reefs known or expected to be found in Norwegian
waters have been partially or totally damaged by bottom-trawling activities.692
And as the example below shows, even the best efforts to promote the sustainable
sourcing of fish have had very limited success.
151
Case study: Unilever: Fishing for Good
Unilever is one of the world's largest buyers of fish, sourcing from a number of
fisheries in the Atlantic and Pacific oceans. In 1996 the company made a long-term
commitment to buy all its fish from sustainable sources by 2005. In conjunction with
the WWF it also initiated an independent fisheries certification programme in 1996.
And yet by 2002 almost two-thirds of Unilever's fish came from sources that failed
to meet its own internal sustainability criteria. And only 5% of its fish purchases
came from fisheries certified by the independent certification programme.693
According to its own assessments, Unilever is on track to source 60% of its seafood
from sustainable sources by the end of 2005.694
Unilever also encourages the fisheries with the best management regimes to apply
for certification by the MSC (Marine Stewardship Council).
Just 4% of wild capture fisheries currently qualify for the MSC certificate.695
Our current fishing practices will cause untold damage to marine ecosystems. As one
biologist, Larry Crowder from Duke University, puts it:
"You can't just remove the top layer of an ecosystem without having a knock-on effect."696
But this is exactly what is happening. 90% of the world's big fish are gone.697 In the
past 50 years, over-fishing has removed nine out of the ten large predators – the big fish
like tuna and cod. These predators such can travel thousands of miles and into different
seas to feed and breed. If these predators are taken away, the top layer of the food chain
simply disappears – with untold consequences.
152
Aquaculture: a solution to the global fish crisis?
Fish farming - or aquaculture - has been practised for centuries. But modern, industrial
fish farming has seen rapid growth in the last few decades - so much so that the FAO
believes that by 2020 more than half the world's fish will come from farms.698 Worldwide, aquaculture production is expected to nearly double in the next two decades,
climbing from 29 million tonnes in 1997 to 54 million tonnes in 2020.699
•
Aquaculture is predicted to grow to the point where it provides 40% of fish for
human consumption.700 Production from aquaculture is now growing by around 5% a
year and supplies 30% of total global production of fish and seafood.701
•
Today, the UK is the largest aquaculture producer in the European Union, producing
30% by volume of the EU's total production; 90% of this effort is concentrated in
Scotland, where the industry has an annual turnover of around £500 million.702
Farmed fish and big business
Fish farms fit well with retailer demands. Supermarkets favour farmed fish because of its
consistency of supply and lower prices. Now salmon can be sold in the same way as beef
or lamb.
In North America, the market is growing quickly – by 12-13% a year in recent years. A
round half of the fresh and frozen seafood consumed by Americans is farmed.703
Ten years ago, Costco, the American retailer, did not even stock fresh fish. Now it sells
15,000 tonnes of farmed salmon fillets a year. The same story applies to shrimp, now
America's most popular seafood.704
As aquaculture grows - and retailers demand ever-lower prices - the industry is
undergoing rapid consolidation, as the example of Nutreco shows (see boxes).
153
Nutreco: netting the aquaculture market
In September 2004, Dutch aquaculture company Nutreco merged with Stolt Sea Farm,
combining its fish-farming, processing and marketing activities in the new company,
Marine Harvest.
Marine Harvest is now the world's largest aquaculture company and the largest
producer and supplier of farmed salmon.705 Marine Harvest controls about 20% of
the world’s farmed salmon production706
Nutreco's website declares that the strategy of the new Marine Harvest rests on:
• "the provision of a dependable supply”
• "a growing range of value-added products"
• "quality control, tracking and tracing, and leadership in food safety".
Salmon feed industry
The salmon feed industry is strongly concentrated amongst a few players.
Worldwide, three feed companies (Nutreco, EWOS and BioMar) control 70-75% of
the market.707
Fifteen years ago there were 50 fish farm companies in British Columbia. Now there
are 12 with just five multinationals operating 80% of British Columbia's marine
salmon farm sites as well as scores of salmon farms around the world.708
Vertical integration:
Nutreco is the leading player on the fish feed market, producing 1 million tonnes in
2004. Over 70% of this is used in salmon and sea trout farming, a market in which
Nutreco has a 40% share. Of the salmon feed, approximately 30% is destined for
Nutreco's own farms. Nutreco supplies specialised feed for more than 50 other fish
species.709
But is it sustainable? Environmental implications of fish farming
Fish farms have created serious environmental problems. If environmental costs were to
be included in the price of farmed salmon, their price would increase by as much as
57%.710
154
Major concerns include:
•
The continued depletion of wild fish populations (known as forage fish) to produce
fishmeal and fish oil for aquafeed.711
•
Pollution from the faeces, uneaten food and the chemicals used to treat disease and
parasitic infections.712
•
The introduction of exotic species (including disease and parasites) and increased
abundance of pathogens.713
•
Interactions between farmed species and wild populations of fish and shellfish. For
example, farmed fish can escape and disturb or breed with wild populations.714
Wild stocks become fish-food
It is questionable whether fish farms do in fact preserve fish stocks:
•
It takes three tonnes of wild fish to produce one tonne of salmon.715
In order to make the pellets to feed farmed fish, 'industrial' fishing boats literally vacuum
the seas of sand eels, sprats, anchovies, sardines and other lesser species. Wild fish are
used for fishmeal and fish oil to feed farmed stocks.716
•
In 2002, about 24% of estimated world fish production (32 million tonnes) was
destined for non-food products, in particular the manufacture of fishmeal and oil.717
•
In 2003 fish farms used about 40% of the world's supply of fish oil. Many, including
the FAO, predict a worldwide shortage of fish oil within the decade.718
•
By the year 2010 the fish-farming industry will use 48% global fishmeal
production.719
•
The Royal Society for the Protection of Birds in Scotland warns that industrial
fisheries harvesting the North Sea for animal and fish feed threaten the survival of
coastal species such as puffins, which depend on the small fish used in feed.720
Pollution
155
721
The nutrients in fish waste, which include nitrogen and phosphorous, can cause huge
damage to the environment: Nutrients collect in the sediment on the bottom of lakes,
causing eutrophication (see section on Water). Biodiversity then suffers as fish and plant
life die or migrate.722 But waste from fish farms does not just affect lakes. Offshore fish
farming is now growing source of nutrient build-up in some coastal waters.723
•
100 tons of fish, grown in captivity produce the same amount of chemical waste as
do 2,800 to 3,200 people in developed countries.724
•
A 1,000 tonne salmon farm – small by current industry standards – produces sewage
waste equivalent to a town of 20,000 people.725
•
Pollution from fish farms on the west coast of Scotland is comparable to the sewage
input of up to 9.4 million people.726
•
A study by the Scottish government found that 70% to 80% of nutrients given off
from salmon are dissolved into the water.727
156
Marine biologists say that siting farms at the mouths of deep-sea lochs is a major problem
because there is not enough tidal flush to remove the pollutants and sweep them out to
sea. One has likened it to flushing your toilet once every two weeks, or in some cases
once every two years.728
Disease
•
Salmon farms, each with about one million fish, ensure the rapid spread of parasites
and pathogens. For example: in 2001, it was reported that around 20% of farmed
salmon in British Columbia were infected with the Kudoa parasite, with rates on some
farms reaching 50%.729
Sea Lice
•
Researchers looking at a salmon farm in Canada found that infection levels in
wild juvenile salmon near the farm were 73 times higher than normal. 730
•
In some Scottish fisheries, salmon and sea trout have been found with up to 500
lice on them – causing horrific damage, eating the fish from inside out. Moreover,
sea lice have spread from farmed fish to wild stocks, thus endangering the species
that fish farming was designed to save.731
•
The lice problem in farms has led in some cases to inappropriate use of
organophosphates, killing large areas of sea bed. Furthermore, escaped farmed
salmon mix with wild fish (that were once distinct to individual river basins) and
damage their genetic make-up.732
The Transgenic Gene scenario
The aquaculture industry is exploring the possibility of creating transgenic fish: the
marine equivalent of GM crops. The genes of other fish are inserted to promote
growth (by increasing food conversion efficiency) and enhance resistance to disease.
Genetically modified (GM) salmon are not currently available for sale to UK
consumers and no transgenic animals have been approved for use as human food in
the US.733 But government agencies in the US, Canada, Cuba and China are known to
be reviewing procedures for the authorisation of commercialising transgenic
aquaculture products.734 Already some transgenic animals have been approved for
turning into animal feed.735
According to one scientific model, if a transgenic fish escaped and mated with wild
fish, the following could happen:
•
Purge Scenario
157
- The new trait might simply disappear due to the effects of natural selection.
• Spread Scenario
- The new trait might spread through the wild populations offering a survival
advantage and persisting in subsequent generations.
•
A 2004 study showed that when food was scarce, transgenic Coho salmon
(bioengineered for faster growth) out-competed, and even ate, native
salmon.736
And accidents will happen
•
A 2003 study estimated that some two million salmon escape every year in the
North Atlantic, which is equivalent to about 50% of the total pre-fishery
abundance of wild salmon in the area.737
•
More than 490,000 salmon escaped in Trustna Norway, costing the company
£2,673,000. At first the company reported that only 200,000 fish had
escaped.738
158
Distribution
‘Distribution’ covers all stages of the value chain between farm and store. This section
examines the energy consumption and emissions of food transportation, storage and
processing.
Much of the food system’s energy consumption occurs during these intermediary stages.
In the US for instance, processing and transportation together account for 39.1% of total
energy use in the food system.739
Food is increasingly processed and pre-packaged before it reaches the store. What’s
more, demands for all year round supply and just in time delivery are increasing global
sourcing and the development of refrigerated supply chains.
Food value chains may be consolidating. But the links in the chain are lengthening. Food
is now travelling further than ever before.
159
Food miles
Food now travels vast distances before it reaches our plates. Links in food value chains
are lengthening, for two main reasons:
The food system is centralised. A single huge processing plant will now serve many
regions. And since transport is still relatively cheap compared with other supply chain
costs740, retailers tend to favour centralised sourcing. All of the food that we eat passes
through just a handful of large distribution centres.
The food system is also globalised. Leading firms are extending their influence over
ever-larger distances. Retailers aim to source food all year round, from all over the world.
“However, some raw materials can only be produced in certain countries and
because of our need for a reliable year-round supply, much of it comes from
Eastern and Southern Europe and also South and North America. For
example we get our strawberries from Poland, Turkey, Mexico, Morocco and
Argentina and our cherries come from Serbia and Turkey.”741
Website of food manufacturer, Muller
Industry trends driving food miles
•
increased sourcing of food from around the world
•
specialisation and centralisation of food processing
•
increase in the amount of processing
•
increased market share of major supermarket retailers with out of town locations
•
movement towards greater centralisation of distribution
•
purchasing policies of major retailers greatly favour centralised sourcing.742
Food is being transported around in increasingly complex ways before it reaches the
retail shelf. After leaving the farm, products will be sent to a regional or even national
plant to be processed and packed. Products will then be sent to a regional or national
distribution centre. Finally, after hundreds of miles of travel, the products may even come
back to a local store – just a few miles from where they were grown.
160
Furthermore, 'just in time' delivery is becoming more common in retail. This means that
supermarkets order on a daily basis for a majority of their products. These orders come
from a central distribution centre.
Global food
European supermarket shelves are also brimming with food products from around the
world – apples from Chile, kiwis from New Zealand, grapes from South Africa.
•
Half of all vegetables and 95% of all fruit consumed in the UK now come from
overseas.743.
As countries source their fresh fruit and vegetables from distant fields, a whole industry
has sprung up to cater for the supermarket demands of fresh and traceable delivery.
744
As the sale of imported fruit and vegetables increases, sales for local fruit and vegetables
are decreasing. For example, just 6.25% (2,500) of Asda products are sourced locally.745
Global sourcing
Global retailers are forming strategic alliances with suppliers (grower-shippers) to
structure year-round supply chains. Retailers are looking to source particular products
from just a handful of places.
161
•
Carrefour buys melons from just three growers in northeast Brazil to supply all of
its 67 Brazilian stores and to ship to distribution centres in 21 countries.746
•
Ahold has already done global promotions for mangoes and some other items,
using shippers in one country as a source for all its stores around the world.747
•
At least one Europeam retailer is seeking to source grapefruits for all of its stores
worldwide from Florida.748
International food trade trebled between 1968 and 1998.749 This situation means that food
is travelling further.
The facts…
•
Between 1968 and 1998, world food production increased by 84%, and human
population by 91%. Food trade increased by 184%.750
•
Since 1961, the tonnage of food shipped between nations has grown twice as fast
as the global population. 751
•
Exports of food from the UK have soared since 1961, from two million tonnes to
15 million tonnes in 2000.752 Another major study estimated that the UK exported
8.8 million tonnes of food, feed and beverages in 2000 and imported 17 million
tonnes.753 But certainly, both imports and exports, measured in tonnes, have at
least tripled in the last 20 years. 754
And consumers are no longer surprised when they buy produce from the other side of the
world.
•
The food on the typical American family’s dinner table has travelled an average
of some 1,500 miles.755 An average food item in the US now travels 25% farther
than in 1980.756
•
The typical American prepared meal contained ingredients from at least five
countries outside the United States.757
•
One study estimated the distance travelled by the ingredients of a Swedish
breakfast (apple, bread, butter, cheese, coffee, cream, orange juice, and sugar).
The mileage calculated for the meal was equivalent to the circumference of the
earth.758
The result?
Huge increases in transport and energy use.
162
Transportation and emissions
Food now travels further than ever before. Food is being shipped around more and
consumers are travelling further to buy their food. Consumer shopping patterns have
changed – from frequent visits to local shops towards weekly trips to large out-of-town
supermarkets.759
•
In the UK, a fifth of food (by weight) moves more than 200km.760
•
Over the last 20 years, the transport capacity of food and agricultural products in
Germany has doubled.761
•
Between 1983 and 1991 the average number of links in the food supply chain rose
by around 13%, while their average length increased by 26%.762
Transport consumes a quarter of the world’s energy, and accounts for some 25% of total
CO2 emissions. 80% of this can be attributed to road transport. At the same time road and
air transport is over 95% dependent on fossil fuels.763 Very simply, fossil fuels are burnt
to produce the energy needed to transport food. This contributes to polluting emissions.
163
Transport accounts for a large
percentage of air pollution
90
80
Carbon
Monoxide
70
Percentage
60
Sulphur
Oxides
50
40
Nitrogen
Oxides
30
20
Volatile
Organic
Compounds
10
th
er
O
Tr
an
sp
or
t
En
er
gy
In
du
st
ry
H
ou
se
ho
ld
0
SOURCE?
•
Between 1990 and 2000, CO2 emissions from transport increased by 18% in the EU –
mainly due to increased road transport in almost all member states.764
•
CO2 emissions from freight transport increased by 36% between 1990 and 1999.765
•
Between 1989 and 1999 there was a 90% increase in road freight transport of
agricultural and food products between the UK and Europe.766
Some food miles are more polluting than others…..
There are many different ways of measuring the impacts and assessing the causes of
‘food miles’. A single indicator based on total food kilometres is an inadequate indicator
of sustainability,767 because different forms of transport have different impacts on the
environment.
•
Transporting the same weight by plane emits almost 6 times as much CO2 as
transport by road, nearly 30 times as much as by rail, and over 40 times as much
164
as by ship.768 Other studies have put airfreight just below this level – but still
increasing CO2 emissions by up to 30 times that of sea transport.769
•
Heavy goods vehicles (HGVs) produce five times the emissions of cars per
kilometre traveled, but over 1000 car journeys will be made to carry home the
contents of just one HGV.770
Food miles in the UK
•
In the UK, distances for food transport by road increased by 50% between 1978 and
1999. The food system now accounts for between a third and 40% of all UK road
freight.771
One major estimate puts food production, retailing and transport at 8% of the UK’s final
energy consumption. And food transport accounts for nearly half of this.772
The vast majority of food in the UK, whether home-grown or imported, travels by road.
Over the past 50 years there have been dramatic changes in transport logistics, with most
goods now delivered to the supermarket’s own regional distribution centres and taken
from there to the shops in large HGVs, replacing local deliveries direct to the store in
smaller vehicles. 773
Every year the UK trucks 300 million tonnes of food, drink and agricultural products
around the country. This traffic generates 41 billion tonne-kilometres (the transport of one
tonne of food over one kilometer) and account for 28% of the total tonne-kilometres
travelled by freight in the UK.774
And this is on the rise. Since 1991 food-related tonne-kilometres have grown by 26.6%.775
•
'Out-of-town' supermarkets have led to a massive dependence on car use for shopping.
Between 1975 and 1990, distance travelled to shops increased by 60% – and now threequarters of supermarket customers travel by car.776
•
One metric ton of food transported by road in the United Kingdom travelled an average
distance of 77 miles in 1998 compared with 51 miles in 1978.777
This means more fuel used to transport food….
The energy used by UK road food transport grew by 33% between 1978 and 1999.778
….and higher emissions, which contribute to climate change
CO2 emissions from food transport increased by 12% from 1992 to 2002.779 By 2002 UK
food transport was producing 19 million tonnes of carbon dioxide. Ten million of these
165
tonnes were emitted in the UK and almost all of them were from road transport.780This
represented 1.8% of the total annual UK CO2 emissions.781
By other calculations, food transport accounts for 3.5% of the UK’s total CO2 emissions,
with just under 1% from car-based shopping. 782 Indeed, customers travelling to
supermarkets now account for a significant part of the ‘food miles’ problem. By 1996 the
average shopper was traveling 22km each week to do the shopping.783
The costs of rising traffic and emissions are enormous
•
The direct environmental, social and economic costs of food transport are over £9
billion each year.784 A typical out-of-town superstore causes €38,000 worth of
congestions, pollution and associated damage to the local community every week.785
•
Another study in 2005 estimates that the transport of agricultural and food produce
currently imposes external costs of £2.35 billion per year.786
•
The real cost of the average weekly UK food basket per person – £24.79 – would be
£2.91 more if externalities and subsidies are included. Shopping transport alone
would add 41 pence.787
788
Airfreight
More food is now travelling by air than ever before and this has severe implications for
the environment. CO2 emissions attributed to international aviation have increased by
87% between 1990 and 2001.789
166
Even produce that is available closer to the end market is flown across the Atlantic at
short notice. For instance, the US supplied 0.4% of UK lettuce consumption in 1997. One
supermarket explained that they use the US as a ‘standby’ source if the weather effects
UK and European availability.790
•
More than 44,000 tons of California-produced food alone are transported by air to
other US states each year.791
•
The weight of airfreight handled in the UK increased by 50% between 1994 and
2004.792 And food is the largest sector (by weight) of all air-freighted goods.793
•
Transport of food by air has the highest CO2 emissions per tonne, and is the
fastest growing mode of food transport. Total UK airfreight of food doubled
between 1989 and 1999 – and it is predicted to increase at 7.5% each year until
2010.794 Although air freight of food accounts for only 1% of UK tonnekilometres, it produces 11% of the food transport CO2 (or equivalent)
emissions.795
•
Air transport accounts for a significant proportion of CO2 emissions (13%)
although it accounts for less than 1% of tonne kilometres796
797
167
‘Organic’ emissions
Organic food is free from many pesticides which harm the environment, but much
organic food is processed and packaged to the same extent of other food. In
California just five huge farms control half of the state’s $400 million organic
produce market.798 This domination of organic farming by large companies means
that similar methods of distribution are used – with just the same impacts on the
environment.
“Someone in Oakland who buys a bottle of Heinz organic ketchup may
rightly suspect that the tomatoes were grown in California, reasonably
close to home. However, they are unlikely to know that those Californiagrown tomatoes were shipped to Ontario, Canada to be processed and
bottled before returning to retail shelves in Oakland, a round trip of 5,000
miles”799
International Society for Ecology and Culture
And imports of organic food are common, so the emissions from transporting organic
produce remains high.
•
In 2003-2004, 56% of all organic food by value in the UK was imported.800
•
A study in November 2004 found that half of the organic beef and pork from
Tesco was imported. The beef was mainly from Argentina and Australia and
the pork was from Denmark.801
The energy involved……
Because of the systemic transportation of food around the world, very often it takes more
energy to transport the food than the food itself actually contains.
•
The fossil fuel energy required to ship a head of lettuce from Salinas Valley,
California to Washington D.C. is 36 times the food energy that the lettuce
provides.802 And for every calorie of iceberg lettuce flown in from Los Angeles to
Western Europe, 127 calories of transport fuel are used.803
•
The UK ships parsnips from Australia and carrots from South Africa. Every
calorie of carrot imported requires 66 calories of energy to get it here.804
168
•
To import 1kg of asparagus from California to Europe requires four litres of
fuel.805
•
Around 90% of the orange juice concentrate processed in Germany comes from
Brazil – and therefore travels an average of 12,000 km. The transport of this
concentrate uses around 40 million litres of fuel each year, causing 100,000 tons
of CO2 emission.806
•
Strawberries from Israel travel 3,100 km to Germany – just one kilogramme
requires the use of 1.3 litres of fuel.807
•
A kilogramme of grapes from South Africa will use 4.3 litres of fuel on their
10,000 km voyage – releasing 11 kg of carbon dioxide and 74 kg of nitrogen into
the atmosphere.808
If considered in terms of electrical energy, the costs of food transport are startling…
Flying a kilo of mange tout 5000 miles from Zambia uses an incredible 130,000 MJ.809
Given that just one megajoule (MJ) of energy will light a 100-watt light bulb for 2.8
hours,810 that kilo of mange-tout could keep a 100-watt light bulb glowing strong for
364,000 hours… that’s over 40 years.
Food miles: a local comparison…
Buying locally drastically reduces the polluting impacts of food transport. A recent
British study showed that purchase of local apples resulted in an almost 3,000% reduction
in energy use and 87% lower carbon dioxide emissions than apples imported from New
Zealand.811
•
In Europe, if spring onions were grown and bought locally, there would be 300
times less CO2 emissions than if they were flown in from Mexico and taken home
from a supermarket in a car.812
•
If Iowans bought just 10% more of their food from within the state, they could
collectively save 7.9 million pounds of CO2 emissions a year. And if Japanese
families consumed local food instead of imported food, the impact would be
equivalent to reducing household energy use by 20%.813
The table below is taken from a Canadian study. It found that locally produced food items
in a farmer’s market had travelled an average of 101 km. The same study compared
similar items purchased in a nearby supermarket and found that the same imported
supermarket food items had travelled an average of 5,364 km.814 Some examples are
particularly striking. Lamb chops flown from New Zealand to Canada travelled 193 times
169
further than Canadian produced lamb chops by the time they were purchased by
consumers. But the New Zealand lamb chops produced over one thousand times as much
CO2 because they were flown in – one kilo of New Zealand lamb producing an incredible
eight kilos of CO2.815
Source: Foodshare report816
And this locally produced food is often cheaper. A UK study found that local produce in
local, independent stores was 17% cheaper than non-discounted food in chain stores.
Imported produce was 20% more expensive.817
Despite the environmental costs, food continues to be sourced from global producers and
transported long distances to the eventual consumer.
•
Data from Sainsbury’s shows that only a third of its UK sales by value were of British
food – £6 billion out of £18 billion in sales818
•
At the height of the British apple season, only 39% of apples stocked by the average
supermarket were British.819
170
What’s the price of them apples?
One survey looked at the country of origin and the varieties of apple on sale in the
largest five supermarket chains and in greengrocers during October 2005 – the peak of
the UK apple season. 32% of apple varieties were sourced from outside the EU – twice
as many as the last time similar survey was undertaken just two years before (when
Tesco and Asda only sourced 16% from outside the EU).820
171
Food Swapping
The global food supply system does not just distribute food types to countries which
cannot produce those foods themselves. In many cases countries are simply swapping
food. ‘Swapped commodities’ refer to instances when technically the same produce is
both imported and exported. In the UK ‘swapped’ commodities presently amount to 5.23
million tonnes every year.821
•
In 1998, Britain imported 61,400 tonnes of poultry meat from the Netherlands In
the same year it exported 33,100 tonnes of poultry meat back to the
Netherlands.822
•
Britain imported 240,000 tonnes of pork in 1998 and 125,000 tonnes of lamb
while it exported 195,000 tonnes of pork and 102,000 tonnes of lamb.823
•
In 1997 the UK imported 126 million litres of liquid milk and exported 270
million litres. In the same year the UK imported 23,000 tonnes of milk powder
and exported 153,000 tonnes. Most was exported outside the European Union.824
•
In one year, the port of New York City exported $431,000 worth of California
almonds to Italy, and imported $397,000 worth of Italian almonds to the United
States.825
•
Germany imports 10.06 million litres of apple juice concentrate from France,
while France imports 21.6 million litres of apple juice concentrate from Germany.
And what's more, Germany imports 40.8 million litres from China and 179.9
million litres from Turkey – and it exports 161.7 million litres to the US.826
And this has some sad consequences.
•
Since 1970 some 60% of the UK’s apple orchards have been lost and the UK now
imports half a million tonnes a year, half from outside the EU. This is a crop
ideally suited to the UK’s climate.827
•
A 2001 study estimates that even if all the UK’s home-grown fruit was consumed
domestically, the UK could be only 5% self-sufficient in fruit.828
•
Even home reared beef has probably been fed on soya protein imported from the
Americas or the Far East.829 Imports of soya, maize, molasses and other feedstuffs
together account for roughly a quarter by weight of all animal feed consumed in
the UK.830 Millions of acres of land in Latin America for example are producing
cattle fodder for the European market. These are known as ‘Ghost Acres’.831
172
Animal Transport
And this unsustainable demand for meat means live animals are also being transported
over long distances – to be slaughtered in centralised, large-scale slaughterhouses.
•
Livestock production traded across international borders has increased from 4% in
the early 1980s to approximately 10%.832
•
Over 6 million tonnes of live animals were transported by HGV within the UK in
2002.833
•
In 2002, 5 million live animals were imported to the UK and 41 million
exported.834
•
Between 1994 and 2004, U.S. imports of Canadian hogs increased from 670,000
pigs to about 8.6 million.835
Distances over which live animals are transported within Europe have increased due to
the closure of many small local abattoirs partly as a result of charging systems for
hygiene inspections. The increased movement of stock poses a new threat as it increases
the risk of spreading epidemics throughout a region’s farms. Reductions in live animal
movements could help to reduce the rates of spread of animal diseases.836
A recent survey showed that 52% of EU citizens said that they did not take animal
welfare considerations into account when buying meat. Overall, 74% of consumers
believe they can improve animal welfare through their shopping choices, and 57% are
willing to pay more for animal welfare-friendly food products. But the poll also reveals
consumers were concerned that such products are difficult to identify.837
Every year in the UK, around one million broiler chickens die in transit.838
173
Production and storage
The rise of pre-prepared foods, combined with consolidation in the food industry as a
whole, has led to the development of large, centralised processing and storage facilities.
In Ireland, for example, most potatoes are now sold pre-packed. In 2004, pre-packs
accounted for 95% of retail sales.839
The washing and pre-packing of potatoes requires new infrastructure. Growers have
invested over €65m in storage facilities over the last ten years. The Irish government has
invested a further €20m in grants. There is now in excess of 360,000 tonnes storage
capacity of which 117,000 tonnes is refrigerated. Most of the latter is concentrated in the
hands of growers farming over 50 hectares.840
The investment has enabled all-year-round supply of potatoes.841 But the benefits,
especially in the case of refrigerated storage space, come at huge environmental cost.
174
Refrigeration
Food is refrigerated more in store and in transit. Refrigeration is a key non-transport issue
to consider when assessing overall energy consumption and greenhouse gas emissions in
the food system.842
•
The largest single use of energy in a supermarket is refrigeration. Refrigerated
cabinets and storage units use half of a supermarket’s total energy – roughly 2-3
million kilowatts per hour annually – for a 35,000 square foot store.843
And retailers are expanding their offerings of refrigerated food. Chilled ready meals are
one of the supermarkets’ most profitable product categories, not least because they are
mostly private labels. In the UK, 97% of sales in the ‘refrigerated complete ready meals’
category are for private label brands.844
Major retailers are major consumers of energy
Supermarkets use large amounts of energy. Approximately 3% of the electric energy
consumed in Sweden is used in supermarkets. A breakdown of the energy usage shows
that typically 47% is used for refrigeration system, 27% for illumination, 13% for fans
and climate control, 3% for kitchen, 5% for outdoor usage and 5% for other uses.845
•
48% of a typical Sainsbury’s store’s energy use – 3.2 million kilowatts per hour
per year – is consumed by refrigeration.846
Cool chains - how refrigerated supply chains are increasing consolidation
and energy use
The following information is taken from a presentation delivered by Marks and Spencers.
It details the British food store’s strategy for sourcing fresh produce and the tight control
of the ‘cool chain’ required to stock its refrigerated shelves.
175
These are extracts from a slide show
presentation made by UK retailer Marks
& Spencer at the “CCA Convention “ in
Billund held on 24th May 2004
1
The slides are a fine illustration of many of the
problems that this report highlights.
Slide 1
Says:
80%
100%
pre-packed
chilled
Means: We use lots of packaging materials and
lots of energy to refrigerate almost three quarters
of our stock.
2
Slide 2
Says:
Chilled
Ambient
Frozen
70%
27%
3%
Means: We make lavish use of energy because
73% of our food is either frozen or chilled.
Slide 3
Says:
Local road freight
Int. road freight
Sea freight
Air freight
16%
24%
40%
20%
3
Means: We use lots of energy to transport our
food because almost a quarter of it travels
internationally by road. And a staggering 20% of
our fresh produce travels by air, often from the
other side of the world.
Slide 4
Says: Where the produce comes from. Another
Slide in the presentation listed sources as:
Africa
Asia
Australasia
Central America
EU (approx 50% Spain)
Middle East
North America
Oceana
Rest of Europe
South America
>90 £m
20 £m
20 £m
>30 £m
>160 £m (Spain >80 £m)
<10 £m
>40 £m
< 5 £m
10 £m
40 £m
Means: Our fresh produce is sourced globally, in
fact our supply chain stretches as far as
Polynesia. This means we have to use lots of
energy to transport it. Especially when so much
of it comes by, carbon intensive, air freight.
4
176
Slide 5
5
Says: Cooled in the field, then blast and hydro
cooled, pre-packed, then blast cooled.
Transported in refrigerated containers.
Means: We make lavish use of energy to
refrigerate our food. And we push our costs to
the very bottom of the supply chain by prepacking and labelling on the farm.
Slide 6
Says: Produce travels to airport, flown to
Europe, by road to Distribution Centre.
Refrigerated all the way. All auditable.
Means: We make lavish use of energy to
transport our food by air (refrigerated every
step of the way). Everything is “auditable” so
we know that our suppliers are complying with
our private standards. All our produce is
private label which means the supply chain
belongs to us even if we don’t actually own it.
Instead of owning it we use partner/suppliers,
preferred wholesalers and contract farmers.
6
Slide 7
Says: Price based on cost of production rather
than the marketplace.
Means: Our supply chain is closed. It is not
influenced by open markets. Small producers
are likely to be excluded. (“Price based on
cost of production” suggests use of open book
pricing where M&S decides profit margin and
return on capital suppliers are to receive.)
Another slide in the presentation headed “Cost
– Where we need to get to” states that
“Rationalisation won’t stop with growers &
packers”
7
Slide 8
Says: Retailers working with less packers
and less but bigger growers (the
Asda/Wal-Mart model). Perishables becoming
more important. Volumes shipped worldwide.
Faster more efficient distribution needed.
Means: We want to consolidate our supply
chain even more and work with fewer packers
and growers. This will mean larger farms,
extensive monoculture and will lead to a new
round of growers excluded from the market.
8
Like many retailers we follow also Asda/WalMart’s lead.
We plan to ship more food worldwide. And
because we want to do it faster and more
efficiently this will probably mean our
shippers are to be further consolidated. It also
means we are likely to make more use of
airfreight and just-in-time deliveries.
177
Slide 9
9
Says: Contrasts structure of present supply
chain with structure of desired supply.
Means: We want to consolidate our supply
chain even more and we plan to outsource
many of our core retail functions. In addition,
our relationships and commitment to existing
supply chain partners is now to be outsourced.
Slide 10
Says: Desire more retail/logistics interaction.
Desire for one stop shop.
Means: Single logistics provider, likely to
become conduit for company’s private
standards and responsible for enforcing them.
10
More interaction with logistics provider means
tighter integration with company’s systems,
especially IT. Logistics provider will be
required to make a substantial investment and
risks becoming a captive supplier subject to
“exit power”. “One stop shop” arrangement
suggests use of “open book pricing” where
retailer decides suppliers profit margin and
return on investment.
Slide 11
Says: Establishment of a code of conduct.
Looking for partners they can trust.
Means: We will establish a new set of private
standards. While relationships are important
to us, you are about to replace many of our
existing supply chain partners. But, we
promise to be more committed to you than we
are to them.
11
Slide 12
Says: Get colder. Get cheaper. Get faster. Get
closer.
Means:
Use more, energy intensive, refrigeration.
Push down prices. Further consolidate the
supply chain. And, because producers usually
end up with the biggest share of price cuts, this
will lead to bigger farms, further exclusion of
smaller producers and longer supply chains.
12
Get faster suggests an energy intensive “just
in time” supply chain and more use of carbon
intensive airfreight.
“Understand your end customer” means
“we’re only responding to consumer
demand”.
178
Logistics firms gear up for cool chains
In response to the retailer’s plea, large transport and logistics companies are gearing
themselves up for this energy intensive form of food distribution.
Cargolux Airlines of Luxembourg, which claims to be Europe’s largest all-cargo
airline.847 By December 2006 the company hopes to provide end-to-end cooling systems
for transporting supermarkets’ fresh produce.
Cargolux says it will carry “more than 100 tonnes of fresh fruits, vegetables, fish, and
flowers at a precise temperature over intercontinental distances without landing”.848
Perishable cargo makes up 10% of its tonnage each year and Cargolux’s sales manager
says he expects this to grow by up 20% by the end of 2010. Its perishables originate from
the company’s stations in Africa, Pakistan, Thailand, the US, South America as well as
from Amsterdam, Brussels, Frankfurt, Paris and the UK. During the last few years the
company’s perishable products operation has grown by 7-10% each year849
Cargolux predicts that the sector will move towards the processing of fresh produce at its
origin.
“The trend from South Africa, with regards to fruit products carried by air, is
towards the higher value, processed, fresh seasonal fruits, already peeled and
sliced, and mixed into fruit salads with their juices, to be ready for display on
the shelves of European supermarkets”850
Freshinfo News, paraphrasing the sales manager of Cargolux
British airways forcast growth of airfreight in perishables to grow at about 9% percent
each year851
All this refrigeration is damaging the environment in different ways. For one thing, it
produces Hydrofluorocarbons and Polyfluorocarbons (HFCs and PFCs), which are now
the primary causes of Ozone depletion.
The Ozone layer is a separate issue to climate change, although it is frequently damaged
by the same pollutants.
HFCs and PFCs also have a ‘radiative’ reinforcing effect. By trapping heat in the
atmosphere – just like CO2 – they are also harmful greenhouse gases. Some analyses
project that their impact will reach 4–10% of the global total by 2100 and double that if
not controlled.852
179
Processing
Consumption of processed foods is rising. Processed food travels far further than nonprocessed and its total energy consumption, including the processing stage, is some 15
times greater than non-processed food.853
The costs of corn
The energy required to produce, process, package, and distribute a can of corn is six
times the food energy contained in that very same corn. The packaging alone uses
more than twice the energy of production. Driving the corn home from the store and
preparing it also uses more energy than production. And what’s more, canned corn is
quite typical in its energy intensity.854
855
•
Processing accounts for about one-third of the energy use in the U.S. food system.
Each calorie of processed food consumes about 1,000 calories of energy.856
180
Some estimated energy inputs for processing various foods are:
•
Canned fruits and vegetables: 575 kcal/kg.857
•
Frozen fruits and vegetables: 1,815 kcal/kg.858
•
Breakfast cereals: 15,675 kcal/kg.859
Worse still is that processed food tends to require more packaging. Food packaging waste
accounts for 17.5% of UK household waste.860 (See the following section,
‘Consumption’.)
Processing food to increase its shelf life often requires food to be heated or dehydrated.
These treatments require significant amounts of energy.
•
Process heating uses approximately 29% of total energy in the food industry. 861
•
Process cooling and refrigeration uses around 16% of all energy inputs for the
food industry.862
Cutting carrots
Just two companies (Grimmway and Bolthouse) process 90% of the carrots in California.
Grimmway and its contract growers harvest carrots from 40,000 acres over the course of
a year.
Many of these carrots will be washed, soaked, de-topped, brushed, size sorted, cut, size
sorted again, electronically color sorted, hydro-cooled, stored, retrieved, peeled, polished,
size-sorted yet again, hand-sorted, hydro-cooled again, electronically scanned, packaged,
boxed, topped with ice, stored again, retrieved again and, at last, shipped.
Just 30% of those processed carrots end up in the bag. The rest is whittled away or
chopped off, or rejected entirely as too yellow, too blemished or too crooked. About twothirds of the company’s unprocessed carrots make it to the store shelves.863
Another study found the energy needed for a fast food-type hamburger – including,
amongst other things, beef, bun, lettuce, cheese, pickles, and onions – was estimated to be
between 24 and 65 MJ per kilogram. Unsurprisingly ground beef required the most
energy of all.864
Approximately half of all energy end-use consumption is used to change raw materials
into products (process use). Processing uses 78% of electricity, with 48% used for
machine drive and 25% for process cooling and refrigeration865
181
•
10 energy units are spent for every energy unit of food on our dinner table.866
•
1,000 energy units are used for every energy unit of processed food.867
A huge proportion of the cost of food is due to these stages in food manufacturing.
•
At least 40% of the industry shipment value is added through energy intensive
manufacturing 868
182
Consumption
The major environmental impact associated with consumption is waste.
The food system produces an enormous amount of waste, in the form of both packaging
and food.
Waste occurs at every stage of the value chain. Naturally, the largest share comes at the
end of the chain. Food packaging accounts for around 12% of all waste. Households in
the UK throw away enough edible food to feed 250,000 people.869
The disposal of the food system’s waste products has several implications for the
environment.
Waste
“We have lost touch with the processes that bring it to the table and we don't
notice the inefficiency.”870
Timothy Jones, University of Arizona
Europe is creating more and more rubbish. Each year in the European Union alone we
throw away 1.3 billion tonnes of waste - some 40 million tonnes of it hazardous. This
amounts to about 3.5 tonnes of solid waste for every man, woman and child, according to
European Environment Agency statistics.871
Add to this total a further 700 million tonnes of agricultural waste. It is clear that treating
and disposing of all this material - without harming the environment - becomes a major
problem.872
Here are some of the ways in which packaging and food waste threaten the environment:
•
Pollution of ground and surface water
•
Soil contamination and nature deterioration
•
Health risks from emissions of hazardous gases
•
Global warming through emissions of gases from landfill sites (methane) and
waste incineration
183
By 2020, the OECD estimates, we could be generating 45% more waste than we did in
1995.873
The modern food system is inherently wasteful.
•
Around 25% of the material introduced to the food chain is wasted.874
•
In the UK, the food sector accounts for over a third of all waste, a total of 17
million tonnes. Approximately 15% arises from food manufacturing and a further
21% from distribution, retailing and consumption.875
This waste falls into two categories – packaging waste and food waste. These are
examined below.
Packaging waste
The modern food system is highly dependent on packaging. The boxes, bags and packets
that contain our food account for 10-12% of the value of all food products.876
Packaging waste is on the increase…
•
More than two-thirds of packaging waste is related to the consumption of food.877
•
At current trends, packaging waste in Europe will rise to 77 million tonnes by
2008, an increase of 18%.878
•
Packaging waste represents about 17% of municipal solid waste2 by weight and
3% of the total waste stream. 879
Overall, more than half of all plastic packaging is used to package food.
•
The European packaging market produced 12.3 million tonnes of plastics in 1998.
The food packaging market – an overview
Packaging is big business. The value of the global packaging market is around $400bn.880
2
Municipal solid waste (MSW) is defined as ‘waste from households, as well as other waste which,
because of its nature or composition, is similar' (European Commission).
184
•
The largest European packaging manufacturer, Tetra Pak, has sales almost on a
par with food processor Cadbury Schweppes ($8.3bn compared with the
confectioner’s $10.1bn).881
•
The UK’s largest food and drink packager, Rexam, accounts for approximately
2.5% of the annual world use of aluminum (560, 457 tonnes in 2004).882
And food packaging is a major part of the packaging industry:
•
Food and drink account for 70%, in terms of volume,883 and 48%, in terms of
value,884 of all packaging worldwide.
•
Between 2004 and 2008 the UK market for food and drink packaging is forecast
to rise by 3%, reaching an estimated £5.944bn.885 Paper & board will account for
an estimated 43% of total sales by 2008. Plastics will represent 39% of the food
packaging market, with an estimated value of £1767.5m.886
•
The European market for plastics used in food and beverage packaging is set for
dramatic growth. A survey suggests total sales will have risen from €3.92 billion
in 2000 to €5.71 billion in 2007, equivalent to an annual growth rate of 5.5%.
Principal growth engines for the market include the rising sales of convenience
foods and ready meals.887
But increases in food consumption alone do not explain the rise in the amount of
packaging used for our food. Other factors affect the way food is packaged.
•
Increasing number of one-person households – smaller portions which means
more packaging.
•
Ageing population – development of easy-open features which may require more
material per pack.
•
More women working full-time outside the home; families tending not to eat
together - more ready-meals which need more sophisticated packaging; small
portions avoid food wastage, but need more packaging.
•
Health concerns - demand for fewer preservatives, means more packaging to
provide same shelf-life; encouraging children to eat fruit – small portions
packaged to appeal; increased demand for tamper-evidence and child-resistant
closures, means more material per pack.888
185
Packaging waste – the facts
•
EEA projections show that packaging waste volumes are likely to continue to
increase by about 50% between 2000 and 2020 in the EU-15.889 More than twothirds of this packaging waste is related to the consumption of food.890
•
More than half of the total packaging in Sweden is associated with the food
supply chain.891
•
Over the period 1997 to 2001 the amount of packaging waste generated increased
by 7% across the EU as a whole. The EEA estimates that this trend is set to
continue, and the amount of packaging waste could increase by 18% from 65
million tonnes in 2000 to 77 million tonnes in 2008.892
•
Packaging waste represents about 17% of municipal solid waste by weight and
3% of the total waste stream. For some materials, such as glass, plastics and
paper/cardboard, packaging waste represents a high share of the total material
waste, about 70% for glass, 60% for plastics and 40% for paper and cardboard. 893
•
On average, across the whole of the European Union, the amount of waste
packaging generated per head of population increased from 161kg in 1997 to
169kg in 1999.894
•
Packaging makes up around a quarter of UK household waste. Nearly 70% of this
is food-related. So food packaging waste accounts for 17.5% of total household
waste. Food waste accounts for 17% of this total. Therefore, 34.5% of household
waste is associated with the food supply chain.895
•
The Waste and Resources Action Programme (WRAP) puts this figure slightly
higher. It estimates that around half of UK household rubbish originates from
supermarkets and convenience stores.896
Nevertheless, packaging is only a part of total waste in the food value chain. In fact, most
waste is food waste – peelings and trimmings in the processing stage, or food that has
been damaged in transit, unsold, or left on a plate.
186
Food Waste
Much of the food that we buy is not eaten:
•
A USDA study estimated that US wastes 43 billion kilogrammes of food a year –
an incredible 27% of US food production, but the true figure is as much as 50%
according to another major research project.897
•
A 2004 study for the Department of Environment, Food and Rural Affairs
(DEFRA) estimates that 3%-6% of purchased food is discarded and food waste is
10%-20% of the food consumed..898 Other studies put this figure as high as 3040%.899
•
It is estimated that the food wasted in the UK is worth between £8bn and £16bn a
year900 and that the edible food thrown away could feed more than 250,000
people.901
•
The food and drink sector produces about seven million tonnes of waste per year,
most of which is food waste - making it the biggest manufacturing producer of
industrial waste. And this figure is growing by around 5% per year.902
•
The US Environmental Protection Agency (EPA) found that 21.9 million tons of
food waste was generated in 1997, representing the third largest category of solid
waste (10.1% of the total, by weight).903
Food is lost at every stage of the value chain:
In agriculture, some 30%-40% by weight of all food grown can be lost.904 More slips
away at the processing stage. The UK food manufacturing industry throws away at least
1m tonnes a year.905 But most food is wasted at the final stages in the value chain.
Retailers
•
According to Biffa, one of the UK’s largest waste handlers, supermarkets and
other retailers throw out about 500,000 tonnes of food a year.906
•
In the US, each year supermarkets, restaurants and convenience stores toss out
approximately 27 million tons of edible food worth $30 billion907
Food service
187
•
A study on food losses in four food service institutions in Stockholm, Sweden,
found that about one-fifth of the food is lost. Plate waste is the single largest
source of loss, at 11–13% of the amount of food served.908
Consumers
•
In the UK, 30-40% of all food is never eaten. In the last decade the amount we
binned went up by 15%. Every year each of us throws away over £400 worth of
food - £20 billion in total. 909
•
According to Biffa Waste Services, UK households now throw out more than
supermarkets and the food processing industry combined. Food waste is roughly
one third by weight of all the waste produced by households.910
•
A recent report for Prudential Insurance found that 61% of people admit to
throwing out at least one bag of salad each week without even removing the
packaging. A similar percentage threw away unused loaves of bread and fruit,
while slightly fewer threw out milk, cheese and meat. Also regularly wasted were
prepared meals.911
•
The average UK family now throws out about 2.7kg (6lb) of food per person per
week.912
•
A typical US household wastes 14% of all food purchased. 15% of that includes
products still within their expiry date, but never opened.913
Reasons
The changing structure of the food chain is not only shaping food production, but also the
production of food waste. The examples below highlight the impacts that contracting,
standards, retailer concentration and increased consumption of convenience foods can
have on waste:
•
Food surpluses used to go through wholesalers. But this market now accounts for
just 15% of sales, and it does not have the capacity to take extra food.914
•
WRAP estimates that 35-40% of biodegradable household waste originates from
purchases made in the four major food retailers.915
188
•
Chilled ready meals may appear to be more profitbale for retailers, but their
shorter shelf life makes them prone to losses through wastage.916
In addition, standards imposed on farmers, which specify the size and shape of produce,
may force them to plough up or dispose of large amounts of perfectly good fruit and
vegetables.917
189
Waste Disposal
There are several forms of waste disposal, or ‘municipal solid waste management’. The
options include:
•
Landfill
•
Incineration
•
Recycling
•
Composting
•
Anaerobic digestion
•
Mechanical biological treatment
918
190
All of these methods of waste disposal have environmental impacts. They all involve
emissions of CO2 and other pollutants, noise, odour and congestion from vehicles
supporting waste and by-products to and from treatment plants.
But some forms of waste disposal are more environmentally damaging than others,
particularly landfill.
Landfill
Landfill is one of the main ways to dispose of packaging and food waste:
•
Most of what we throw away is either burnt in incinerators, or dumped into
landfill sites (67%).919
•
UK government figures show that 17 million tonnes of food worth up to £20bn a
year are being put into landfill, even though approximately 25% of it could be
safely eaten by people or animals, or turned into compost and energy. The cost of
throwing food waste into landfills is more than £175m a year.920
Landfill is causing serious environmental damage
•
Landfilling not only takes up more and more valuable land space, it also causes
air, water and soil pollution, discharging carbon dioxide (CO2) and methane
(CH4) into the atmosphere and chemicals and pesticides into the earth and
groundwater. This, in turn, is harmful to human health, as well as to plants and
animals.921
•
And what's more, few materials degrade in landfills. Even naturally biodegradable
products may not degrade due to lack of air and moisture that bacteria need to
thrive. As a result, if a landfill was to be opened up 20 years into the future, many
of the packaging materials would still be recognisable.922
•
Landfill gas is roughly 50% methane.923 According to the EPA, methane is 21
times more efficient at trapping heat than carbon dioxide (CO2) and so is a major
cause of global warming.924
•
In the US, methane is responsible for 10.6% of global warming damage from
human sources. Of this, 35.8% is from landfill gas. Therefore, 3.8% of U.S.
global warming damage is from methane in landfill gas.925
191
Despite widespread recognition of the environmental risks, most waste continues to be
discharged to landfill:
•
According to the UK’s Department for Environment Food and Rural Affairs, in
the case of food waste there is “an imperative for disposal away from landfill”.926
But retailers still dispose of large amounts of biodegradable food waste in this
way. In 2004, Tesco says it sent 131,000 tonnes of waste to landfill, of which “the
majority was food”. Sainsbury's sent 91,000 tonnes to landfills, of which at least
70,000 tonnes is believed to be waste food.927
Moreover, this waste could be put to better use:
•
Landfilled waste from food production has been estimated at 2.7 million tonnes
per annum, much of which is organic matter. This is, if nothing else, a potential
source of energy, and may also be the source of useful materials for other
applications. Most of this value is currently written off as unrecoverable.928
Recycling
As an alternative to landfill, recycling can reduce emissions of greenhouse gases and
other pollutants since less energy is required to manufacture goods from recycled
sources.
The amount of recycling is increasing across Europe:
(Source: The Packaging Federation)929
In the UK, 12 billion plastic carrier bags and 29 billion food and drink cans are thrown
away every year.930
192
Export
Another, more recent ‘alternative’ to landfill is the export of waste to landfill sites in
other countries, such as China. This dumping of waste in other countries is a growing
trend….and concern.
•
The UK exported 27% of its packaging waste in 2004 compared to just 4% in
1998931
•
New government figures suggest that exports to China are running at 200,000
tonnes of plastic rubbish and 500,000 tonnes of paper and cardboard a year - a
huge increase on just three years ago.932
•
China drives the global waste trade, importing more than 3m tonnes of waste
plastic and 15m tonnes of paper and cardboard a year.933
•
Major UK supermarket chains are now sending their waste to China to be
recycled. Sainsbury's for instance sends 5,000 tonnes of plastic to China a year.934
193
Human health
This section refers mainly to consumer health.
The first part considers the question of biosecurity, or how safe our food is from
contamination. High-profile threats to biosecurity include BSE (mad cow disease) and E
coli bacteria. The food industry is demanding greater traceability of food through the
value chain. But as the industry consolidates, it may well be creating the conditions that
allow diseases to spread.
The second part takes a brief look at a common public health issue – obesity.
Biosecurity
Food is a source of health and nutrition. But it is also a carrier of disease:
•
According to the World Health Organisation, food-borne pathogens are
responsible for 70% of the roughly 1.5 billion annual episodes of diarrhea and 3
million deaths of children under the age of 5.935
•
A UK government survey in August 2001 revealed that two-thirds of fresh
chickens in British supermarkets and butchers shops are infected with food
poisoning bacteria.936
•
BSE cost the US beef industry $4 billion in 2004.937
And the chemicals used in farming are finding their way onto our plates.
•
Processed grains, such as bread and pasta, and certain fruits, such apples, peaches,
grapes, and pears, are often highly contaminated with organophosphates, a family
of chemicals accounting for 70% of the insecticides applied in the US.938 939
Industrial farming creates the conditions that give rise to disease, while the global nature
of food value chains means that these diseases can soon spread rapidly:
•
According to the Food and Agriculture Organization, the spread of avian flu from
Pakistan to China may have been facilitated by the rapid scaling-up of poultry and
pig operations and the massive geographic concentration of livestock from
industrial animal farms in Thailand, Vietnam and China.940
194
•
Most outbreaks of Escherichia coli (E. coli) have been associated with the rise of
rapid automated slaughter practices and industrial feedlots systems as the means
of raising cattle.941
•
A study of cancer causing compounds in farmed and wild salmon found that each
of the 14 substances tested were present in higher concentrations in the salmon
that had been farmed.942
•
Of the 18,000 tonnes of antibiotics used each year for medical and agricultural
purposes in the US, 12,600 tonnes are for ‘non-therapeutic’ treatment, in order to
promote farm animal growth. According to the World Health Organization and
FAO, the widespread use of these drugs in the livestock industry is helping to
breed antibiotic-resistant microbes, and making it harder to fight diseases amongst
both animals and humans alike.943
Consolidation in the food industry as a whole may also lead to unsafe practices. Despite
the better monitoring and enforcement of ‘standards’, the economic squeeze caused by
consolidation means that suppliers further down the chain will be tempted by cornercutting. The incorporation of cheap protein – such as chicken litter or bone meal – into
animal feed could save a processor thousands of pounds.
As most people by now know, the result of this particular industrial efficiency was the
appearance of bovine spongiform encephalopathy (BSE), or Mad Cow Disease, which
killed 175,000 cows in Britain before the government ordered the killing of an additional
2.5 million animals in an attempt to eliminate the disease.944 945
Traceability systems mean that outbreaks of disease can be quickly pin-pointed and
products recalled. Traceability is also becoming a unique selling point. For retailers,
biosecurity can be a source of competitive advantage – the ability to trace products back
to source is one way supermarkets can differentiate their products from those of their
rivals.
In future, the need to simultaneously meet the demand for cheap, safe and convenient
products on one hand and the need to maintain production efficiency and profitability,
one the other hand, is a challenge facing all actors in the industry.946
195
Obesity
Oil to fat…
The current structure of the food system seems to encourage unhealthy eating. The rise in
convenience foods, growing portion sizes, and increased accessibility of restaurant meals
all contribute to the rise in obesity.
For example, research shows that ounce for ounce, foods eaten away from home are more
calorie-dense than foods prepared at home.947 A typical American child now gets a
quarter of his or her vegetables in the form of French fries or potato chips.948
•
Obesity is the cause of 63% of heart attacks in Western Europe and 28% of heart
attacks in Central and Eastern Europe.949
•
Europeans with obesity problems are more than twice as likely to suffer a heart
attack as those who are not obese.950
•
In the US, diet-related chronic diseases account for nearly two-thirds of all deaths
each year.951
•
Today, 3 out of 10 Americans are obese and close to two-thirds are overweight or
obese.952
Fast-food chains argue that consumers are free to choose what not to eat – but research to
suggest that strong tastes for fat, sugar, and salt are hard-wired into humans.953
196
Appendix:
the food supply chain –
in detail
This section looks at the food supply chain in more detail. It provides facts and figures
for every step in the chain. It begins with retailers, before moving on to processors,
producers and consumers, and a final section on food service.
197
Retailers
Retail now dominates the control of food supply. As the final link between the supply
chain and consumer, retailers have grown in scale and power. Over past two decades, a
few major companies have consolidated and are now expanding their businesses across
the globe. This first section of this report looks at these seismic shifts in the global food
retail sector – focusing on Europe, the expansion of retail chains and formats into Central
and Eastern Europe and the astonishing growth of low-cost discount stores. It provides
the essential background detail to the rest of this report.
The Four Trends: Globalisation, Horizontal integration,
Concentration and Internationalisation
Retailers now operate in a globalised market. As trade becomes increasingly blind to
national boundaries, a single global marketplace has emerged. Food is sourced from –
and distributed around – the world and companies are consolidating to survive. A few,
large companies are succeeding – exploiting enormous economies of scale to streamline
their supply chains. These companies are grabbing ever-larger shares of the market in
food and this leads to extreme concentration within the retail market.
The 30 largest supermarket chains now account for about one third of all food sales
worldwide.954
Over the past decade or so, the appetites of retailers for mergers and takeovers has led to
the emergence of a small group of ‘proto-global’ retail transnational corporations
firmly committed to international expansion. These firms include Wal-Mart, Ahold,
Carrefour and a new and significant addition, Tesco.955 Between 1980 and 2001, each
expanded the number of countries where it operated by at least 270%.956
Globalisation
As the world’s food systems converge, towards a hybrid of U.S. and European
practices,957 researchers predict that as few as three or four global supermarket companies
– among them, Carrefour, Royal Ahold, and Wal-Mart – will control the distribution of
food to consumers worldwide.958
This figure is similar to an estimate made by Royal Ahold’s chairman who predicted that
only 5-8 supermarket leaders will survive globally.959
198
In fact, 51 of the 100 largest economies in the world are corporations and food retailers
are now among these new economic powerhouses. The global retailer Wal-Mart has a
value bigger than Sweden’s GDP and is one of the world’s top 20 economic entities.960
•
In 2003, the world’s top 30 grocery retailers were active in 88 countries, an
increase of nearly 70% since 1997.961
•
And total sales of the world’s 30 largest food retailers rose by 53% during 2002,
with some firms registering a two-fold increase in sales.962
The reason for globalization is simple: growth…..
Food is a mature market, but there are plenty of countries in the world where food retail
has not yet developed and consolidated. Retail growth in these countries offsets
increasingly stagnant western European markets963 and international sales have become
important to many retailers’ growth strategies.
International expansion since the late 1990s has not been just a defensive reaction to
over-dependence on home markets. It is also fuelled by the retailers’ need to sustain
earnings growth. In other words, pressure from financial institutions to secure profits has
driven this trend.964 This international expansion is clear to see in black and white:
•
In 1990 Ahold was present in two countries and Carrefour in six. Wal-Mart and
Tesco were only present in their home markets. By 2002, however, Ahold was
present in a total of 21 countries, Carrefour in 29, Wal-Mart in 11, and Tesco
in13.965 And, today, nearly half of Tesco’s square footage is overseas.966
•
Wal-Mart’s international division now makes up nearly one-fifth of the
company’s total sales.967 Wal-Mart announced in 2005 that it wants its foreign
sales percentage to rise to 30%.968
199
Top 30 Grocery Retailers Worldwide 2004
Horizontal integration
What is horizontal integration?
Horizontal integration is when a firm expands across its own area of the market – for
example, when one retailer acquires another retailer, or one chicken processor acquires
another chicken processor. In food retail, firms that are successful in their domestic
markets tend to try and expand overseas, Often they do this by merger or aquisition. This
benefits them in three ways:
•
•
new and wider market opportunities
synergies and increases in cost efficiency
200
•
the ability to obtain established retail brands from across the world
Mergers and acquisitions create the “synergy effect”, enabling companies to benefit from
economies of scale. An increase in buying volume increases the bargaining power in
relation to manufacturers. But just as important is the transplanting of a successful
format. Operators possess a competitive advantage in the professionalism of their
format-specific marketing and management. These companies see more advantages in
transferring their concepts themselves than in licensing them to third parties.969
Over the past few years, a wave of acquisitions has taken place in the global food retail
market, as companies buy and gain the retail infrastructure of their competitors.
•
XXX WHEN At least 300 reported food merger and acquisition transactions have
occurred globally every year for the last 5 years.970
•
In 2001 alone, there were 57 identified deals amongst the top 30 retailers –
involving more than 7,000 stores, and representing around €38.4 billion worth of
net sales.971
•
Between 1996 and 1999, there had been 385 mergers in the US grocery industry
with the acquired companies having combined annual sales in excess of US$67
billion.972
Carrefour: a case in point
In 2005 Carrefour acquired hypermarkets in Brazil and Poland, and it bought majority
stakes in retail chains in Turkey (Gima and Endi)973, Cyprus, Italy and Romania. The net
result: by the end of 2004, Carrefour was trading from 42 hypermarkets, 77 supermarkets
and 239 discount stores in Poland, the Czech Republic, Slovakia and Turkey.974 In
addition to this, determined to win in the discount format, Carrefour declared its intention
to buy low-cost French supermarket Penny Market from Germany's Rewe.975
Retailers can also reshuffle their hands by simply swapping stores with each other. That
way companies who are strong in one market and weak in another can swap with
companies who have equal and opposite strengths.
•
In October 2005, Tesco announced that it will swap six stores and two building
projects in Taiwan, in return for 11 Carrefour stores in the Czech Republic and
four stores in Slovakia. Both companies were making losses in the areas which
they swapped.976 For the two large retailers, the exchange was mutually
beneficial.
201
Concentration
This is happening worldwide
All these mergers and buy-ups lead to a very concentrated retail market. Fewer and larger
transnational corporations are rapidly taking a growing share of the global market in
food. 30 retailers account for a third of global food sales now, but that proportion is
growing and the number of companies controlling those sales is diminishing.
•
The global market share of the top six grocery retailers worldwide is set to rise to
nearly 20% in 2008, up from 15.4% in 2003.977
•
And Wal-Mart’s share is forecast to rise from 6.7% to 8.6% in the same
timeframe.978
Inserted here will be a table demonstrating the concentration forecasts (region by region)
of the top ten global retailers: 2003-2008.
TABLE CR-10 (global, by region)
XXX concentration ratio’s explain
Some national markets are oligopsonies
XXX CONCENTRATION RATIOSXX
‘Strong oligopsony’ is a market dominated by a few buyers. It is considered to occur
when the four firm concentration ratio is above 50%.979 Many grocery markets around the
world are oligopsonies:
•
In France, in 2000 the top five grocery retailers had an 81% share of the
market.980
202
•
In the late 1990s the top three supermarket chains in Australia had 75.4% of the
grocery market. Now, the top two account for over 75% of Australian grocery
sales.981
•
In 2003, the top 5 food retailers in the US accounted for 46% of total US sales,
almost double the 24% share just six years before.982 Wal-Mart is predicted to
control 35% of US food-store-industry sales by 2007.983
Emerging Markets
“The company [Carrefour] knows what it is good at – hypermarket retailing –
and it has a history of rolling out this format in ever-distant markets.”984
Mintel, European Retail Digest, 2003
In future, more than half of the growth in global food retail is expected to be in emerging
markets.985 Almost all population growth over the next 25 years is predicted to take place
in urban centres in low- to middle-income countries, and the global retailers are
structuring their organisations to meet this demand.
But, there are also other reasons why foreign markets are attractive:
•
•
•
Restrictive planning legislation in western Europe have prompted large operators
to look further a field for growth opportunities.986
Market saturation or monopoly problems in the domestic market. 987
Weaker competition or higher profit margins in the foreign markets988
“global retailing was characterized in the mid-to-late 1990s then by the
efforts of an elite group of firms to leverage their increasing core-market
scale and the free cash flow for expansionary investment which those markets
provided, in order to secure the longer-term higher growth opportunities
offered by the emerging markets.”989
The big food retailers are moving into emerging markets at breakneck pace and this trend
can be witnessed throughout the world:
•
In Latin America, global multinationals now constitute on average 70-80% of the
top five supermarket chains per country.990 Supermarkets now control 50–60% of
the food retail sector in Latin America – a phenomenal increase from 10–20% in
only 10 years.991
203
•
Tesco’s operating space in Central and Eastern Europe and East Asia is set to rise
to 50.2% of the group’s total operating space by 2007. Up from just 8.1% in
1998.992
•
In Thailand, Tesco has become the clear market leader since its arrival in 1997,
with its investments accounting for over 5% of all inward foreign direct
investment since 1998.993
•
Just two multinational companies operating in Nicaragua – CSU (Corporación de
Supermercados Unidos) and US PriceSmart – hold 56.4% of the supermarket
sector of Nicaragua.994
204
China: foreign firms moving in
The modern food chain comprises around one-quarter of the China’s food retail
sales.995 Carrefour entered mainland China in 1995 and in the following six years it
built 27 stores there996. By 2001 supermarket shares in the sales of packaged and
processed food in urban China had increased by more than 50% from only two years
before.997
Supermarkets in China are estimated to turn over US$40 billion of food annually.
This is 35% of urban food retailing, and growing fast.998
Carrefour, the world ’s second largest retailers, for the first time, launched 435
private label products in its 46 stores across 23 Chinese cities last year. These
Carrefour-branded products include foods, daily necessities and clothes, and are sold
only in Carrefour hypermarkets in China. They are priced at around four-fifths the
price of the non-private label products.999
In China, Carrefour’s first Dia discount store was opened in 2003, and there are now
164 Dia outlets. Carrefour hopes to open 200 a year over the next few years.1000
Carrefour, for example, recently announced plans to build 10 to 15 new stores each
year, one-third of which will be in tne centre and western areas, Spar has also
recently entered China, with plans to build 15 hypermarkets in the next three
years.1001
For instance, Carrefour, the largest foreign retailer in China, has relocated its regional
headquarter for central and western China from Shanghai to Chengdu, the capital city
of Sichuan province. Such relocation reflects that the retail giant has been trying
hard to consolidate its foothold in China ’s western region. Recently, Carrefour has
stated its intention to open 10-15 new stores each year, and about one-third of these
stores will be located in the central and western areas. Meanwhile, Walmart, another
international retail giant, has begun its penetration into the second-tier cities and the
inland regions. Reliable sources say that Walmart is currently negotiating with 10
second-tier c cities, including Jinhua in Zhejiang and Wuhu in Anhui, about opening
new stores in these cities. With its aggressive expansion plan, Walmart plans to have
over 90 stores nationwide by the end of 2006. Apart from Carrefour and Walmart,
Germany-based Metro AG also claimed that it would focus on the northeastern area
and was set to open new stores in Dalian, Shenyang, Harbin and Changchun. Lotus
Supercenter of Thailand and Auchan of France,are also speeding up their expansion
in the western area.1002
205
1003
Strategies for expansion
There are many reasons why retailers have sought growth in markets abroad:
New formats: the rise of the bigger superstore
As the concentration of an internationalized market expands, the world is witnessing a
rise in the number of superstores and hypermarkets. Wal-Mart Supercenters range from
180,000 to 225,000 square feet.1004 XXX HOW MANY FOOTBALL FIELDS Because
of the size of these formats, most are located outside town centres.
•
Global store numbers for the top 30 retailers are set to rise by 13% between 2005
and 2009, from 140,700 to 159,000. The large majority of these stores will be
opened in Asia & Australasia, Central & Eastern Europe and Latin America.1005
•
Between 1999 and 2004, the global numbers of hypermarkets and superstores
increased by 20% from 19,356 to more than 23,000 outlets.1006
•
Meanwhile the number of discount stores shot up by 37% between 1999 and
2004, rising from 21,060 to nearly 29,000 outlets. Discount stores are forecast to
grow by 22% between 2005 and 2009, increasing their numbers to 37,000.1007
206
And the major retailers are also taking an ever-greater share of the convenience
market.
•
The number of convenience stores developed by the Top 30 grocery retailers
worldwide increased by 40% from 23,820 to 33,441 units. This will likely swell
to almost 40,000 units by 2009.1008
Despite a less concentrated retail market than Europe, the US has seen an astonishing
growth of superstore formats. With a 72% share of US ‘supercenter’ sales,1009 WalMart’s 1,672 ‘supercenters’ account for approximately 42% of its total sales. Their
growth has catapulted Wal-Mart to $80 billion in food sales, or $1 out of every $6 spent
at retail.1010 And while Wal-Mart plans to open 1,000 new Supercenters in the U.S. by
2010,1011 the superstore formats are putting smaller shops out of business.
•
Studies in the US have shown that five years after opening a new Wal-Mart, sales
of stores within a 20-mile radius fall by an average of 19%.1012For every new
Supercenter that Wal-Mart opens, two local supermarkets will close. 1013
•
Since Wal-Mart’s expansion into Iowa, where it now has 60 outlets, a number of
stores have shut down, including: 555 grocery stores, 298 hardware stores, 293
building suppliers, 161 variety shops, 158 women’s stores, and 116
pharmacies.1014
207
Top transnational retailers: company profiles
The major retailers have global ambitions. Only five of the top 30 grocery retailers
operate in just one domestic market. The rest have substantial and growing foreign sales.
Walmart’s estimated annual US stores sales of $285 billion is nearly five times its nearest
domestic competitor Kroger Co.1015
Wal-Mart
Number of countries: 11
Number of stores: 5,170
Number of employees: 1.6m
Country of origin: USA
Wal-Mart is the world’s largest retailer, selling to more than 138 million customers per
week worldwide. It is the market leader in three countries. Internationally, the company
continues to expand. It already has a presence in the UK and Germany, and is looking at
opportunities in Russia, India, Italy, Turkey and in Latin America. It also plans to
accelerate store openings in China and expand into smaller Chinese cities.1016 Wal-Mart’s
1,672 supercenters account for approximately 42% of total sales.1017
Carrefour
Number of countries: 29
Number of stores: 11,000
Number of employees: 430,000
Country of origin: France
Carrefour is the largest European retailer, operating three main formats: hypermarket,
supermarket, and hard discount. Its global reach spans five countries in Latin America,
six in North Africa and the Middle East, eight in South East Asia and 11 in Europe. It is
the market leader in nine countries worldwide.
Metro Group
Number of countries: 30
Number of stores: 2,447
Number of employees: 251,556
Country of origin: Germany
208
Metro has a strong focus on Central & Eastern European markets such as Russia and the
Ukraine. The company recently entered Moldova (December 2004) and Serbia &
Montenegro (January 2005).
Royal Ahold
Number of countries: 21
Number of stores: 4,000
Number of employees: 206,441
Country of origin: Netherlands
Following an accounting scandal at a US subsidiary in February 2003, Ahold has
withdrawn from several markets and decided to refocus its attention on Europe, as part of
its ‘road to recovery’ plan. The company has significant operations through subsidiaries
in its domestic market, the Netherlands, and in Eastern Europe, especially Slovakia,
Poland and the Czech Republic.
Tesco
Number of countries: 13
Number of stores: 2,365
Number of employees: 335,750
Country of origin: UK
The vast majority of Tesco stores (1780) are in the UK. The company recently entered
Turkey (2003) and China (2004) and operates in 6 countries in Europe. Worldwide it is
the market leader in 5 countries. In 2006 Tesco announced plans to enter the US
convenience store sector.
REWE
Number of countries: 13
Number of stores: 11,665
Number of employees: 196,224
Country of origin: Germany
Founded in 1927, REWE is a cooperative owned by some 3,000 of its independent retail
members. The majority of its sales (59%) are in Germany, where it has 9,841 stores. The
company has an additional 2,999 stores in Western and Eastern Europe, with Western
Europe accounting for 77% of these foreign sales.
209
Costco
Number of countries: 8
Number of stores: 450 (warehouses)
Number of employees: 113,000
Country of origin: USA
Costco Wholesale Corporation operates membership warehouses based on low prices.
The size of each warehouse is approximately 139,000 square feet. Stores offer about
4,000 products to 42 million cardholders.
AEON
Number of countries: 11
Number of stores: 4,000
Number of employees: 194,978
Country of origin: Japan
AEON is the largest supermarket chain in Japan, where it has 690 stores. It is the holding
company for 148 operations in Asia and the US.
A closer look at Europe’s food retail market
The European consumer market is made up of 519 million people spread over 35
countries, spending €700 billion in supermarkets.1018 Europe has been at the centre of a
transformation in food retail. Concentration levels are among the highest in the world and
many of today’s global retailers started their expansion from domestic European markets.
Mergers have dominated European food retail over the past decade or so, leading to
greater and greater economies of scale in retailer supply and distribution networks.
•
Between 1990 and 1998, there were 55 food retailer mergers across Europe.1019
•
In 2002 alone, over 180 deals led to nearly 23,500 stores changing hands1020
210
•
In Europe, the biggest single deal in 2003 was Rewe's acquisition of the Swiss
group Bon appétit, which added €2.1 billion in retail sales.1021
Wal-Mart buys Asda
In June 1999 Wal-Mart acquired Asda in a deal worth £6.7bn.1022 The UK company
immediately started a price war and continues to drive down retail prices. In 2003, Asda
overtook Sainsbury’s to become the UK’s second biggest retailer behind Tesco. But the
company has faced criticism for its policy of making exclusive contracts with a small
group of ‘preferred suppliers’.1023
Morrisons buy Safeway
In 2004 Morrisons acquired Safeway for £3bn to expand its regional coverage. Yet the
costs of integrating Safeway have been greater than expected.1024 Soon after the
acquisition, the monopoly commission asked Morrison to sell 50 stores and management
complications have led to an estimated 200 store closures across the country.1025 The
tussle at the top for a dominant share of the UK retail market is still being played out.
As the European single market has lowered many borders – mergers are happening
between firms on an international level.
•
In 1998, almost half Europe’s €10.8 billion worth of food retail mergers were
acquisitions or alliances outside domestic markets – against only 20% five years
before.1026
Concentration
In Europe, concentration levels are extremely high. In 2004, the top 30 European grocery
retailers captured a combined market share of 63.5%.1027 Incredibly it looks as if the big
companies dominating the European food retail market are set to become even bigger.
•
In Western Europe concentration levels are higher than on the continent
generally. The combined market share of Western Europe’s top 30 grocers is
expected to rise to 71.5% in 2009 from 68% in 2004.1028
•
In 2009, just 10 retailers in Europe will account for 37.8% of European grocery
sales.1029
•
The top 10 European grocery retailers will increase their global share from 22.7%
to 36.8% between 2000 and 2010.1030
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To be amongst Europe’s top ten, today’s retailers need annual sales of more than Euros
29 billion.
Europe: Top 30 Grocery Retailers, 2004
212
213
Market share by country
Below is a quick country by country lowdown of Western Europe’s food retail market. It
provides a good overview of just how concentrated the markets in food sales have
become.
74% of the UK’s grocery market is currently controlled by four companies (Tesco, Asda,
Sainsburys and Morrisons).1031 Accounting for more than £1 in every £8 spent on the UK
high street,1032 Tesco controls more than 30% of the overall British grocery market. It has
been calculated that Tesco has the largest market share in 67 out of 120 postal districts
around the country, while Asda controls 23, Sainsbury’s 14 and Morrisons 13. In 14
districts, Tesco has more than 40% of the market and in five towns more than 45% of the
market. Tesco has accumulated enough land to develop up to 180 new stores.1033
In Germany, the largest four grocery firms (Metro Group, Rewe Group, Edeka/AVA
Group and Aldi Group) have 56% of the total grocery market.1034 In 2003, the top five
food and beverage retailers accounted for 73% of national sales and the top ten accounted
for 90% national sales.1035
France, Belgium, Spain and the Netherlands all have highly concentrated food retial
markets. In France the concentration of the four largest food retailers (Carrefour, ITM,
Leclerc, and Casino) is 63%.1036 The largest grocery firms in the Netherlands (Ahold,
Casino, Sperwer, and Makro/Metro) account for 66% of grocery sales. 1037 In Spain the
top four firms (ElCorte Ingles, Carrefour, Mercadona, and Eroski) control 62% of
grocery sales.1038 Belgium is similar, as the four firms (Carrefour, Delhaize LE Lion,
Colrupt and Cora Delhaize) take 64% of sales.1039
Italy’s market remains relatively fragmented with the top four taking 36% of grocery
sales (Coop Italia, Auchan/Rinascente, Carrefour and Conrad).1040 But the top five chains
in Austria cover nearly 90% of the domestic market. The retail market share of REWE
Austria alone in 2003 was 36% while the market share of Spar accounted for 34.2%.1041
Market concentration in the northern European countries of Denmark, Norway,
Sweden, and Finland is especially high. The largest three retailers in each country have
up to 95% of the total market share.1042 In Sweden, the wholesale and retail food market
is dominated by three nationwide groups, ICA (37.3%), Coop (18.3%) and Axfood
(18.2%). Together they account for almost 75% of the commodity retail market.1043 A few
central wholesale organizations (LK-Group, S-Group, Tradeka/Elanto, Spar Group,
Wihuri and Stockmann) dominate the Finnish food industry with a combined market
share of nearly 80%.1044 And in Norway four retail chains (Norgesgruppen A/S, ICA
Norge A/S, Coop, and Rema 1000 Norge) control 99% of all retail stores and also
dominate grocery sales through gas stations and kiosks.1045
214
Formats in Europe:
The big stores grow…
Every food retail market is different. France is clearly the heartland of the hypermarket,
first established by Carrefour in 1963. Germany is renowned for the hard discount stores
originally developed by Aldi. Superstore retailing and their complementary convenience
stores such as Tesco Express and Sainsbury’s Local is the main feature of the UK retail
landscape.1046
Supermarket growth has happened across Europe. In Italy, for example, between 1996
and 2000, the number of supermarkets rose from 3,696 to 6,413 – an increase of 74%.1047
And throughout Europe, all of the major retail formats will continue to rise.
…and the small stores become fewer
The rising number of big and discount formats comes at a cost. Despite the rising
numbers of hypermarkets. the number of individual food stores is in fact falling, as small
shops go out of business. All over Europe, the story is the same: supermarket chains
move in, small independent shops shut down. There has been a litany of closures across
the continent.
•
In Spain the number of traditional and self-service stores fell from 54,448 to
43,193 between 1999 and 2003. In the same period the number of supermarkets
increased from 12,565 to 13,720.1048
215
•
In 1960 there were 23,900 small retailers in Austria1049 and there were still 20,000
in 1970. By 2003, the number of food shops had dropped to just 6,0831050
•
In Italy, the arrival of superstores known as 'ipermercati' has resulted in the
closure of 370,000 small, family-run businesses – including half of the country's
corner groceries – since 1991.1051
•
Between 1985 and 2000, the number of independent grocery retailers in Britain
fell from 47,068 to 28,319. The number of butchers fell from 23,000 to 9,721 in
the same period.1052 More than 20% of independent food shops closed in the four
years before 2004. 2,000 closed down in 2004 alone.1053
Concentrated Convenience: the UK leads the way…
Despite small food store closures in the UK, the rise of the chain convenience store has
been stellar. There are presently 53,653 small convenience stores in the UK. Researchers
predict that by 2009 this market will shrink slightly to 51,950 stores with an enormous
market value of £29 billion1054
Serial consolidation since 2002 has resulted in fewer, larger operators controlling the
convenience market. Musgrave bought Budgens. Tesco bought Europa and T&S Stores.
Co-op bought Balfour, Local Plus and Alldays. Sainsbury’s bought Bell Stores.
Somerfield bought Aberness.1055 The large retailers are moving into the small store
market.
Tesco’s recent acquisition of 21 petrol stations from Morrisons takes the number of
convenience stores it operates to almost 580. The retailer now has 6% of the highly
fragmented convenience store market1056 and plans to double the number of Tesco
Express convenience stores to 1,200.1057
In a strategy code-named ‘Project-Disco, Wal-Mart’s Asda has recently announced that it
will open a new chain of discount convenience stores, stocking only a limited range of
goods to challenge Sainsbury’s and Tesco’s convenience stores1058
Expansion into Central and Eastern Europe (CEE)
As Western Europe’s market approaches saturation point, the large retailers are looking
to continue their growth. New markets have emerged within Europe and economic
216
growth has accelerated since EU enlargement. Europe’s major retailers are expanding
into Central and Eastern Europe at a rate of knots.
Until recently Poland’s food retail market was mostly a Polish affair, but by 2002, no less
than 13 of the world’s top 30 grocery retailers had a presence there.1059
Expansion in Central and Eastern Europe is taking place in two phases. International
retailers moved first into markets in Central Europe, such as Poland, the Czech Republic
and Hungary. Now, as markets in Central Europe have become more concentrated,
retailers are starting to look further a field, to the relatively untapped markets of Eastern
Europe.
With a grocery market worth €187.8 billion, compared to the UK’s €176.7 billion,
Eastern Europe is a tempting prospect for food retailers.1060
Concentration: East follows West
In the former Communist region of Central Europe, concentration is progressing a lot
faster than in West, although from a much lower level. The story is the same: fewer
retailers are taking larger chunks of food sales. The combined market share of the top 30
grocery retailers operating in the region is set increase to 59.5% in 2009 from 48% in
2004.1061 The retailers are rapidly transforming the food retail scene.
•
The leading five food retailers in Lithuania, Slovenia, Estonia and Hungary
command over 65% of food sales.1062
•
The top five companies in Croatia, Latvia and the Czech Republic have a 35-65%
share of the food retail market.1063
•
The top ten retailers in Poland are all foreign-owned. Large retail chains are
expected to account for 45–50% of Poland’s total food sales by the end of
2005.1064
Recent retailer manoeuvres in CEE
In 2005 the top five companies command less than 24% of the Bulgarian food retail
market,1065 but this situation looks set to change. REWE has announced its intention to
have 50 hypermarkets in Bulgaria by 2010. The group will invest more than €220m in the
country in the next three to five years.1066
217
Tesco planned to add more than 30 stores in Central and Eastern Europe in 2005. The
firm already has just under 200 stores across Hungary, the Czech Republic, Slovakia and
Poland.1067
Meanwhile, Ahold has acquired 57 stores in the Czech Republic from Austria-based firm
Julius Meini in a deal rumoured to be between €20 to €40 million. This will increase the
number of Albert supermarkets in the Czech Republic to approximately 250.1068
Formats go East
By 2009, Metro Group is forecast to become the largest retailer in Central and Eastern
Europe, ahead of Russian group Pyaterochka, the current leader. Ahold is set to be the
third largest.1069 The expansion of the major retailers has of course come hand in hand
with larger formats. So the same things are happening in Eastern Europe as happened in
Western European markets. The hypermarkets and discount stores arrive and thrive while
the smaller shops go out of business.
•
Supermarket sales in Eastern Europe are forecast to expand by 150% to just
under €9 billion for the leading retailers by 2009.1070 Supermarkets are the most
common type of store in Slovakia and in the urban areas of Kiev.1071
•
Hypermarkets are popular in the Czech Republic and Hungary, where they
account for 35% and 29% of shoppers respectively. 1072
•
Discount chains account for nearly a quarter of all food shops in Poland and 22%
in Czech Republic and 20 % in Hungary. 1073
And although small stores still dominate in the emerging markets of Romania or Serbia
and Montenegro,1074 if the present trends are anything to go by, their future looks bleak.
218
219
Hungary
In Hungary the concentration of the market is striking. The top 10 retailers now account
for 89% of the market. This compares with just 22% in food processing and 7% in
agriculture.1075
1076
The rise of the Hungarian Hypermarkets
In 1997 a mere five hypermarkets existed with only 5% of the country’s food retail sales,
Six years later the number of hypermarkets had risen twlevefold with 24% of the total
food sales – over half of them are owned by Tesco.
Looking further east….
Similar concentration in the food retail market looks sure to follow in Russia. Investment
analysts A.T. Kearney publish a list ranking emerging markets in terms of their suitability
for foreign retail investment. When the list was first published in 1995, Poland and Czech
Republic both featured in the top 10. Now neither makes the list. Given that major
retailers have since entered both these countries, the analysis seems to provide a good
indication of future shifts in the retail market.
220
In 2005 a string of Eastern European countries appeared on the list. Slovenia came 5th,
followed by Latvia in 6th and Croatia in 7th. Slovakia, Bulgaria, Macedonia, Lithuania,
Hungary, Bosnia-Herzegovina and Romania all made the top 30.1077
Russia and the Ukraine rate highly on the index for 2005. Russia was ranked 2nd and the
Ukraine 3rd. Those markets are set to expand as the supermarket chains move in.
•
By 2020, Russia will have taken over from Germany and France to become the
largest food and grocery market in Europe. In the next 15 years the Russian
market will be worth €375bn, almost three times more than its current €134bn.1078
•
Metro is expanding its cash & carry network and has just opened its first
hypermarket in Russia.
Discounters
Discounters are growing fast in Europe are the most extreme example of recent trends in
the food supply chain – driving down prices whatever the cost. Discounters are food
retailers that offer goods at low prices and on a large scale. They are also known as
“value sellers”. The number and market share of discounters across Europe have risen
relentlessly over the past decade.
Discounters share some the following common characteristics:
•
•
•
•
•
Aggressive and unambiguous “low price” strategy. With strong cost control, there
is a relentless focus on driving down cost, from head office to stores.1079
Standardised shop formats with simple equipment and no frills.
Limited number of lines, most of them private label.1080 A typical store range for
is only 600-1,500 lines.1081
Efficient logistics programme. Aldi’s logistics and operation system works on a
12% gross margin.1082
Aggressive expansion programme. Aldi and Lidl are opening new stores across
Europe. Aldi has a “real estate” section on its website, looking for offers of raw
land or retail space in areas with a population of 15,000 or more. Lidl’s website
notes that it has more than 4,000 stores in Europe, and that it is seeking real estate
in areas with a population of 5,000 plus.
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Germany
Germany is the ‘discount’ nation of Europe and discounters are still growing in strength,
controlling nearly 40% of the German grocery market. The market is dominated by Lidl
and Aldi.
•
Hypermarkets and discounters now account for about 60% of all retail food and
beverage sales, despite accounting for less than one-quarter of all the outlets.1083
•
Discount stores took 38.4% of the German retail food sales, up from 26.3% in
2003.1084
•
All regular German grocery retailers experienced a considerable sales drop in
2002, but sales at leading discount chains Aldi and Lidl grew by up to 15%.1085
Frozen food sales at the two leading discounters are thought to have grown by an
even faster rate – by up to 20%.1086
This breakneck growth comes at a cost. The main association of German retailers
issued a report on in March 2004 blaming Aldi and other “hard discounters” for running
35,000 small shops out of business last year. Bavarian dairy farmers have picketed Aldi
stores, which they blame for a ruinous 15% plunge in milk prices since 2001.1087
The Rest of Europe
Don’t discount the Discounters as a German phenomenon. Discounter share is increasing
rapidly across Europe. They have grown their share over the past decade in all but two of
the top 16 European markets. They now account for more than 15% of the total European
grocery retail market.1088
222
•
Discounters sales are set to grow by 35% across Europe to €154bn by 2009. The
discount store is the fastest growing format across the region, with an additional
10,000 stores due to open over the next five years.1089
•
Some 47% of all new retail outlets opened in Europe since 1991 have been
discount stores. Collectively, they have opened an average of 3.5 stores every day
since that year.1090
•
The combined share of Aldi and Schwarz Group (Lidl, Kaufland) is set to rise to
7% of the entire European food retail market in 2009 from 6.2% in 2004.1091
1092
Discounters are growing faster than other formats
Although discounters still occupy a lower share in total grocery sales in the UK, they
have experienced tremendous growth in an otherwise stagnant market.1093 Further-a-field,
Carrefour’s first Dia discount store was opened in China in 2003, and there are now 164
Dia outlets. Carrefour hopes to open 200 a year over the next few years.1094
Lidl expanded into the Czech Republic in 2003 and Hungary in 2004 and earlier this year
Rewe’s Penny Markets opened in Romania.1095 Foreign hypermarket operators in Poland,
the Czech Republic, Hungary and Slovakia are being hit hard by the Aldi, Lidl and
Kaufland hard discount operations which are forcing them to lower their prices.1096 As a
result, some of the major supermarket retailers are beginning to copy the format. Tesco
has recently opened a discount supermarket concept in the Czech Republic, designed to
compete head-on with the fast growing discounters.1097
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Company profiles
Aldi
The Aldi Group is the world’s leading discount food chain with more than 6,000
stores.1098 It took 16.7% of the German grocery retail market in 20031099 and increased its
sales by 7.3% over the following year to €26.3 billion.1100 According to a poll conducted
by AC Nielsen, German consumers spend about $21 per visit to Aldi compared to $23 in
hypermarkets, $15 in other discount stores, and $13 in supermarkets.1101
Here’s the story…
In 1946, Karl and Theo Albrecht took over their mother’s small grocery store in
Germany’s Ruhr Valley. Over the next decade, they expanded Aldi (short for “Albrecht
Discount”) across West Germany, growing to over 300 stores by 1960. A year later, after
a disagreement over whether to sell cigarettes in their stores, the brothers split their
grocery business into Aldi Süd and Aldi Nord. Ever since, both companies have been
legally and organizationally separate. Aldi has expanded internationally, first into
Austria, then into Benelux and the US. In 1979 Aldi Süd purchased the American grocery
chain Trader Joe’s. The sluggish German economy has actually supported Aldi’s
continued growth.1102
224
•
•
•
•
•
Aldi’s operating margin in some regions of Germany is as high as 9.3%,
according to McKinsey. 1103
By 2003, 90% of Germans lived within 15 minutes of an Aldi store1104
The reclusive Albrecht brothers had also become Germany’s richest men,
amassing a combined fortune of more than €30 billion. 1105
89% of German households shopped at least once at Aldi last year, according to
Nuremberg-based market researcher GfK1106
Aldi boasts awesome margins, huge market clout, and seemingly unstoppable
growth – including an estimated sales increase of 8% a year since 1998.1107
Lidl
Lidl & Schwarz began as a wholesale business in the 1930s. The first Lidl discounter
opened in 1973, imitating Aldi’s basic, no frills model. In 1984, the Schwarz group also
opened its first Kaufland discount hypermarket. Corporate restructuring in 1999 split Lidl
and Kaufland into separate entities, though they share common ownership by Lidl &
Schwarz.
1989 marked the start of Lidl’s aggressive international expansion. Beginning with Italy,
Spain and the UK, the discounter then expanded into Benelux and the Nordic regions by
the mid-1990s. Lidl’s expansionary focus has shifted towards the former Eastern Bloc,
(Hungary, Poland, and the Czech Republic) and even announced plans to enter Canada.
Kaufland has grown in importance within the group. Its sales have increased thanks to
acquisitions (Magnet/Grosso from Tengelmann in 2000 and Familia’s Bremke and
Horster chain in 2003). By 2003 it was the largest hypermarket operator in Germany,
ahead of Metro’s Real. 1108
•
•
•
Today Lidl & Schwarz is the 7th largest European grocery retailer, operating in 15
countries, and generating combined revenue of €34 billion.1109
By the end of 2003 it had operations in 15 European markets and during 2004 it
has entered three new markets – Slovakia and Norway in September and Hungary
in November.1110
In 2003, the Lidl discount division generated 52% of its sales in Germany. France
is Lidl’s most important market, outside Germany, and is estimated to deliver
19% of divisional sales. The UK (7.9%), Spain (5.8%) and Italy (4.0%) are also
important markets. 1111
Carrefour (Dia)
Carrefour’s discount division Dia is number one in Portugal and Greece and number two
225
in Spain. It accounts for 7% of the group’s massive turnover, which is dominated by its
hypermarket format (59%).
Mercadona
The soft discounter operates exclusively in Spain. Its market share nearly quadrupled in
five years to 12.6% in 20021112
Tengelmann (Plus)
This company runs hard discounters in Czech Republic, Poland, Portugal and Spain and
soft discounters in Austria, Germany, Hungary.
REWE (Penny)
Like Tengelmann, REWE is adept at adapting to local markets. It operates hard
discounters in Austria, Czech Republic, France Hungary, Italy and soft discounters in
Germany and Romania.
Dansk (Netto)
Netto is the leading discounter in Denmark where it has 362 stores. Netto opened its first
UK store in Leeds in 1990 and now runs 136 stores across the country. Netto is also
present in Sweden, Germany, and Poland.
Secrecy
Discounters are highly secretive. They give little information away on their websites, are
typically adverse to publicity and their telephone numbers tend not to be listed.
The US branch of Aldi - Trader Joe’s – doesn’t name its foreign owners on its website
and won’t talk about them.
“Since we are privately held, we don’t disclose any information about our
business practices, sales, operationals, or marketing strategies” 1113
Trader Joe’s media-relations manager
Information on Discounters is notoriously hard to come by. A recent report on private
labels conducted by ACNielsen had some notable gaps in its research:
“On looking specifically at the coverage of Private Label activity, certain
exclusions should be noted that may have affected the country specific trends
observed. For example, data from the hard discounters Lidl and Aldi was not
included for the following countries:
Lidl: Czech Republic, Slovakia, Austria, Finland, France, Greece, Ireland,
Netherlands, Norway,
Portugal and Sweden.
226
Aldi: Australia (liquor), Denmark, Ireland, France, Netherlands (Private
Label products), United States.”1114
ACNielsen, The Power of Private Labels, 2005
German companies with at least 5,000 employees and $167 million in annual sales are
under legal obligation to disclose their results and consult with unions. A former
employee says Aldi carved the Aldi Group into 60 separate operating units as a way to
circumvent this German disclosure law.1115
Discounter success is all down to private label
The success of discounters is in part down to the cost-efficiency of selling food under
their own brand names. Every discounter sells a large proportion of its food under private
label.
•
•
•
95% of Aldi’s sales are private label1116
Spain’s Mercadona increased its private label share from about 3% in 1997 to
51% in 20021117
Half of KwikSave’s UK grocery sales are private label1118
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Processors
Processors manufacture and often package the food grown by farmers. They turn potatoes
into frozen French fries; cows into mince; chickpeas into dry chickpeas; cocoa,
flavourings and sugar into chocolate bars. As consumers, much of our food has been
processed in some way. This section looks at the globalization of the food manufacturing
industry and looks to the already concentrated US processing market as an example of
where consolidation trends are leading.
Processors are a mixed bag: they encompass a range of companies from drinks
manufacturers to meat packers. Increasingly they are co-ordinating their production with
the primary stages of agriculture and so the distinction between producer and
manufacturer is becoming more and more blurred.
For example the J.R. Simplot Company is a food and agribusiness corporation based in
Idaho. It is one of the world’ largest frozen-potato processors, annually producing 3
billion pounds of french fries and other potato ‘products’ worldwide. It also farms over
80,000 Simplot-owned acres of farmland – many of which are growing the potatoes it
processes.
Processors bring together raw foodstuffs and churn out higher value food ‘products’ –
among the results are ready meals and frozen foods synthesizing sometimes dozens of
separate ingredients. This processing is big business. The global processed food market
was worth a whopping $3.24 trillion in 2004.1119 High-value and processed foods now
account for two-thirds of all agricultural trade1120 and the European food and drink
industry takes a large slice of that pie:
•
The EU's food and drink industry is the largest manufacturing sector in the EU. In
2002, it accounted for 13.6% of the total EU-15 manufacturing sector1121
•
In 2003 the turnover of the food and drink industry in the EU25 amounted to
€799bn.1122
•
In 2003 the top four European food processing countries were France, Germany,
the UK and Italy – each with annual sales of over €100 billion1123
Trends
The same trends of horizontal integration, concentration and internationalisation have
been felt in the processing industry, but to a lesser extent. A few multinationals
(Unilever, Diageo, Danone, Cadbury Schweppes) compete on the global market with
228
global brands and a large range of products, while smaller enterprises serve local markets
and concentrate on regional preferences.1124
Europe's food and drink industry, however, remains quite fragmented. The top ten food
and drink producers in Europe's largest countries still account for only about 14% of the
market - a low level compared with grocery retailing (42%) and pharmaceuticals
(35%).1125 The industry employs 4.1m people in Europe, with almost two-thirds of those
working in small and medium sized firms.1126
Horizontal integration
But while the European food manufacturing market is still relatively fragmented, a surge
in merger and acquisitions within the industry is forecast for the next few years.1127 In the
future it seems certain there will be fewer and larger companies manufacturing our food.
“As global competition hots up and as the retailers become increasingly
international, we can be in little doubt that food companies will be looking to
strengthen their position by further consolidation in their core markets”1128
Neil Sutton, head of PWC's corporate finance food division
•
Between 2000 and 2004, there were over 1800 food deals in Europe valued at
around €48bn.1129
•
The largest move in 2004 was the purchase of Weetabix by Hicks, muse, Tate &
Furst (HMTF) for €915 million
•
There are clearly fewer companies around. Between 1997 and 2002 the number of
food manufacturing enterprises in the UK registered for VAT fell by 11.9%1130
229
1131
1132
As the big become bigger there will be an inevitable slow-down of mergers and
acquisitions. Since 2002, the number of deals has dropped in most European countries,
but significant consolidation amongst food companies continues to take place in the UK
and Spain.
230
1133
The numbers of mergers are only one indicator of consolidation. While the number of
‘merger and acquisition’ deals in the UK fell from 69 in 2003 to 56 the following year,
the average value of these deals increased to €24m from €98m in 2003. As the big get
bigger, the deals become bigger and fewer mergers are required to achieve massive
consolidation.1134
This projected consolidation is driven by a desire for bigger profits. Analysis of the beer,
confectionery, spirits and yoghurt production markets found that the category leader in
any national market typically earned margins up to twice those of competitors half its
size.1135
Concentration
As food processors become bigger, these newly expanded companies are controlling ever
larger portions of the market. The result of this merger activity is an increasingly
concentrated market in the processing of food.
•
In 2001, 0.9% of companies in the EU-25’s food and drink sector accounted for
over 51.5% of total sales.1136
•
78.9% of Europe’s food and drink sector are small companies (1-9 employees)
They account for only 7.3% of sales.1137
231
Top transnational processors: the company profiles
232
1138
Company profiles
Nestlé
Number of countries: 86
Products: beverages, baby food, pet food, chocolate, confectionery
Brands: Nescafe, Perrier, Shredded Wheat, KitKat, Polo
Number of employees: 247,000
Headquartered in Vevey, Switzerland, Nestlé is the world’s largest food and beverage
company. It runs 511 factories in 86 countries and employs 253,000 people of over 100
nationalities. Its 8,500 brands are sold in almost every country in the world. In addition to
food products, Nestlé owns about 75% of Alcon Inc. (ophthalmic drugs, contact-lens
solutions, and equipment for ocular surgery) and almost 27% of cosmetic giant L'Oréal.
A new arrangement with L’Oréal is part of a longer-range plan to transform itself from a
food company to a health and well-being company with a strong line of neutraceuticals
aimed at affluent retirees.1139
Cargill Inc.
233
Number of countries: 59
Products: grain, sugar, feed and fertilizer
Brands: Diamond Crystal (salt), Gerkens (cocoa), Honeysuckle White (poultry), and
Sterling Silver (fresh meats)
Number of employees: 124,000
As the leading American grain producer, Cargill’s mission statement is to be “the global
leader in nourishing people”1140. It is the largest private company in the US, 85% owned
by descendants of the founding Cargill and MacMillan families. The company recently
said it would merge its fertiliser operations with publicly listed IMC Global and carve out
some of its riskier capital markets operations into a hedge fund.1141 The commodities it
trades in and processes feed billions of consumers round the world every day and include
all the eggs used in McDonald's stores in the US. (IMPROVE)
Kraft Foods
Number of countries: 151
Products: Cheese, chocolate, cereal
Brands: Philadelphia, Milka, Shredded Wheat
Number of employees: 98,000
Kraft is 85% owned by tobacco company Philip Morris, which took control in 1988.
Kraft Foods operates two divisions, in North America and Europe. Its global brands
cover beverages, snacks, desserts, cheese and other enhancers, pizzas and convenience
meals.
Unilever
Number of countries: 88
Products: margarine, soups and sauces, ready meals, ice cream, shampoo and skin care
Brands: PG Tips, Ben & Jerry’s, Vaseline
Number of employees: 279,000
Unilever was founded in 1930, with the merger of soap maker Lever Brothers and
margarine producer Margarine Uni, who combined forces to secure bulk imports of palm
oil (a major raw material in soaps and spreads). The company continues to offer an
assortment of food and consumer products.
ConAgra
Number of countries: 35
Products: prepared and frozen food
234
Brands: Slim Jim, La Choy, MaMa Rosa’s
Number of employees: 39,000
ConAgra has recently moved away from raw foods to focus on branded, ‘value-added’
products. The company has sold its fresh beef, pork and chicken processing businesses
and has acquired several well known US food brands. In the US, the company is the
largest supplier of foodservice and restaurants. It also remains one of the top buyers and
processors of grain in the US. ConAgra retains an agricultural products division, which
sells seed, chemicals and fertilizer products to farmers.
Pepsico
Number of countries: 200
Products: beverages and snacks
Brands: Pepsi, Sunny Delight, Doritos, Frappucino (for Starbucks)
Number of employees: 143,000
Pepsico makes, markets and sells carbonated and non-carbonated drinks and grain based
snacks. The company consists of Frito-Lay North America, PepsiCo Beverages North
America, PepsiCo International and Quaker Foods North America. PepsiCo differs from
its competitor The Coca-Cola Company, having three times as many employees, larger
revenues, and a much more expensive stock price, but a smaller net profit.
Coca-Cola
Number of countries: 200
Products: beverages
Brands: Coca-Cola, Diet Coke, Minute Maid
Number of employees: 50,000
Sells about 400 drink brands, including coffees, juices, sports drinks, and teas, in about
200 nations. More than 70% of the company’s income is from outside the US. The CocaCola Company owns four of the world’s top five soft-drink brands (Coca-Cola, Diet
Coke, Fanta, and Sprite). Although it does no bottling itself, the company owns about
36% of Coca-Cola Enterprises, the largest Coke bottler in the world.
Diageo
Number of countries: 80
Products: Beers, wines, spirits
Brands: Guinness, Baileys, Johnnie Walker, Smirnoff
Number of employees: 20,000
235
Diageo was formed in 1997, following the merger of Guinness and GrandMet and is
headquartered in London. The company sells its products in 180 markets around the
world.
Mars
Number of countries: 65
Products: confectionery, pet food, main meal food
Brands: Mars, Whiskas, Uncle Ben’s, Dolmio
Number of employees:
Mars is one of the world’s largest privately-owned businesses. Mars, Incorporated now
operates its three core businesses - snackfood, petcare and main meal food - under the
Masterfoods name in most parts of the world. Outside the Masterfoods structure, Mars
also operates a smaller business, MEI/Drinks Group, which makes drinks vending
machines.
Danone
Number of countries: 120
Products: dairy, water
Brands: Evian, Volvic, Activia
Number of employees: 90,000
Worldwide Danone is number one in fresh dairy products, number one in bottled water
(by volume), and number two in biscuits and cereal products. Evian, which sells 1.5
billion bottles every year, is present in 125 countries. Today nearly 31% of Danone’s
sales are in emerging markets. Danone’s target is to do 40% of business in emerging
markets and 60% in developed countries. It is already a market leader in China and
Indonesia.
Source: Company websites, Hoovers, Yahoo finance, TMCnet.com
Processors in the US: leading the way in concentration
Processing in Europe is less concentrated than in the US. In Europe, consolidation trends
have been retailer led whereas in the US they have begun further up the supply chain.1142
US agricultural markets are dominated by a small number of enormous processing firms
and nowhere is this concentration more apparent than in meat processing.
236
The market for value-added meat processing has risen dramatically. In 1974 only 6% of
broilers were marketed to foodservice operators and retailers as further processed
products (such as burgers, breaded strips, and nuggets). By 2001, the share of these
‘further-processed products’ had soared to 46.5%.1143
Since the late 1980s, the concentration ratios for the top four companies in each of the
different meat processing industries show an astonishing and rapidly rising level of
concentration.
•
•
•
•
The top four beef packers made up 83.5% of the market in 2003
The top four pork packers made up 64% of the market in 2003
The top four broiler processors made up 56% of the market in 2003
The top four turkey processors made up 51% of the market in 20031144
237
The same is true for other agricultural sectors
• the top four firms control 60% of terminal grain handling1145
• the top four firms control 80% of soybean crushing1146
• the top four firms control 61% of flour milling1147
• the top three firms control 81% of corn exports1148
Two companies, Cargill and ADM, are in the top groups for all these categories of
concentration.1149 Cargill's corporate goal is to double in size every five to seven years –
and it says it has achieved this for the past 40 years.1150
Concentration in Europe
Cargill’s consolidation in Europe control of European food manufacturing looks to be
strengthening as well.
•
Cargill purchased a Russian food-oil refinery worth €46.1 million in February
2005, thereby expanding its reach in the main vegetable oil market for the Central
and Eastern European region. 1151
•
Cargill also acquired the Romanian oilseed maker Olpo Podari in May 2005.
Cargill now has a comprehensive network of grain storage facilities in the
Romanian grain belt. New construction will give Cargill one of the largest oil
factories in south-east Europe.1152
238
In certain sectors, consolidation and concentration in Europe seems to be following the
US lead. In UK there are signs already emerging of a number of very large,
internationally operating dairy companies. The NFU urges major dairy manufacturers to
explore joint initiatives with those overseas to increase economies of scale and better
exploit markets.1153
“While size is not everything, it will assist in reducing supply chain costs and developing
a competitive advantage for those companies that do consolidate.”1154
UK National Farmers Union
Input Suppliers
Input suppliers are involved with the production of food itself. The market for farm
inputs – from the supply of seeds, to the sales of herbicides and pesticides – has
globalised over the past few decades, leading to market concentration. In other words, a
very small number of companies are producing the supplies farmers need. This has been
a major worry in the EU, calling for anti-trust and merger-control enforcement.
Recent consolidation in agricultural industry research and development has led to the
formation of “life science” and “crop solution” companies that apply biotechnology to the
agrochemical and agriculture industries.1155
This section examines the agrochemical companies and the seed companies separately,
but recognises there are many overlaps between the two industries. Companies now
routinely manufacture genetically engineered crops that are resistant to the herbicides
they also produce. The industry in agricultural input supplies has become increasingly
integrated.
Agrochemicals
Agrochemicals: horizontal integration, concentration and
internationalisation
The global agrochemical sector is already huge and trends suggest it is getting bigger.
Crop protection products such as insecticides, fungicides and herbicides accounted for
US $27 billion in 20031156. This surged to US $32.6 billion in 2004 - the largest single
239
year growth for 10 years. 1157 It now stands at $35.4 billion.1158 The most noticeable trend
is the increased share of herbicides and reduced share of insecticides.1159
Bayer’s acquisition of Aventis CropScience saw the leading group of seven agrochemical
firms dwindle to six1160 and the agrochemicals market is now so concentrated that just a
handful of firms control over three quarters of global sales.
•
Six companies accounted for 73% of the agrochemicals market in 2002, 81% in
2003, and 77% in 2004.1161
•
The two largest companies (Bayer and Syngenta) now command 37% of all
agrochemical sales.1162
•
Three companies (Bayer, Syngenta and BASF) have a 61% share of the Latin
American market for pesticides and GM crops.1163
1164
240
1165
Seed Companies
Seed Companies: horizontal integration, concentration and
internationalisation
Only 25 years ago, not one of the 7,000 seed producers had an identifiable share of the
commercial seed market. Since then, there has been massive consolidation in the seed
industry and the manipulation of seeds has become increasingly sophisticated, enabling
firms to manufacture seeds with specific traits for specific climates and soils.
“control and ownership of seeds – the first link in the food chain – has farreaching implications for global food security.” 1166
ETC Group, 2005
The commercial seed industry has a total worldwide market of approximately US$21
billion per annum.1167 While the market is significantly smaller than the pesticide market,
it has become just as concentrated. The last year has seen a dramatic rise in seed industry
takeovers. Acquisitions by Monsanto, Dupont and Syngenta – all among the world’s topranking pesticide firms – have consolidated these firms as the major players.
•
In 2002 the top ten seed corporations accounted for one-third of the world's
commercial seed sales.1168
•
Now, only three years later, just ten companies control half of the world’s
commercial seed sales.1169
World’s Top 10 Seed Companies + 1
241
Company
1.
+
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
2004 seed sales (US Millions)
Monsanto (US)
$2,2771 + $526
Seminis (acquired by Monsanto 3/05) pro forma = $2,803
DuPont/Pioneer (US)
$2,600
Syngenta (Switzerland)
$1,239
Groupe Limagrain (France)
$1,0442
KWS AG (Germany)
$ 6223
Land O’ Lakes (US)
$ 5384
5
Sakata (Japan)
$ 416
Bayer Crop Science (Germany) $ 3876
Taikii (Japan)
$ 3667
DLF-Trifolium (Denmark)
$ 3208
Delta & Pine Land (US)
$ 315
1170
Major Players: profiles
There are four ‘billion dollar plus’ companies in the market.
Monsanto
Monsanto is the world’s leading pesticide manufacturers and is the global leader in
agricultural biotechnology. Between 1996 and 1998, Monsanto followed a strategy of
buying out and forming relationships with the majority of U.S. and international seed
companies.1171 Monsanto's stated goal is to strive to “integrate insect protection and weed
control into seeds.”1172
Monsanto acquired Seminis – a world leader in vegetable seeds – for $1.4 billion in
January 2005,1173 acquiring the capacity to supply over 3,500 seed varieties to fruit and
vegetable growers in 150 countries.1174 The acquisition has given Monsanto a dominant
position in the fast-growing vegetable seed market.. According to Monsanto gross profit
(as percent of sales) is higher for vegetables than for soybeans or for corn.1175
•
•
•
•
In 2004, Monsanto’s biotech seeds and trait technology accounted for 88% of the
total GM crop area worldwide.1176
Monsanto’s biotech trait acreage covered 175.7 million acres in 2004 – roughly
the size of Zambia. (one acre = .4047 hectare)1177
For cucumbers, Monsanto controls 38% of the global seed market1178
Between 1996 and 2003, according to the company, Monsanto increased its share
of US corn farmers’ input expenditures from 7% to 20%.1179
Dupont
242
Dupont led the way in consolidating the commerical seed market.1180 Knocked from its
top-spot as a result of Monsanto’s manouevre with Seminis, Dupont still commands seed
sales of $US 2.6 billion. The company has subsidiaries “on every crop-producing
continent of the world.”1181
Syngenta
Syngenta was formed in 2000 when Novartis merged with AstraZeneca’s agribusiness. In
2004, 52% of Syngenta’s seed sales came from field crops with the rest coming from
vegetables and flowers. Its annual seed sales are worth US$1.2 billion.1182
Group Limagrain
Limagrain is an independent cooperative and the European leader for maize and wheat
seeds. Its subsidiary, Vilmorin Clause & Cie, is the world leader for commercial home
garden seeds. Limagrain’s 2004 turnover for field seeds, vegetable seeds and garden
seeds was just over US $1 billion.
Life science mergers and alliances
The mergers and acquisitions in the input supply sector represent not just a consolidation
of seed companies and pesticide sellers, but a consolidation of the entire food chain. For
example, when Monsanto and Cargill undertook a joint venture in 19981183, they
controlled seed, fertilisers, pesticides, farm finance, grain collection and processing,
livestock-feed processing, livestock production and slaughtering, as well as several
processed-food brands. Similar alliances have formed across the food supply chain.
ConAgra subsidiary United Agri Products (seeds, pesticides, fertilisers) and DuPont
(chemicals) set up a joint venture to explore ‘developmental businesses’.1184
Biotechnology and GM
Genetic Modification (GM) technology is now integral to the strategies of all the major
seed companies. Despite controversy and lack of public acceptance, the market in GM
seeds is growing.1185 Genetically modified seeds now account for one quarter of the total
value of the commercial seed market worldwide.1186
In the USA almost all of the GM crops have been engineered to increase crop yield:
either the crop has been engineered to have herbicide resistance or to prevent insect
attack by producing an insect toxin from the bacterium Bacillus thuringiensis (Bt).
Now that genetically modified seeds are being used, companies such as Monsanto gain
even more control over the food chain. These seeds were originally developed to
strengthen insect and virus resistance. But recently companies have been producing
plants engineered to resist or respond only to their own agrochemicals.
243
•
Monsanto sells seeds that produce crops engineered to tolerate heavier doses of its
best-selling herbicide, ‘Roundup’.
In 2004 an estimated 200 million acres were devoted to GM crops (about 2% of the total
global agricultural land), grown by 8 million farmers in 17 nations.1187 The US is by far
the largest grower of GM crops, followed by Argentina, Canada, Brazil, China.
•
The market for biotechnology seed traits (such as herbicide tolerance and insect
resistance) has mushroomed from $280 million in 1996 to $4.6 billion in 2004 –
this is a 17-fold increase over only nine years.1188
•
Just one company – Monsanto – accounts for over 90% of GM crops grown
worldwide.1189
•
In the US in 2004 GM herbicide-resistant varieties were expected to constitute
86% of all soybean hectares and 40% of maize.1190
The growth and concentration in the biotech and GM sectors is concerning. The
excessively broad intellectual property rights given to some companies can hinder the
market for innovation.1191 But the main implications explored in this report are those for
the environment. These are explored in Section 3.
244
Producers
As global retailers and manufacturers exercise supply chain management and sourcing on
an increasingly international level, farmers are now competing to sell their produce on a
global market.
Farmers have lost their traditional position as the essential suppliers of food. They no
longer control the know-how of farming, increasingly relying upon the ‘crop solutions’ of
input suppliers and adapting to the livestock production methods imposed by processors.
Traditional farming activity such as the rearing and slaughtering of chicken is now no
longer seen as farming in some US states:
“Farming… does not include…the production of poultry or poultry products”
Minnesota Statutes1192
The massive consolidations of the food retail, manufacturing and agricultural inputs
industries have seen farmers reeling from the consequences. Quite simply, there are fewer
buyers buying farm produce. High competition means farms must grow larger to reduce
costs through economies of scale. Farms have had to become more efficient, specialized
and operationally hi-tech to cope with falling margins.
This section looks at the growing concentration and specialization of farming and
highlights some of the consequences – namely, spiraling farm incomes and the demise of
the small farm.
Trends
World output of food per head has gone up by some 25% over the past 40 years, even
though land use has grown by only 10% and world population has increased by 90%.1193
European farmers have become more productive, but at what cost?
Since the 1980s European farms have become larger whilst the number of farmers has
shrunk.1194 This has been more dramatic in some European countries than others. The
main environmental issues related to agriculture reflect two dominant trends in farming:
•
•
intensification and specialization in some areas
marginalization and abandonment in others
Both these processes involve a move away from traditional forms of low-input, labourintensive agriculture to more intensive farming using hi-tech agricultural methods.1195
The EU agri-foods market is one of the largest in the world and EU farms are
245
comparatively productive in global terms. But as agriculture becomes more specialized
and less labour intensive, farming as a traditional way of life is in decline.
The drop in the number of young people taking up farming is a case in point. Between
1990 and 2003, the number of agricultural holders under 35 fell in every European
country, in many cases by more than half. In France the number fell from 120,800 to
54,370.1196
Concentration
Insights from the US…
The US provides a textbook case-study of concentration in farming. Seventy years ago
there were nearly seven million US farms.1197 Today, after the onslaught of industrial
agriculture, those numbers have tumbled to less than 2 million.1198 Large farms are now
producing the majority of America’s food.
•
In 1997 just 2% of U.S. farms accounted for half of all agricultural sales1199 The
vast majority of U.S. farms are small family farms (91%), but they account for
just 28% of production. 1200
•
Today, five giant farms control half of the state’s $400 million organic produce
market.1201
•
The share of sales attributed to large farms increased steadily from 51% in 1982
to 72% in 1997.1202 In 2001 ‘very large’ (farms with annual sales of over
$500,000) increased their share of the value of production from 32% to 44%.1203
Concentration has been underway for at least a century. It took 17% of U.S. farms to
produce 50% of farm sales in 1900. Now the situation has changed dramatically and
small farms are being forced either out of work or to diversify.
•
More than half of US farm households lose money farming.1204
•
Between 1987 and 1992, the US lost an average of 32,500 farms per year. 80% of
these were family-run. 1205
•
Family farm households now earn 91% of their income from sources other than
farming.1206
•
The state of Missouri lost about 75% of its hog farmers over the ten years since
large-scale contract operations first entered the state.1207
246
There are now fewer and larger farms involved in the primary production of food supply
and the same trend has been witnessed across North America. Between 1980 and 1997,
the number of farms in Canada fell from nearly 320,000 to 280,000, while the average
size in acres grew from 275 to 610 acres.1208
Producers have had to adapt to the massive consolidations downstream in the food value
chain. This has resulted in the rapid development of large-scale, intensive agriculture. In
California, for example, retail consolidation drove a group of produce companies including Teixera Farms, PacFresh Produce, Gold Coast Packaging, A&A Farming, Byrd
Farms and Church Brothers - to form one large company, FreshKist Produce. This
massive new conglomerate expects to ship an estimated 15-20 million cartons of
Californian produce to global destinations each year.1209
However, the small farms are left to deal with the land. Although small farm groups
accounted for only 32% of total US agricultural production, they collectively held 72% of
farm assets, including 74% of the land acreage owned by farms. As custodians of this
huge share of farmland, small farms play a major role in US environmental land
management.1210
Europe
The very same shifts in agricultural production have been experienced in Europe.
Farmers have been run out of business as only the largest and most specialised survive.
Farms are becoming bigger, as agriculture becomes more intensified.
•
Between 1990 and 2003, the total number of large agricultural holdings (more
than 50 hectares) increased in almost every European country1211
•
In Germany, the number of large agricultural holdings increased from 56,280 in
1990 to 83,540 in 2003. In France the number of large farms grew by 22,750 in
the same time period.1212
As the number of large farms increased, a far higher number of smaller farms in Europe
has been lost. There are now far fewer farmers involved in agriculture. The six founding
members of Europe’s Common Agricultural Policy had 22 million farmers in 1957. By
2003 that number had fallen to just seven million.1213
“Small farms will be eliminated as the mass-oriented global food system
closes its markets to them.”1214
247
•
Between 1990 and 2003, the total number of farms fell in almost every European
country.1215 In Germany, the total number of farms fell from 653,000 to
412,000.1216 France alone lost 309,000 farms1217
•
Denmark lost 60% of its farms between 1970 and 1999,1218 with the number of
dairy factories in Denmark falling from 1,350 in 1960 to just 45 in 1999.1219
•
In 1999, 200,000 farmers and 600,000 beef producers gave up agriculture.1220
•
In 2002, 400 farming jobs were being lost each week in the UK1221
Those farmers that have survived are suffering the effects lower farm prices. Retail
competition has driven down the prices of agricultural produce. In the UK for example,
for every pound’s-worth of food sold at retail, farmers earn on average only 34 pence - a
share that has dropped by 28% since the late 1980s.1222 The drop in margins is much
higher for particular farm outputs and the price paid often falls below the cost of
production. In a 2003 survey, 52% of British dairy farmers, 37% of fruit and vegetable
growers and 31% of livestock farmers said they were getting paid the same or less than
the cost of production.1223
•
Between 1995 and 2004, producer prices fell in every European country.1224
•
In 1950 a UK farmer could earn a living with 15 cows, now, in real terms to earn
the same living, the farmer needs 120 cows1225
•
Farm incomes in the UK have fallen by 60% since 1995 (after doubling between
1990 and 1995). 25% of full-time farmers in England have diversified
incomes.1226
•
Agriculture provides 44% of Polish family incomes but comprises only 6% of the
country's GDP.1227
The graph below shows a steep fall in the net farm income for general cropping in the
UK from a high of a £100,000 per farm to less than £15,000.1228
248
1229
Increasing Specialisation
Those farms that have not been forced to close down have been driven to specialise their
methods and produce. Not so long ago, the small farms of a region would produce a wide
range of products for nearby consumers. In today’s globalised food system, however,
every region is pushed to specialise in whichever commodity its farmers can produce
most cheaply – and to offer that product on global markets.
•
In the EU four agricultural companies account for 24% of all pig slaughterhouses
and the largest pig producer is Smithfield, which produces about 5% of Poland’s
pigs.1230
•
The top 10 integrated broiler producers account for about 36% of the European
broiler production.1231
Concentration and specialization in the poultry industry
In 2003, Aviagen – one of the largest chicken breeders in the world – changed hands in a
leveraged finance deal worth €367 million. The company breeds pedigree birds for the
production of broiler chickens and turkeys. Aviagen supplies poultry to 250 customers in
85 countries and has a massive 47% share of the world market for chicken breeding.1232
249
In 2005 Aviagen was acquired by the Erich Wesjohann Group. The Erich
Wesjohann Group holds a 50% global market share of the breeder market for
poultry eggs.1233
Consumers
Everyone is a consumer. We are the final stage of food supply: buying and consuming the
food produced, processed, distributed and sold by the different parts of the food supply
chain. Yet over the last few decades the consumer’s relationship with food supply has
changed dramatically.
Three major factors are shaping consumer preferences: price, convenience and quality.
We are spending less money on food and much less time preparing it. We also demand
our food to be of a consistently high quality.
These preferences are being expressed in the context of a rapidly rising human population
and shifting demographics. If present trends continue, the world’s urban population will
equal the global rural population by around 2017.1234 So half of the world’s consumers
will look to the supermarket formats – currently dominating urban food supply – for these
three things: price, convenience and quality.
People are spending less on food
There is one clear trend. People are spending less on food as a percentage of their
income. In the check-out aisles of supermarkets at least, food is becoming – in relative
terms – cheaper.
In the past decade household expenditure on food has fallen as a percentage of family
income in every European country.1235 And the trend is very much the same elsewhere.
The cost of food in America continues to decline as a portion of family income — from
50% in the 19th century to 10.1% today.1236
There is a trend across Europe towards price convergence1237 – a single food retail market
with standardized prices reflecting standardized methods of production and distribution.
Regional differences of course persist. In Central and Eastern Europe for example,
households still spend on average 15-20% of total income on food,1238 but in many other
European countries this proportion has fallen to far lower levels:
250
•
Irish consumers spent only 6.6% of their incomes on food in 2004 down from
17.5% only 11 years earlier.1239
•
UK consumers spent £147.7bn on food and drink in 20041240 - food expenditure is
currently represents only 8.9% of UK incomes. 1241
We are becoming accustomed to the cheap food delivered by the ‘everyday low prices’ of
retailers.1242 For example, consumer food prices in the UK rose by 0.6% between 2003
and 2004 compared to all items which rose by 1.3%.1243
Convenience
Lifestyles are changing. Europeans are spending less money on food and, crucially, less
time preparing it. Food processors argue that home-food lifestyles are changing and that
less basic food preparation with simple foods such as flour, sugar and eggs is being done
in the home.
•
Time saving products and 'quick fixes' are important to 82% of European and US
consumers.1244
•
The average time spent making a meal fell from an hour in 1980 to 20 minutes in
1999.1245 The length of time for food preparation at home is forecast to be only 8
minutes in 2010.1246
•
In 2000, only 10% of adult time in the UK was spent on cooking, dish washing
and eating.1247
Convenience has become a crucial feature of the modern diet. Consumers now expect
consistent, quality processed products that are table-ready. This has led to the rise of
‘convenience’ foods: food meant to be consumed with little or no preparation, whether at
home or away. In order to minimize or eliminate cooking time, these foods are highly
processed, heavily packaged, and are crammed full of additives, all of which compromise
the nutritional value of the food.
As convenience helps drive innovation in the European food and drink industry,1248 many
new food products are designed to be eaten on the run or while ‘multi-tasking’. New lines
of ‘meals-on-a-stick’, for example, are being targeted at web-surfing teenagers, who keep
one hand on the computer mouse, leaving only one hand free for eating.1249
The market in convenience is booming:
251
•
Prepared meal consumption in Europe and America is forecast to double in ten
years, to exceed US$40bn by 2009, up from US$29bn in 1999.1250
•
Nearly two-thirds of households buy ready-meals.1251
The pursuit of convenience is changing food consumption patterns. More people are
shopping in supermarkets, buying frozen food and eating in restaurants and fast-food
outlets:
•
For more than 90% of the UK population, a supermarket is the main or sole place
of shopping1252
•
In Europe within 15 years out of home and retail sales of food will be equal1253
•
UK consumers eat 50 kilograms of frozen food per year1254 and a quarter of all
UK households do not buy any fresh meat.1255
•
In the US, money spent on food at home as a proportion of total food expenditure
has fallen from nearly 75% in 1962 to 55% in 2002. The share for food eaten
away from home has risen from 28% to just over 45%.1256
A greater interest in 'quality'
While price and convenience are driving food purchases, a much wider range of
consumer concerns have emerged since the 1990s. Quality has become a catch-all phrase
referring to the taste and appearance of food, but ranging even to the food’s health value
and the methods used to produce the food.1257
In the future, consumers, especially in more affluent counties, can be expected to become
even more demanding as they become more discerning and better informed of the impact
of food production on their personal health and the environment.1258
252
1259
Organic growth
The organic sector presently accounts for only a tiny proportion of global food
production. But growth within this sector reflects a rising interest in the methods used to
produce food. The global market for organic food was £15.5 billion in 20041260 and 24
million hectares of farmland are now managed to organic standards.
Western Europe still accounts for more than half of global organic food sales and
consumption of organic produce rose in many European countries in 2004, following a
couple of years of consolidation.
•
Over the next three years, sales of organic food are expected to reach $7.3 billion
and 3.3% of Italy's entire food consumption.1261
•
Around three-quarters of UK households buy some organic food during the
year.1262
•
Sales of organic food in the US were $6.5 billion in 1999.1263 This has now risen
to over $7 billion.1264
The increased demand for organic food has led to a growth in specialised retailers, such
as natural food supermarkets. Natural food supermarkets offer less-processed foods and
253
more foods free of preservatives, hormones, and ‘artificial’ ingredients. Natural food
supermarket chains, such as Whole Foods Market and Wild Oats Markets in the US, grew
rapidly in the 1990s through mergers and acquisitions.1265
Retailers are also quick to respond to these developments. 60% of organic goods bought
in Italy are expected to be sold in supermarkets by 20041266 and organically produced
food is now being sourced by retailers and sold under private label.1267
Healthy food
There is a rising interest in health food and there is increasing research by the food
industry to develop what are described as ‘functional foods’. Growing concerns over
rising obesity levels in the world have led some manufacturers to develop foods to meet a
rising consumer demand for value-added health food products. ‘Functional food’ is not
just healthy, nutritious produce. It is food that has had ingredients incorporated into it to
provide a specific medical or physiological benefit, such as pro-biotic yoghurts and
margarines containing cholesterol-reducing ingredients.
“It begins to resemble more the world of pharmaceuticals than the food and
drink sector”1268
Peel Holroyd, former senior agriculturalist for Marks and Spencer
Whilst still very much in its nascent stages, this sector of the food industry looks set
grow:
•
In 2004, sales of functional foods were worth $31.1 billion – 56% of this was
functional dairy products 1269
•
In the UK, the functional food and drink sector grew by 159% between 1999 and
2001 to be valued at £667m.1270
•
In the fast evolving economies of Latin America, the Asia Pacific and Eastern
Europe, functional food sales grew by 9.6% in 2004. Research predicts that
functional food sales by value will rise by 28% between 2005 and 2009 in the
emerging economies of Brazil, Hungary, China, Poland, Russia, Mexico and
South Korea. 1271 In Brazil functional dairy sales made up 11% of all dairy sales in
2004. 1272
Consumers are eating much more meat
254
As we demand cheaper, more convenient and higher quality food it seems we are also
demanding more meat. Global meat production has increased more than five-fold since
1950.1273 Annual meat consumption in developed countries increased from 57 kilograms
per person in the 1960s1274 to 80 kilograms now.1275
For Americans the figure is even higher. In 1999, the average U.S. citizen consumed a
whopping 124 kilogrammes of meat.1276
While consumers in rich countries spend a large share of their food budget on meat, a
higher proportion of the food budget is spent on cereal in poorer countries.1277 In the US,
27% of the food budget is spent on meat, compared with just 6% in Kenya.1278
But as incomes rise, consumers in emerging economies will buy less low value cereals
and start buying higher value livestock products.1279 In 1980, people in developing
countries made up 76% of the global population and consumed one-third of the world’s
meat and milk.1280 By 2020, people in presently developing countries are expected to
account for 66% of direct consumption of meat and 60% of milk consumption.1281
•
As recently as 1995 Filipinos ate 21 kilograms of meat per person per year. Since
then, average consumption has soared to almost 30 kilograms per year.1282
•
Annual average meat consumption per person in lesser developed countries
increased from 10 kilograms between 1961 and 1971 to about 26 kg at the turn of
the last century.1283
These changes are having a massive impact on the location and supply routes of
meat production throughout the world. High income countries are producing less
meat and developing economies are producing more.
•
In 1980, high income OECD countries produced 45% of the world meat while
Asia and the Near East produced less than 20%. Less than 20 years later in 1998,
the share of meat production in high income OECD countries fell to just 36%
while Asia accounted for 38%.1284
Factory farming is the fastest growing method of animal production worldwide.1285
Feed lots are presently responsible for 43% of the world’s beef and more than half of the
world's pork and poultry are raised in factory farms.1286 Increased consumption of meat
and milk means more pressure on land and water resources.1287
If Europeans shifted towards the American level of meat consumption patterns, land
requirements will rise by 17%.1288 The implications of this are explored fully in Section
3.
255
1289
Food Service Sector
The food service sector – in particular fast-food – has experienced an incredible rate of
growth in the past fifty years. People in developed economies are eating out more, as
256
fast-food chains proliferate. Catering to an increased demand for convenience, food
service has mushroomed and challenged the predominance of food retail.
“Retailers soon realized that their biggest competitors were not other stores
but fast food or quick service restaurants.”1290
Now, ‘channel-blurring’, frequently occurs as gas stations and retail stores, such as WalMart and Target, are hosting foodservice chains like Pizza Hut and Taco Bell.1291
McDonald’s currently has outlets inside nearly 700 (out of 2,374) Wal-Mart stores across
the United States, and almost 200 outlets in Chevron and Amoco gas service stations.1292
Trends
Consumer demand for convenience has led to a recent rise in people eating out. Nowhere
has this trend been more evident than in the US.
•
In the US, consumers are buying nearly half their food at restaurants and takeout
establishments,1293 from 28% in 1962 to 47% in 2003.1294
•
From 1963 to 1991, the number of fast food restaurant establishments in the
United States rose nearly five-fold from 39,680 to 193,392.1295
And fast food is swiftly taking a bigger slice of the cake.
•
The proportion of away-from-home food expenditures on fast food increased from
29.3% to 34.2% between 1982 and 1997, while the restaurant proportion
decreased from 41% to 35.7%.1296
•
The number of fast food outlets now outnumber the table service restaurants1297
•
The simulated net effect of all developments in the U.S. population is to lift per
capita spending by about 6 percent on fast food between 2000 and 2020.1298
One major reason for the growth in food service is a change in the composition of
households. A single person spends almost $3 more per person each week at each type of
out-of-home food establishment than an otherwise identical person who is married and
has live-at-home children.1299 Traditional households (‘a married couple with live-athome children’) accounted for 30.2% of all households in 1980. This is set to fall to only
16.7% by 2020.1300
257
European spending more on fast-food
In Europe the situation is lagging behind by a few years, but present trends suggest that
more and more Europeans are regularly leaving the kitchen behind and dining out.
Consumption of food and drink in places other than homes has risen from about 32% of
total consumption in 1995 to 35% in 2000. This is expected to approach 38% by 2005.
This development is boosting wholesale demand from the food service sector by 4-5% a
year across Europe - around treble the growth rate of retail demand for wholesale.1301
•
People in the UK are expected to spend half of their food budget on out-of-home
food by 2020.1302 and it is forecast that UK food service sales could be £10 billion
in 20081303
•
Italians have eaten 141% more meals outside the home in the past ten years.1304
Concentration
The food service industry has become increasingly concentrated over the years and the
fast-food industry in the US demonstrates this trend the best. Just a few well-recognised
brands dominate the US fast-food sector: McDonald's; KFC; Burger King; Pizza Hut;
Wendy’s; Subway; Taco Bell; Domino's Pizza; Starbucks; Applebee's Neighborhood
Grill & Bar.
•
The 10 largest chains had combined sales in 2004 of $117.3 billion, representing
49.4% of the Top 400's total sales. 1305
•
The 100 largest chains account for 86.2% of the sales of the top 400 fast food
companies.1306
And this is an international phenomenon. The top US chains are taking their ‘services’
across the globe, expanding into ever-wider markets.
•
There were 120,530 units of the 10 largest US chains operating globally at the end
of 2004.1307
•
In 1968 McDonald’s operated about one thousand restaurants. In 2002 it had
about 30,000 restaurants worldwide and opens up almost two thousand new ones
each year.1308
•
McDonald's and Burger King take 91% of the UK’s burger market.1309
•
In the food service industry, US-based Yum Brands has 33,000 restaurants –
including Taco Bell, Pizza Hut, and KFC – in over 100 countries, and is
especially focusing on expansion in China, Mexico, and South Korea.1310
258
•
In 1987, Kentucky Fried Chicken (KFC) opened the first foreign-owned fast food
restaurant in Beijing. Fifteen years later, KFC boasts more than 600 stores in
China and total fast food sales top US$24 billion a year. 1311
259
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‘Wake up to the old-fashioned power of the new oligopolies’, Barry Lynn, Financial Times, 2
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260
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262
49
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50
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"Access of small tomato growers to supermarket and traditional markets in Nicaragua",
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Linking Small Farmers to Global Markets: Role of Contracting Farming and Cooperatives in
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160
The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood
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161
The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood
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162
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‘Polish factory farms cause a stink’, BBC News in Poland, Julianna Kettlewell, 24 November
2004, http://news.bbc.co.uk/1/hi/sci/tech/4035081.stm
181
‘Snouts in the Trough’, reprinted from The Ecologist, Robert Kennedy Jr., December
2003/January 04, http://www.warmwell.com/smithfieldmar04.html
182
‘Polish Farmers Raise a Stink Over U.S. Agribusiness Giant’, Washington Post, Glenn
Frankel, 2 February 2004, http://www.washingtonpost.com/ac2/wpdyn?pagename=article&contentId=A4101-2004Feb1&notFound=true
183
FARMING AND FOOD, Collaborating for Profit, English Farming and Food Partnerships,
2003,
http://www.effp.com/StellentEFFPLIVE/groups/public/documents/coop_reports/farmingandfood
_coll_ia42e622d0.hcsp#P20_197
184
‘On Track: News and views from the Royal Agricultural College’, Royal Agricultural College
Issue 10, 2002
185
Contracts, Markets and Prices: organizing the production and use of agricultural
commodities, James MacDonald et al., United States Department of Agriculture, Agricultural
Economic Report Number 837, November 2004,
http://www.ers.usda.gov/publications/aer837/aer837.pdf
186
'Structural Changes in U.S. Agriculture: Implications for small farms', Gebremedhin and
Christy, Journal of Agricultural and Applied Economics, 28-, 57-66, July 1996, cited in
'Economic Concentration and Structural Change in the Food and Agriculture Sector: Trends
Consequences and Policy Options', prepared by the Democratic staff of the Committee on
Agriculture, Nutritiion and Forestry, United States Senate, October 2004
187
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
188
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, GPN Working Paper 9, prepared as part of the ESRC Research Project R000238535:
Making the Connections: Global Production Networks in Europe and East Asia. August 2004
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271
190
Economic Fallacies of Industrial Hog Production, John Ikerd, University of Missouri ,
Presented at Sustainable Hog Farming Summit, sponsored by Water Keepers Alliance, White
Plains, NY, held at New Bern, NC, January 11, 2001,
http://www.ssu.missouri.edu/faculty/jikerd/papers/EconFallacies-Hogs.htm
191
Economic Fallacies of Industrial Hog Production, John Ikerd, University of Missouri,
presented at Sustainable Hog Farming Summit, White Plains, NY, held at New Bern, NC,
January 11, 2001, http://www.ssu.missouri.edu/faculty/jikerd/papers/EconFallacies-Hogs.htm
192
Factory Hog Farming: The Big Picture, Hogwatch, Nov 2002,
http://www.environmentaldefense.org/documents/2563_FactoryHogFarmingBigPicture.pdf
193
Factory Hog Farming: The Big Picture, Hogwatch, Nov 2002,
http://www.environmentaldefense.org/documents/2563_FactoryHogFarmingBigPicture.pdf
194
Factory Hog Farming: The Big Picture, Hogwatch, Nov 2002,
http://www.environmentaldefense.org/documents/2563_FactoryHogFarmingBigPicture.pdf
195
Report on the FAO/AFMA/FAMA Regional Workshop on the Growth of Supermarkets as
Retailers of Fresh Produce’, 4-7 October 2004,
http://www.fao.org/ag/ags/subjects/en/agmarket/docs/afmaklrep.pdf
196
Wholesale markets in the era of supermarkets and hypermarkets – Developments in Central
and Eastern Europe, Andrew W. Shepherd, Agricultural Marketing Group, FAO, Rome, May
27th 2004
197
‘The food retailing revolution: experience from Poland’, Rapeepun Jaisaard, World Bank,
Workshop Review: Agriculture, Agri-Business and the Retail Sector in South-East Europe, 2004
http://www.eastagri.org/meetings/index.asp?id=7
198
Report on the FAO/AFMA/FAMA Regional Workshop on the Growth of Supermarkets as
Retailers of Fresh Produce’, 4-7 October 2004
http://www.fao.org/ag/ags/subjects/en/agmarket/docs/afmaklrep.pdf
199
Links among Supermarkets, Wholesalers, and Small Farmers in Developing Countries:
Conceptualization and Emerging Evidence, Thomas Reardon, et al, 2005,
http://www.ifpri.org/events/seminars/2005/smallfarms/sfproc/SO2_Reardon.pdf
200
The implications of supermarket development for horticultural farmers and traditional
marketing systems in Asia, A. Shepherd, Agricultural Management, Marketing and Finance
service (AGSF) FAO, Rome 2005
http://www.fao.org/ag/ags/subjects/en/agmarket/docs/asia_sups.pdf
201
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
202
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
203
Livestock Price Reporting Issues, CRS Report for Congress, RS20070, Dec 1999,
http://www.ncseonline.org/NLE/CRSreports/Agriculture/ag-53.cfm
204
Livestock Price Reporting Issues, CRS Report for Congress, RS20070, Dec 1999,
http://www.ncseonline.org/NLE/CRSreports/Agriculture/ag-53.cfm
205
Contracts, Markets and Prices: organizing the production and use of agricultural
commodities, James MacDonald et al., United States Department of Agriculture, Agricultural
Economic Report Number 837, November 2004,
http://www.ers.usda.gov/publications/aer837/aer837.pdf
272
206
The Many Faces of Power in the Food System , Department of Justice / Federal Trade
Commission Workshop on Merger Enforcement, C. Robert Taylor , February 17, 2004
207
Supermarket Challenges and Opportunities for Fresh Fruit and Vegetable, Producers and
Shippers: Lessons from the US Experience, Dr. Roberta L. Cook, Department of Agricultural and
Resource Economics, University of California, Davis, paper presented at the Conference on
Supermarkets and Agricultural Development in China – Opportunities and Challenges, Shanghai,
China, May 24, 2004, http://www.agmrc.org/NR/rdonlyres/30ADD429-D9DA-4382-AD79BAADE4CD816F/0/supermarketchallenges.pdf
208
Livestock Price Reporting Issues, CRS Report for Congress, RS20070, Dec 1999,
http://www.ncseonline.org/NLE/CRSreports/Agriculture/ag-53.cfm
Vertical coordination
209
Links among Supermarkets, Wholesalers, and Small Farmers in Developing Countries:
Conceptualization and Emerging Evidence, Thomas Reardon, et al, 2005,
http://www.ifpri.org/events/seminars/2005/smallfarms/sfproc/SO2_Reardon.pdf
210
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
211
Globalization, urbanization and changing food systems in developing countries, FAO, 2004,
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/y5650e/y5650e04.htm
212
Wholesale markets in the era of supermarkets and hypermarkets – Developments in Central
and Eastern Europe, Andrew W. Shepherd, Agricultural Marketing Group, FAO, Rome, May
27th 2004
213
Changes in Food Retailing in Asia: Implications of Supermarket Procurement Practices for
Farmers and Traditional Marketing Systems, Agricultural Management, Marketing and Finance
service (AGSF) occasional paper 8 FAO, Rome 2005
http://www.fao.org/ag/ags/subjects/en/agmarket/docs/agsf8.pdf
214
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
215
Wise moves: exploring the relationship between food, transport and CO2: ‘Section 4: the
influences shaping the food supply chain’, Transport 2000 Trust, London, 2003
http://www.fcrn.org.uk/pdf/wise_moves.pdf
216
Structural Change and Globalisation of the German Retail Industry, Social Science Research
Center Berlin, Michael Wortmann October 2003
217
‘Factory Gate Pricing’ IGD Research, Free Factsheets, 2006
http://www.igd.com/CIR.asp?menuid=83&cirid=452
218
‘Australian Retail Grocery Supply Chain Study, A study in to the changes and associated
implications’, Oliver Sargent, Director of Performance Improvement, PricewaterhouseCoopers,
5th April 2005, http://www.laa.asn.au/__data/page/150/s_Presentation2.pdf
273
219
‘Australian Retail Grocery Supply Chain Study, A study in to the changes and associated
implications’, Oliver Sargent, Director of Performance Improvement, PricewaterhouseCoopers,
5th April 2005, http://www.laa.asn.au/__data/page/150/s_Presentation2.pdf
220
‘Australian Retail Grocery Supply Chain Study, A study in to the changes and associated
implications’, Oliver Sargent, Director of Performance Improvement, PricewaterhouseCoopers,
5th April 2005, http://www.laa.asn.au/__data/page/150/s_Presentation2.pdf
221
‘Perception and understanding of distribution and factory gate pricing’, Scottish Food and Drink, May
2003
222
‘Electronic Systems in the Food Industry: Entropy, Speed and Sales’, The Retail Food
Industry Center, J. Kinsey, University of Minnesota, September 2000 http://economy.berkeley.edu/conferences/9-2000/EC-conference2000_papers/JeanKinsey.pdf
223
‘Is your organisation built for the consumer?’, Harvard Business School Working Knowledge,
M. Lagace, 18 March 2002, http://hbswk.hbs.edu/item.jhtml?id=2837&t=bizhistory&noseek=one
224
Electronic Systems in the Food Industry: Entropy, Speed and Sales, Jean Kinsey, University of
Minnesota, The Retail Food Industry Center, September 2000
225
Electronic Systems in the Food Industry: Entropy, Speed and Sales, Jean Kinsey, University of
Minnesota, The Retail Food Industry Center, September 2000
226
Electronic Systems in the Food Industry: Entropy, Speed and Sales, Jean Kinsey, University of
Minnesota, The Retail Food Industry Center, September 2000
227
Electronic Systems in the Food Industry: Entropy, Speed and Sales, Jean Kinsey, University of
Minnesota, The Retail Food Industry Center, September 2000
228
Electronic Systems in the Food Industry: Entropy, Speed and Sales, Jean Kinsey, University of
Minnesota, The Retail Food Industry Center, September 2000
229
The Category Captain and the Consolidating Food Industry, American Antitrust Institute,
Albert A. Foer, 2001
230
A Second Look at Category Management, Federal Trade Commission (USA) Speeches,
Thomas B. Leary
231
‘Shelf-Determination’ , Forbes Magazine, Brandon Copple, 2002
232
‘Perception and understanding of distribution and factory gate pricing’, Scottish Food and
Drink, May 2003
233
‘Shelf-Determination’ , Forbes Magazine, Brandon Copple, 2002
234
Trading away our rights: women working in global supply chains, Oxfam, 2004,
http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/trading_rights.pdf
235
Frozen Food Age, Supermarkets: The "Category Captain" in the Next Millennium, Christopher
W. Hoyt, 1999
236
Food for thought, PricewaterhouseCoopers insert (56) into Retail & Consumer Worlds, Jan
2006
237
Grocery and Food Service Trends, National Farm Products Council (Canada), 2004
238
Buying your way into trouble?, Insight Investment, 2004
239
Traceability in the U.S. Food Supply: Economic Theory and Industry Studies, United States
Department of Agriculture Economic Research Service, Agricultural Economic Report Number
830, Elise Golan, Barry Krissoff, Fred Kuchler, Linda Calvin, Kenneth Nelson, and Gregory
Price, March 2004, http://www.ers.usda.gov/Publications/AER830/AER830fm.pdf
240
Traceability in the U.S. Food Supply: Economic Theory and Industry Studies, United States
Department of Agriculture Economic Research Service, Agricultural Economic Report Number
830, Elise Golan, Barry Krissoff, Fred Kuchler, Linda Calvin, Kenneth Nelson, and Gregory
Price, March 2004, http://www.ers.usda.gov/Publications/AER830/AER830fm.pdf
241
‘On Track: News and views from the Royal Agricultural College’, Royal Agricultural College
Issue 10, 2002
274
242
‘Ahold Sells Stake in Central American Joint Venture to Wal-Mart’, Progressive Grocer, 21
September 2005
http://www.progressivegrocer.com/progressivegrocer/firc_new/search/article_display.jsp?schema
=&vnu_content_id=1001140407
243
‘Wal-Mart Announces Central American Investment’, Wal-Mart Press release, 20 September
2005, http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=26&contId=5646
244
Economic concentration and structural change in the food and agricultural sector: Trends,
consequences and policy options, Democratic Staff of the Committee on Agriculture, Nutrition
and Forestry, United States Senate, Tom Harkin, Iowa, Ranking Democratic Member, October
2004
245
‘Farm Business Practices Coordinate Production With Consumer Preferences’, Food Review,
Vol 25, Issue 1, http://www.ers.usda.gov/publications/FoodReview/May2002/frvol25i1g.pdf
246
Concentration in agricultural markets, Hendrickson and William Heffernan, Department of
Rural Sociology -- University of Missouri, February, 2002
247
‘It is all about the value chain’, The Financial Times, Ian Bikerton, 24 February 2006
248
‘Rolling in the Aisles: The new ad medium’, Carlos Grande, The Financial Times, 16 June
2003
249
‘Let's Innovate For Chocolate’, Andrew Harrison, The Financial Times, 17 June 2003
250
John Owen of Starcom Motive, quoted in ‘Rolling in the Aisles: The new ad medium’, Carlos
Grande, The Financial Times, 16 June 2003
251
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
252
‘Every Little Helps: TESCO’, Jeremy Smith, The Ecologist, 1 September 2004,
http://www.theecologist.org/archive_detail.asp?content_id=318
253
John Owen of Starcom Motive, quoted in ‘Rolling in the Aisles: The new ad medium’, Carlos
Grande, The Financial Times, 16 June 2003
254
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
255
Association of Publishing Agencies: Advancing Customer Publishing, Press Pack, 23 January
2005 www.apa.co.uk/cgi-bin/docs.pl/5/APA_press_pack.pdf
256
‘Roy Morgan Readership Estimates for the United Kingdom for the period to February 2005’,
Roy Morgan International, http://www.roymorgan.com/news/press-releases/2005/388/
257
Association of Publishing Agencies: Advancing Customer Publishing, Press Pack, 23 January
2005 www.apa.co.uk/cgi-bin/docs.pl/5/APA_press_pack.pdf
258
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
259
Top 50 Total Average Net Circulation/Distribution, ABC Concurrent Release Period July –
December 2004, http://www.polestar-group.com/elearningDownloads/ABC%20analysis%20JulDec%202004%20@%20Feb%202005.doc
260
‘Roy Morgan Readership Estimates for the United Kingdom for the period to February 2005,
http://www.roymorgan.com/news/press-releases/2005/388/
261
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
262
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
263
‘Keep the Customer Satisfied’, Association of Publishing Agencies, 23 January 2005
http://www.apa.co.uk/cgi-bin/go.pl/features/article.html?uid=482
264
‘The New Publishers’, Dawn Hynes, The Financial Times, 16 June 2003
265
‘Every little email helps for Tesco’, Stephen Brook, Guardian Media, 14 November 2005
266
‘Every little email helps for Tesco’, Stephen Brook, Guardian Media, 14 November 2005
267
‘Clicks, Bricks and Bargains’, The Economist, 1 December 2005,
http://economist.com/business/displaystory.cfm?story_id=5253010
268
'Every little email helps for Tesco', Stephen Brook, Guardian Media, 14 November 2005
275
Buyer Power
269
CIES Top of Mind Survey, The Food Business Forum, 2005,
270
Supermarket Practices: The need for EU wide action, Whateley, Judith, Agribusiness
Accountability Initiative (AAI) EU Regulating Supermarkets Working Group,
http://www.agribusinessaccountability.org/pdfs//305_Concerns-about-supermarket-practices.pdf
271
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
272
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
273
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
274
Supermarket Practices: The need for EU wide action, Whateley, Judith, Agribusiness
Accountability Initiative (AAI) EU Regulating Supermarkets Working Group,
http://www.agribusinessaccountability.org/pdfs//305_Concerns-about-supermarket-practices.pdf
275
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
276
Supermarket Practices: The need for EU wide action, Whateley, Judith, Agribusiness
Accountability Initiative (AAI) EU Regulating Supermarkets Working Group,
http://www.agribusinessaccountability.org/pdfs//305_Concerns-about-supermarket-practices.pdf
277
FARMING AND FOOD, Collaborating for Profit, English Farming and Food Partnerships,
2003,
http://www.effp.com/StellentEFFPLIVE/groups/public/documents/coop_reports/farmingandfood
_coll_ia42e622d0.hcsp#P20_197
278
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
279
‘Manufacturing for Mass Merchandisers Are You Hooked?’, www.foodengineeringmag.com,
Kevin T. Higgins, Senior Editor, 1 March 2004,
http://www.foodengineeringmag.com/CDA/ArticleInformation/coverstory/BNPCoverStoryItem/0
,6326,120293,00.html
280
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
281
Supermarket Practices: The need for EU wide action, Whateley, Judith, Agribusiness
Accountability Initiative (AAI) EU Regulating Supermarkets Working Group,
http://www.agribusinessaccountability.org/pdfs//305_Concerns-about-supermarket-practices.pdf
282
Globalization of food presents challenges and opportunities to ag suppliers, Dr Roberta Cook,
UC Davis, May 2003
283
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, GPN Working Paper 9, prepared as part of the ESRC Research Project R000238535:
Making the Connections: Global Production Networks in Europe and East Asia. August 2004
276
284
‘Top Down Competition in the Food Industry: Trends and Implications’, Strategic Forum
Discussion Paper, Sparks Companies Inc, US, September 2003
http://www.mda.state.mn.us/ams/whitepapers/topdown.pdf
285
Not on the Label, Felicity Lawrence, Penguin Books London, 2004
286
‘Opening of the 23rd Carrefour hypermarket in Thailand’, 1 December 2005,
http://www.carrefour.com/english/groupecarrefour/ouvthailande011205.jsp
287
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, GPN Working Paper 9, prepared as part of the ESRC Research Project R000238535:
Making the Connections: Global Production Networks in Europe and East Asia. August 2004
288
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
289
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
290
'The Big Brands Go Begging in Europe', Business Week Online, 21 March 2005
http://www.businessweek.com/magazine/content/05_12/b3925071_mz054.htm
291
‘GNX and WWRE Complete Merger Transaction to Form Agentrics’, Agentrics website,
http://www.agentrics.com/press_room/release_002.htm
292
A Comparative Study of Asia Strategy: Wal-Mart versus Carrefour, Paper presented at the The
Seventh International Conference on Global Business and Economic Development.Miao-Que
Lin, Fu Jen Catholic University, China.Wen-Kuei Liang Tatung University, China,
http://blake.montclair.edu/~cibconf/conference/DATA/Theme5/China.pdf
293
The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood
Sector and Rural Development, Liesbeth Dries, Katholieke Universiteit Leuven Thomas Reardon,
Michigan State University Johan F.M. Swinnen, The World Bank and Katholieke Universiteit
Leuven, 2005
294
Economic concentration and structural change in the food and agricultural sector: Trends,
consequences and policy options, Tom Harkin, Iowa, Ranking Democratic Member Democratic
Staff of the Committee on Agriculture, Nutrition and Forestry United States Senate, October 2004
295
Economic concentration and structural change in the food and agricultural sector: Trends,
consequences and policy options, Tom Harkin, Iowa, Ranking Democratic Member Democratic
Staff of the Committee on Agriculture, Nutrition and Forestry United States Senate, October 2004
296
Economic concentration and structural change in the food and agricultural sector: Trends,
consequences and policy options, Tom Harkin, Iowa, Ranking Democratic Member Democratic
Staff of the Committee on Agriculture, Nutrition and Forestry United States Senate, October 2004
297
‘Growing pains survey: Agriculture and technology’, The Economist, Shereen El Feki, 23
March 2000 http://www.economist.com/surveys/displayStory.cfm?story_id=295632
298
Food Marketing Costs: A 1990’s Retrospective, Food Marketing – USDA, Howard Elitzak,
2000
299
Food Marketing Costs: A 1990’s Retrospective, Food Marketing – USDA, Howard Elitzak,
2000
300
‘Family Farms: The Next Endangered Species?’ Australian Nuffield Farming Scholar, Steve
Dilley: "Perivale Orchards Pty Ltd", July 2004
301
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
302
'Supply chain project links RFID with Internet', www.foodproductiondaily.com, 26th August
2005, http://www.foodproductiondaily.com/news/ng.asp?n=62116-rfid-epcglobal-fresh-produce
277
303
Trading away our rights: women working in global supply chains, Oxfam, 2004,
http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/trading_rights.pdf
304
Tasmania: One potato more, Linking Lives & Livelihoods, 2003
305
'Supply chain project links RFID with Internet', www.foodproductiondaily.com, 26th August
2005, http://www.foodproductiondaily.com/news/ng.asp?n=62116-rfid-epcglobal-fresh-produce
306
‘Trading Away Our Rights: women working in global supply chains’, Oxfam, 2004,
http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/trading_rights.pdf
307
'Supply chain project links RFID with Internet', www.foodproductiondaily.com, 26th August
2005, http://www.foodproductiondaily.com/news/ng.asp?n=62116-rfid-epcglobal-fresh-produce
308
Trading away our rights: women working in global supply chains, Oxfam, 2004,
http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/trading_rights.pdf
309
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, GPN Working Paper 9, prepared as part of the ESRC Research Project R000238535:
Making the Connections: Global Production Networks in Europe and East Asia. August 2004
310
‘Farm Business Practices Coordinate Production With Consumer Preferences’, Steve Martinez
and David E. Davis, Economic Research Service, USDA FoodReview, Vol. 25, Issue 1, May 2002
http://www.ers.usda.gov/publications/FoodReview/May2002/frvol25i1g.pdf
311
‘Asda looks for single milk supplier’, Dairy Reporter.com, 23 January 2004
312
‘Asda's selection of Arla shakes up UK dairy industry’, CEE-Food Industry.com, 1 June 2004
313
‘Solid results from Arla Foods UK’, FoodPrductionDaily.com, 15 June 2004
314
‘Tesco, Sainsbury rejig milk supply arrangements’, FoodAndDrinkEurope.com, 27 August
2004
315
Report suggests bad deal for UK dairy suppliers, FoodAndDrinkEurope.com, 8 September
2004
316
‘Arla to close two UK plants’, FoodAndDrinkEurope.com, 1 October 2004
‘UK milk processors clash over prices’, FoodProductionDaily.com, 2 December 2004
318
‘Arla seeks to heal UK milk price rift’, Dairy Reporter.com, 25 January 2005
319
‘Dairy closures show difficult state of industry’, FoodProductionDaily.com, 20/01/2005
320
‘Arla To Cut Prices By 0.35ppl’, MDC Datum, 27 May 2005
321
Arla, Dairy Crest to profit from UK milk shake-up, FoodAndDrinkEurope.com, 9 May 2005
322
‘Joseph Heler to Cut Milk Price’, MDC Datum, 2 June 2005
323
‘Arla attacked over milk price cuts’, DairyReporter.com, 7 June 2005
324
‘Arla Maintain Price Cut’, MDC Datum, 23 June 2005
325
‘Wiseman To Cut Milk Price’, MDC Datum, 29 June 2005
326
‘Golden Vale Make 0.3ppl Price Cut’, MDC Datum, 31 August 2005
327
‘Arla Cuts Price by 0.35ppl for September’, MDC Datum, 9 September 2005
328
‘Farmgate milk prices’, MDC Datum, 13 September 2005
329
‘First Milk Cut Milk Price’, MDC Datum, 22 September 2005
330
‘Dairy Crest contract losses to hit profits’, Chris Mercer, DairyReporter.com, 29 September
2005
331
‘Dairy Crest contract losses to hit profits’, Chris Mercer, DairyReporter.com, 29 September
2005
332
‘Dairy Crest contract losses to hit profits’, Chris Mercer, DairyReporter.com, 29 September
2005
333
‘Dairy Crest Cut Liquid Price by 0.275ppl’, MDC Datum, 17 October 2005
334
‘Longslow to Close Dairy’, MDC Datum, 11 October 2005
335
‘UK Dairy officials to meet OFT amid rising tension’, Chris Mercer, DairyReporter.com, 23
November 2005
336
‘Arla UK revels in branded dairy rise’, Chris Mercer, DairyReporter.com, 1 December 2005
337
‘Liquid milk retail price increases’, MDC Datum, 24 January 2006
317
278
338
‘Wiseman holds February Price’, MDC Datum, 31 January 2006
‘Arla Cut Prices by 0.3ppl’, MDC Datum, 1 February 2006
340
‘Wiseman Cut Price by 0.65ppl’, MDC Datum, 1 March 2006
341
‘Wiseman Cut Price by 0.65ppl’, MDC Datum, 1 March 2006
342
‘Exploiting Buyer power: lessons from the British grocery trade’, Antitrust Law Journal No. 2
(2005), Paul W. Dobson, 2005, http://www.antitrustinstitute.org/recent2/384.pdf
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‘The dead sea cells’, Paul Brown, The Guardian, Saturday May 17 2003
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‘Questions and Answers about Transgenic Fish’, US Food and Drug Administration, 2005
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The evolving global marketplace for fruits and vegetables, Dr Roberta Cook, UC Davis, 2003
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‘Food, Fuel, and Freeways: An Iowa perspective on how far food travels, fuel usage, and
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‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
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‘Food, Fuel, and Freeways: An Iowa perspective on how far food travels, fuel usage, and
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‘Farm costs and food miles: An assessment of the full cost of the UK weekly food basket’,
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‘Farm costs and food miles: An assessment of the full cost of the UK weekly food basket’,
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‘The Validity of Food Miles as an Indicator of Sustainable Development’, DEFRA, (2005),
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‘How Can We Reduce Carbon Emissions From Transport?’, Tyndall Centre, June 2004
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‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
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‘Stopping the Great Food Swap: Relocalising Europe’s Food Supply, C. Lucas, 2001
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‘The Validity of Food Miles as an Indicator of Sustainable Development’, DEFRA, (2005),
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870
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Household consumption and the environment, EEA Report No11/2005,
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'Why the middle class go scavenging in dustbins', James Bone, The Times, 26 November 2005
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‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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900
‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
Guardian, 2005, http://www.guardian.co.uk/waste/story/0,12188,1460219,00.html
901
‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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902
'Wasteful retailers bury corporate responsibility', Anita Awbi, Food and Drink Europe, 8th
November 2005
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903
Environmental Implications of the Foodservice and Food Retail Industries, Terry Davies,
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‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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905
‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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906
‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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907
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911
‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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912
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913
'Why the middle class go scavenging in dustbins', James Bone, The Times, 26 November
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914
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915
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A Review of the UK Food Market, Prepared by Ruth Huxley For Cornwall Agricultural
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‘More than 30% of our food is thrown away - and it's costing billions a year’, John Vidal, The
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922
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WRS-01-1., Market and Trade Economics Division, Economic Research Service,
U.S. Department of Agriculture, Anita Regmi, (ed), May 2001,
http://www.ers.usda.gov/publications/wrs011/wrs011.pdf
936
‘Industrial animal agriculture – the next global health crisis?’, World Society for the Protection
of Animals, 2004 http://www.globalforumhealth.org/Forum8/Forum8CDROM/Posters/Garces,%20L.doc
937
‘A High-Tech Race To Corral Mad Cow’, Business Week, 1 March 2004
938
‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
Ecology and Culture, Katy Mamen, Diana Deumling, Helena Norberg-Hodge and Steven
Gorelick, (May 2004), http://www.isec.org.uk/articles/RipeForChange.pdf
939
‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
Ecology and Culture, Katy Mamen, Diana Deumling, Helena Norberg-Hodge and Steven
Gorelick, (May 2004), http://www.isec.org.uk/articles/RipeForChange.pdf
940
‘Industrial animal agriculture – the next global health crisis?’, World Society for the Protection
of Animals, 2004 http://www.globalforumhealth.org/Forum8/Forum8CDROM/Posters/Garces,%20L.doc
941
‘Industrial animal agriculture – the next global health crisis?’, World Society for the Protection
of Animals, 2004 http://www.globalforumhealth.org/Forum8/Forum8CDROM/Posters/Garces,%20L.doc
942
'World Review of Fisheries and Aquaculture', FAO, (2004),
ftp://ftp.fao.org/docrep/fao/007/y5600e/y5600e01.pdf
943
‘Industrial animal agriculture – the next global health crisis?’, World Society for the Protection
of Animals, 2004 http://www.globalforumhealth.org/Forum8/Forum8CDROM/Posters/Garces,%20L.doc
944
‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
Ecology and Culture, Katy Mamen, Diana Deumling, Helena Norberg-Hodge and Steven
Gorelick, (May 2004), http://www.isec.org.uk/articles/RipeForChange.pdf
945
‘Ripe for Change: Rethinking California's Food Economy’, The International Society for
Ecology and Culture, Katy Mamen, Diana Deumling, Helena Norberg-Hodge and Steven
Gorelick, (May 2004), http://www.isec.org.uk/articles/RipeForChange.pdf
946
'Overview of the world broiler industry: implications for the Philippines', Graduate School of
Agricultural and Resource Economics & School of Economics, Hui-Shun (Christie) Chang,
(2005), http://www.une.edu.au/febl/GSARE/arewp05_8.pdf
947
'The Price is Right: Economics and the Rise in Obesity', Jayachandran N. Variyam, (2005),
http://www.ers.usda.gov/AmberWaves/February05/Features/ThePriceIsRight.htm
948
‘Fast Road to Fat City’, Eating Well, April/May 2005,
http://www.eatingwell.com/articles_recipes/nutrition_images/aprmay05fastfood.pdf
949
European Cardiovascular Disease Statistics 2005 edition, British Heart Foundation Health
Promotion Research Group, Department of Public Health, University of Oxford, 2005,
http://www.ehnheart.org/files/statistics%202005-092711A.pdf
308
950
European Cardiovascular Disease Statistics 2005 edition, British Heart Foundation Health
Promotion Research Group, Department of Public Health, University of Oxford, 2005,
http://www.ehnheart.org/files/statistics%202005-092711A.pdf
951
'Moving Toward the Food Guide Pyramid: Implications for U.S. Agriculture.', U.S.
Department of Agriculture, By C. Edwin Young, Market and Trade Economics Division, and
Linda Scott Kantor, (1999), http://www.ers.usda.gov/publications/aer779/aer779.pdf
952
The Price is Right: Economics and the Rise in Obesity, Jayachandran N. Variyam, (2005),
http://www.ers.usda.gov/AmberWaves/February05/Features/ThePriceIsRight.htm
953
The Price is Right: Economics and the Rise in Obesity, Jayachandran N. Variyam, (2005),
http://www.ers.usda.gov/AmberWaves/February05/Features/ThePriceIsRight.htm
954
‘Globalization, urbanization and changing food systems in developing countries’, The state of
food insecurity in the world (SOFI) 2004, Economic and Social Department, FAO, 2004
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/y5650e/y5650e04.htm
955
‘The internationalization / gloablization of retailing: towards a geographical research
identity?’, Working paper 8, ESRC Research Project R000238535: Making the Connections:
Global Production Networks in Europe and East Asia, July 2003
956
‘Globalization, urbanization and changing food systems in developing countries’, The state of
food insecurity in the world (SOFI) 2004, Economic and Social Department, FAO, 2004
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/y5650e/y5650e04.htm
957
Cotterill 1997
958
'Antitrust Analysis of Supermarket Retailing: Common Global Concerns that Play Out in
Local Markets', Research Report No. 88, Food Marketing Policy Center, Ronald W. Cotterill,
July 2005 http://www.fmpc.uconn.edu/publications/rr/rr88.pdf
959
‘Globalization of food presents challenges and opportunities to ag suppliers’,
Dr Roberta Cook, UC Davis, May 2003
960
‘Oligopoly inc. concentration in corporate power’, ETC group communiqué,
November/December 2003 http://www.etcgroup.org/documents/Comm82OligopNovDec03.pdf
961
‘Retail Giants Global Expansion and Local Concerns’, Corporate Breakdown, New
Economics Foundation, Petra Kjell, Febreuary 2003,
http://www.agribusinessaccountability.org/pdfs//252_Retail%20Giants.pdf
962
‘Globalization of food presents challenges and opportunities to ag suppliers’,
Dr Roberta Cook, UC Davis, May 2003
963
Europe's top retailers, www.meatnews.com, Chris Harris, 23 September 2004
http://www.meatnews.com/index.cfm?fuseaction=Article&artNum=8243
964
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, Working paper, ESRC Research Project R00023853: Making the Connections: Global
Production Networks in Europe and East Asia, August 2004
965
‘The internationalization / gloablization of retailing: towards a geographical research
identity?’, Working paper 8, ESRC Research Project R000238535: Making the Connections:
Global Production Networks in Europe and East Asia, July 2003
966
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, Working paper, ESRC Research Project R00023853: Making the Connections: Global
Production Networks in Europe and East Asia, August 2004
967
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, Working paper, ESRC Research Project R00023853: Making the Connections: Global
Production Networks in Europe and East Asia, August 2004
968
Supermarket update: Wal-Mart and Somerfield, www.foodanddrinkeurope.com, 1 July 2005,
http://foodanddrinkeurope.com/news/news-ng.asp?id=61033-supermarket-update-wal
309
969
Structural Change and Globalisation of the German Retail Industry, Discussion Paper SP III
2003-202b, Berlin: Wissenschaftszentrum Berlin fur Sozialforschung, October 2003
970
The Food Institute Report, Food Industry Discussion prepared for the 15th Annual World
IAMA Forum, June 28, 2005
971 See www.siamfuture.com
972
‘Family Farms: The Next Endangered Species?’ Australian Nuffield Farming Scholar, Steve
Dilley: "Perivale Orchards Pty Ltd", July 2004
973
‘Carrefour acquires Turkish retailers Gima and Endi’, www.fruitnet.com, 6 May 2005,
http://www.fruitnet.com/cgi-bin/news.pl?news.REF=977
974
‘Carrefour's strategy puts pressure on suppliers’, www.dairyreporter.com, 26 July 2005,
http://www.dairyreporter.com/news/printNewsBis.asp?id=61524
975
‘Carrefour to acquire Penny Market in France, sell Prodirest’, AFX News Limited, 24 June
2005, http://uk.biz.yahoo.com/050624/323/fly7e.html
976
‘Tesco swaps Taiwanese shops with Carrefour’, The Guardian, 1 October 2005,
http://www.guardian.co.uk/supermarkets/story/0,12784,1582462,00.html
977
‘Global retail leadership still belongs to Wal-Mart’, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=923&folder-id=485
978
‘Global retail leadership still belongs to Wal-Mart’, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=923&folder-id=485
979
The UK Supermarket sector, Race to the top: stakeholder accountability in the UK
supermarket sector, 2004,
http://www.esmeefairbairn.org.uk/docs/Race%20to%20the%20Top%20report.pdf
980
The evolving global marketplace for fruits and vegetables, AgMRC, University California
Davis, 2003 http://www.agmrc.org/NR/rdonlyres/DCE3CA96-A372-4522-BD181FFD84A0CFF1/0/globalmarketplace.pdf
981
'Antitrust Analysis of Supermarket Retailing: Common Global Concerns that Play Out in
Local Markets', Research Report No. 88, Food Marketing Policy Center, Ronald W. Cotterill,
July 2005 http://www.fmpc.uconn.edu/publications/rr/rr88.pdf
982
Concentration of agricultural markets, Mary Hendrickson and William Heffernan,
Department of Rural Sociology, University of Missouri, Columbia, January 2005,
http://www.foodcircles.missouri.edu/CRJanuary05.pdf
983
‘Operating the Wal-Mart way How the world’s largest retailer influences your industry’, Food
Systems Insider, Kristal Arnold, 1 July 2005
http://www.foodsystemsinsider.com/articles/0507/0507walmartway.htm
984
‘European Food Retailers: Paths for growth’, European Retail Digest, Dr Hayley Myers, head
of European retail research, Mintel, 2003,
http://www.templeton.ox.ac.uk/pdf/erd/SampleErd/07.%20european%20news%20analysis/issue3
8_article16.pdf
985
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
986
‘Retail Giants Global Expansion and Local Concerns’, Corporate Breakdown, New
Economics Foundation, Petra Kjell, Febreuary 2003,
http://www.agribusinessaccountability.org/pdfs//252_Retail%20Giants.pdf
987
Structural Change and Globalisation of the German Retail Industry, Discussion Paper SP III
2003-202b, Berlin: Wissenschaftszentrum Berlin fur Sozialforschung, October 2003
988
Structural Change and Globalisation of the German Retail Industry, Discussion Paper SP III
2003-202b, Berlin: Wissenschaftszentrum Berlin fur Sozialforschung, October 2003
310
989
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, Working paper 9, ESRC Research Project R00023853: Making the Connections: Global
Production Networks in Europe and East Asia, August 2004
990
‘Supermarket Expansion in Latin America and Asia Implications for Food Marketing
Systems’, New Directions in Global Food Markets / AIB-794, Economic Research
Service/USDA, Thomas Reardon, C. Peter Timmer, and Julio A. Berdegué,
http://www.ers.usda.gov/publications/aib794/aib794f.pdf
991
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
992
‘The internationalization / gloablization of retailing: towards a geographical research
identity?’, Working paper 8, ESRC Research Project R000238535: Making the Connections:
Global Production Networks in Europe and East Asia, July 2003
993
‘Global production networks in retailing: supply chain implications for East Asia and Eastern
Europe’, Working paper 9, ESRC Research Project R00023853: Making the Connections: Global
Production Networks in Europe and East Asia, August 2004
994
Access of small tomato growers to supermarket and traditional markets in Nicaragua,
Michigan State University, Regoverning Markets, International Livestock Research Institute,
http://www.regoverningmarkets.org/regions/latin_america/documents/Small_Tomato_Producers_
in_NicaraguaEng.pdf
995
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
996
A Comparative Study of Asia Strategy: Wal-Mart versus Carrefour, Miao-Que Lin, Fu Jen
Catholic University, China.Wen-Kuei Liang Tatung University, China,
http://blake.montclair.edu/~cibconf/conference/DATA/Theme5/China.pdf
997
‘Globalization, urbanization and changing food systems in developing countries’, The state of
food insecurity in the world (SOFI) 2004, Economic and Social Department, FAO, 2004
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/y5650e/y5650e04.htm
998
The globalizing livestock sector: impact of changing markets, Food and Agriculture
Organization (FAO) committee on agriculture, Nineteenth Session, Rome, 13-16 April 2005,
http://www.fao.org/docrep/meeting/009/j4196e.htm
999
‘The Ten Highlights of China’s Commercial Sector’, Li & Fung Research Centre, Secretariat
of the Expert Committee of China General Chamber of Commerce, 2005-2006
1000
From Beijing to Budapest: winning brands, winning formats, PriceWaterhouseCoopers,
October 05,
http://www.pwc.com/extweb/pwcpublications.nsf/docid/16C4E471BFF2B1A985257099005AA
AFA/$File/food-for-thought_oct05-n55_1.pdf
1001
A.T. Kearney Emerging market priorities for global retailers, 2005 Global Retail
Development Index, A.T. Kearney, http://www.atkearney.com/shared_res/pdf/GRDI_2005.pdf
1002
'The ten Highlights of China's Commercial Sector 2005-2006', Li & Fung Research Centre,
Expert Committee of China General Chamber of Commerce,
http://www.idsgroup.com/profile/pdf/special_reports/10_highlights.pdf
1003
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
311
1004
‘Ripe for Change: Rethinking California's Foood Economy’, The International Society for
Ecology and Culture, K. Mamen, S. Gorelick, H. Norberg-Hodge, D.
Deumling, May 2004 http://www.isec.org.uk/articles/RipeForChange.pdf
1005
‘Top 30 global retailers structures’, Planet Retail cited in www.fastmoving.co.za, 12 May
2005,
http://www.fastmoving.co.za/contentView?id=907&folder-id=485
1006
‘Top 30 global retailers structures’, Planet Retail cited in www.fastmoving.co.za, 12 May
2005,
http://www.fastmoving.co.za/contentView?id=907&folder-id=485
1007
‘Top 30 global retailers structures’, Planet Retail cited in www.fastmoving.co.za, 12 May
2005,
http://www.fastmoving.co.za/contentView?id=907&folder-id=485
1008
‘Top 30 global retailers structures’, Planet Retail cited in www.fastmoving.co.za, 12 May
2005,
http://www.fastmoving.co.za/contentView?id=907&folder-id=485
1009
Globalization of food presents challenges and opportunities to ag suppliers,
Dr Roberta Cook, UC Davis, May 2003
1010
'Supermarket News Top 75', www.supermarketnews.com, 2005,
http://www.supermarketnews.com/sntop752004.htm
1011
Low prices at what cost?, Wal-Mart watch, annual report, 2005,
http://walmartwatch.com/pdf/2005-annual-report.pdf
1012
‘Ripe for Change: Rethinking California's Foood Economy’, The International Society for
Ecology and Culture, K. Mamen, S. Gorelick, H. Norberg-Hodge, D.
Deumling, May 2004 http://www.isec.org.uk/articles/RipeForChange.pdf
1013
Low prices at what cost?, Wal-Mart watch, annual report, 2005,
http://walmartwatch.com/pdf/2005-annual-report.pdf
1014
Low prices at what cost?, Wal-Mart watch, annual report, 2005,
http://walmartwatch.com/pdf/2005-annual-report.pdf
1015
'Supermarket News Top 75', www.supermarketnews.com, 2005,
http://www.supermarketnews.com/sntop752004.htm
1016
'Wal-Mart eyes smaller Chinese cities', Briefing Asia Retail, Asia Pulse, 8 September 2005
1017
'Supermarket News Top 75', www.supermarketnews.com, 2005,
http://www.supermarketnews.com/sntop752004.htm
1018
‘Retail Giants Global Expansion and Local Concerns’, Corporate Breakdown, New
Economics Foundation, Petra Kjell, Febreuary 2003,
http://www.agribusinessaccountability.org/pdfs//252_Retail%20Giants.pdf
1019 Policy towards retail mergers, European Commission, cited in ‘Sui generis’?: an antitrust
analysis of buyer power in the United States and European Union, Richard Scheelings and
Joshua D. Wright, George Mason University School of Law, 2005,
http://www.gmu.edu/departments/law/faculty/papers/docs/05-30.pdf
1020
‘Retail Giants Global Expansion and Local Concerns’, Corporate Breakdown, New
Economics Foundation, Petra Kjell, Febreuary 2003,
http://www.agribusinessaccountability.org/pdfs//252_Retail%20Giants.pdf
1021
‘Recession curbs retail expansion in 2003’, www.foodanddrinkeurope.com, 15 April 2004,
http://www.foodanddrinkeurope.com/news/ng.asp?id=51394
1022
‘Special Report: Supermarkets: a chronology of developments in the UK supermarket
industry’, The Guardian, 21 January 2003,
http://www.guardian.co.uk/supermarkets/story/0,12784,879400,00.html
1023
http://www.corporatewatch.org/?lid=2102
312
1024
‘Morrisons plunges deep into red’, BBC news online, 20 October 2005,
http://news.bbc.co.uk/1/hi/business/4359208.stm
1025
‘Two Morrisons stores up for sale’, BBC news online, 23 September 2005,
http://news.bbc.co.uk/1/hi/england/kent/4274978.stm
1026 Multi-national Concentrated Food Processing and Marketing Systems and the Farm Crisis,
Dr. Mary Hendrickson, Dr. William Heffernan, University of Missouri, Columbia, Missouri,
2002
1027
‘Top 30 Grocery Retailers in Europe 2004’, 23 June 2005, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=1058&folder-id=485
1028
‘Top 30 Grocery Retailers in Europe 2004’, 23 June 2005, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=1058&folder-id=485
1029
‘Top 30 Grocery Retailers in Europe 2004’, 23 June 2005, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=1058&folder-id=485
1030
‘Wise moves: exploring the relationship between food, transport and CO2’, Transport 2000
Trust, London, 2003
1031
‘Private retailers fight for Sunday trade advantage’, www.foodanddrinkeurope.com, 15
November 2005, http://www.foodanddrinkeurope.com/news/ng.asp?n=63911-tesco-sundaytrading-supermarkets
1032
‘Tesco buys 21 Morrisons petrol stations’, The Guardian, 26 September 2005,
http://www.guardian.co.uk/business/story/0,,1578765,00.html
1033
‘Former OFT chief urges inquiry into 'abuse' of market position by supermarkets’, The
Guardian, 10 November 2005, http://business.guardian.co.uk/story/0,16781,1638765,00.html
1034
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1035
Germany Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN
(Global Agriculture Information Network) Report, 2004,
http://www.fas.usda.gov/gainfiles/200411/146118049.pdf
1036
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1037
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1038
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1039
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1040
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1041
Austria Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2004
1042
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1043
Sweden Retail Food Sector Report 2005, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2005
313
1044
Sweden Retail Food Sector Report 2005, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2005
1045
Sweden Retail Food Sector Report 2005, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2005
1046
‘European Food Retailers: Paths for growth’, European Retail Digest, Dr Hayley Myers, head
of European retail research, Mintel, 2003,
http://www.templeton.ox.ac.uk/pdf/erd/SampleErd/07.%20european%20news%20analysis/issue3
8_article16.pdf
1047
‘Italians bid arriverderci to mom-and-pop grocers’, www.rootsweb.com, 17 February 2003
1048
Spain Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2004
1049 Megastrukturen des Einzelhandels: Aktuelle forschungsfragen der regionalentwicklung,
Beate Dastel Marianne, Vitovec Manfred Haider, Humangeographisches Seminar Ws, 2002-2003
1050
Austria Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN (Global
Agriculture Information Network) Report, 2004
1051‘The Farm Crisis: How we are Killing the Small Farmers’, International Soceity for Ecology
and Culture, S. Gorelick, US Programs Director, 2003
1052
Ghost Town Britain: the threat from globalisation to livelihoods, liberty and local economic
freedom, New Economics Foundation, 2002,
http://www.neweconomics.org/gen/uploads/ghost_town.pdf
1053
‘Former OFT chief urges inquiry into 'abuse' of market position by supermarkets’, The
Guardian, 10 November 2005, http://business.guardian.co.uk/story/0,16781,1638765,00.html
1054
‘Association of convenience stores, UK convenience retailing market overview’,
www.thelocalshop.com, 31 May 2005,
http://www.thelocalshop.com/Default.asp?Call=CatList&CatID=122
1055
‘Restrictive Practices (Groceries) Order 1987 - A Review and Report of Public Consultation
Process’, Department of Enterprise Trade and Employment, Eire,
2005
1056
‘Tesco buys 21 Morrisons petrol stations’, The Guardian, 26 September 2005,
http://www.guardian.co.uk/business/story/0,,1578765,00.html
1057
‘Former OFT chief urges inquiry into 'abuse' of market position by supermarkets’, The
Guardian, 10 November 2005, http://business.guardian.co.uk/story/0,16781,1638765,00.html
1058
‘Asda to open hundreds of discount shops’, TheGuardian, J. Finch, 10 December 2005
http://business.guardian.co.uk/story/0,16781,1664018,00.html
1059
‘The internationalization / gloablization of retailing: towards a geographical research
identity?’, Working paper 8, ESRC Research Project R000238535: Making the Connections:
Global Production Networks in Europe and East Asia, July 2003
1060
Retailers must adapt to secure lucrative markets, PricewaterhouseCoopers’ (PWC) cited in
www.foodanddrink.com, 18 October 2005,
http://www.foodanddrinkeurope.com/news/ng.asp?id=63291-pricewaterhousecoopers-tescoeastern-europe
1061
‘Top 30 Grocery Retailers in Europe 2004’, 23 June 2005, Planet Retail cited in
www.fastmoving.co.za, http://www.fastmoving.co.za/contentView?id=1058&folder-id=485
1062
Hungarian food retailing: concentration, polarisation, and a new entrant, Aniko Juhasz,
Marta Stauder, Paper presented at the IAMO Forum 2005 “How effective is the invisible hand?
Agricultural and Food Markets in Central and Eastern Europe?” 16 – 18 June 2005, Halle (Saale),
Germany, 2005
http://www.iamo.de/forum2005/files/Stauder%20Juhasz.pdf
314
1063
Hungarian food retailing: concentration, polarisation, and a new entrant, Aniko Juhasz,
Marta Stauder, Paper presented at the IAMO Forum 2005 “How effective is the invisible hand?
Agricultural and Food Markets in Central and Eastern Europe?” 16 – 18 June 2005, Halle (Saale),
Germany, 2005
http://www.iamo.de/forum2005/files/Stauder%20Juhasz.pdf
1064
Concentration in food supply and retail chains, Agriculture and Natural Resources Team of
the Department for International Development (DFID) and Tom Fox and Bill Vorley of the
International Institute for Environment and Development (IIED), London, August 2004
http://dfid-agriculture-consultation.nri.org/summaries/wp13.pdf
1065
A.T. Kearney Emerging market priorities for global retailers, 2005 Global Retail
Development Index, A.T. Kearney, http://www.atkearney.com/shared_res/pdf/GRDI_2005.pdf
1066
‘A salute to Germany: REWE pledges 220 m euro investment for Bulgaria’,
www.sofiaecho.com, 10 October 2005, http://www.sofiaecho.com/article/a-salute-to-germanyrewe-pledges-220-m-euro-investment-for-bulgaria/id_12433/catid_29
1067
‘Tesco plots Eastern Europe expansion’, www.meatprocess.com, 15 April 2005,
http://www.meatprocess.com/news/ng.asp?id=59420
1068
‘Ahold acquisition strengthens position in Europe’, www.foodanddrinkeurope.com, 5 October
2005, http://www.foodanddrinkeurope.com/news/ng.asp?id=63023-ahold-julius-meinlsupermarkets
1069
‘Eastern Europe continues to attract retailers’, www.fastmoving.co.za, Boris Planer, Global
Macroeconomics Manager, Planet Retail,
http://www.fastmoving.co.za/contentView?id=1333&folder-id=485
1070
‘Eastern Europe continues to attract retailers’, www.fastmoving.co.za, Boris Planer, Global
Macroeconomics Manager, Planet Retail,
http://www.fastmoving.co.za/contentView?id=1333&folder-id=485
1071
‘Convenience keeps supermarkets on top in CEE’, www.foodanddrinkeurope.com, 22
February 2005, http://www.foodanddrinkeurope.com/news/ng.asp?id=58265
1072
‘Convenience keeps supermarkets on top in CEE’, www.foodanddrinkeurope.com, 22
February 2005, http://www.foodanddrinkeurope.com/news/ng.asp?id=58265
1073
‘Convenience keeps supermarkets on top in CEE’, www.foodanddrinkeurope.com, 22
February 2005, http://www.foodanddrinkeurope.com/news/ng.asp?id=58265
1074
‘Convenience keeps supermarkets on top in CEE’, www.foodanddrinkeurope.com, 22
February 2005, http://www.foodanddrinkeurope.com/news/ng.asp?id=58265
1075
Hungarian food retailing: concentration, polarisation, and a new entrant, Aniko Juhasz,
Marta Stauder, Paper presented at the IAMO Forum 2005 “How effective is the invisible hand?
Agricultural and Food Markets in Central and Eastern Europe?” 16 – 18 June 2005, Halle (Saale),
Germany, 2005
1076
Hungarian food retailing: concentration, polarisation, and a new entrant, Aniko Juhasz,
Marta Stauder, Paper presented at the IAMO Forum 2005 “How effective is the invisible hand?
Agricultural and Food Markets in Central and Eastern Europe?” 16 – 18 June 2005, Halle (Saale),
Germany, 2005
1077
A.T. Kearney Emerging market priorities for global retailers, 2005 Global Retail
Development Index, A.T. Kearney, http://www.atkearney.com/shared_res/pdf/GRDI_2005.pdf
1078
‘Russia to become Europe's largest grocery market’, www.cee-foodindustry.com, 29 July
2005, http://www.cee-foodindustry.com/news/ng.asp?n=61627-russia-europe-france
1079
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
315
1080
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1081
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1082 Irish Times, November 1999
1083
Germany Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN
(Global Agriculture Information Network) Report, 2004,
http://www.fas.usda.gov/gainfiles/200411/146118049.pdf
1084
Germany Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN
(Global Agriculture Information Network) Report, 2004,
http://www.fas.usda.gov/gainfiles/200411/146118049.pdf
1085
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1086
‘Hot Items in cool market’, Private Label magazine, Karsten Knothe, Spring 2003
1087
‘The Next Wal-Mart?’, www.businessweek.com, 26 April 2004,
http://www.businessweek.com/magazine/content/04_17/b3880010.htm
1088
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1089
‘Discounters set to increase their presence across Western and Central Europe’, Planet Retail
cited in www.fastmoving.co.za, 14 July 2005,
http://www.fastmoving.co.za/contentView?id=1139&folder-id=485
1090
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1091
‘Discounters set to increase their presence across Western and Central Europe’, Planet Retail
cited in www.fastmoving.co.za, 14 July 2005,
http://www.fastmoving.co.za/contentView?id=1139&folder-id=485
1092
Lidl – the discounter to watch, IGD, 26 November 2004,
http://www.igd.com/CIR.asp?menuid=50&cirid=1317
1093
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1094
From Beijing to Budapest: winning brands, winning formats, PriceWaterhouseCoopers,
October 05,
http://www.pwc.com/extweb/pwcpublications.nsf/docid/16C4E471BFF2B1A985257099005AA
AFA/$File/food-for-thought_oct05-n55_1.pdf
1095
From Beijing to Budapest: winning brands, winning formats, PriceWaterhouseCoopers,
October 05,
http://www.pwc.com/extweb/pwcpublications.nsf/docid/16C4E471BFF2B1A985257099005AA
AFA/$File/food-for-thought_oct05-n55_1.pdf
1096
From Beijing to Budapest: winning brands, winning formats, PriceWaterhouseCoopers,
October 05,
http://www.pwc.com/extweb/pwcpublications.nsf/docid/16C4E471BFF2B1A985257099005AA
AFA/$File/food-for-thought_oct05-n55_1.pdf
316
1097
‘Discounters set to increase their presence across Western and Central Europe’, Planet Retail
cited in www.fastmoving.co.za, 14 July 2005,
http://www.fastmoving.co.za/contentView?id=1139&folder-id=485
1098
'Trader Joe's: Billions from Nuts, Veggies, and Two-Buck Chuck’, Corporate Board Member
Magazine, Bonnie Azab Powell, May/June 2004,
http://www.boardmember.com/issues/archive.pl?article_id=11879
1099
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1100
‘Grocery Stores, Food Retailers and Supermarkets in Germany’, Euromonitor, September
2005,
http://www.euromonitor.com/Grocery_stores_food_retailers_and_supermarkets_in_Germany_(m
mp)
1101
Germany Retail Food Sector Report 2004, USDA Foreign Agricultural Service GAIN
(Global Agriculture Information Network) Report, 2004,
http://www.fas.usda.gov/gainfiles/200411/146118049.pdf
1102
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1103
‘The Next Wal-Mart?’, www.businessweek.com, 26 April 2004,
http://www.businessweek.com/magazine/content/04_17/b3880010.htm
1104
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1105
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1106
‘The Next Wal-Mart?’, www.businessweek.com, 26 April 2004,
http://www.businessweek.com/magazine/content/04_17/b3880010.htm
1107
‘The Next Wal-Mart?’, www.businessweek.com, 26 April 2004,
http://www.businessweek.com/magazine/content/04_17/b3880010.htm
1108
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1109
Responding to discount, a new business model for food retailers?, Coca Cola Retailing
research council and McKinsey&co, August 2005,
http://www.coke.net/CCRRC/europe/spotlight_study/RespondingToDiscount_English.pdf
1110
‘Lidl – the discounter to watch’, IGD, 26 November 2004,
http://www.igd.com/CIR.asp?menuid=50&cirid=1317
1111
‘Lidl – the discounter to watch’, IGD, 26 November 2004,
http://www.igd.com/CIR.asp?menuid=50&cirid=1317
1112
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1113
'Trader Joe's: Billions from Nuts, Veggies, and Two-Buck Chuck’, Corporate Board Member
Magazine, Bonnie Azab Powell, May/June 2004,
http://www.boardmember.com/issues/archive.pl?article_id=11879
1114
Power of Private Label 2005: A review of Growth Trends Around the World, ACNielsen
Global Services, September 2005
317
1115
'Trader Joe's: Billions from Nuts, Veggies, and Two-Buck Chuck’, Corporate Board Member
Magazine, Bonnie Azab Powell, May/June 2004,
http://www.boardmember.com/issues/archive.pl?article_id=11879
1116
Power of Private Label 2005: A review of Growth Trends Around the World, ACNielsen
Global Services, September 2005
1117
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1118
‘Win-Win Strategies at Discount Stores’, ERIM (Erasmus Research Institute of Management)
report, ERS-2005-050-MKT, September 2005,
https://ep.eur.nl/bitstream/1765/6924/1/ERS+2005+050+MKT.pdf
1119
'Sweeteners top growth in food additives market', www.confectionerynews.com 29 September
2004
1120
Trading away our rights: women working in global supply chains, Oxfam, 2004,
http://www.oxfam.org.uk/what_we_do/issues/trade/downloads/trading_rights.pdf
1121
EU-25 Food Processing Ingredients Sector, The EU's Food and Drink Industry 2005, USDA
Foreign Agricultural Service GAIN (Global Agriculture Information Network) Report (Number:
E35067), 2005
1122
EU-25 Food Processing Ingredients Sector, The EU's Food and Drink Industry 2005, USDA
Foreign Agricultural Service GAIN (Global Agriculture Information Network) Report (Number:
E35067), 2005
1123
EU-25 Food Processing Ingredients Sector, The EU's Food and Drink Industry 2005, USDA
Foreign Agricultural Service GAIN (Global Agriculture Information Network) Report (Number:
E35067), 2005
1124
CIAA Reflection Paper on Food and Drink Industry Competitiveness, Confederation des
industries agro-alimentaires de l’ue (CIAA), July 2005,
http://etp.ciaa.be/documents/CIAA%20Reflection%20Paper%20on%20Food%20and%20Drink%
20Industry%20Competitiveness.pdf
1125
'Feeding Growth: the role of private equity in the food and drink industry', 3i Sector Report,
Economist Intelligence Unit, 2003
1126
CIAA Reflection Paper on Food and Drink Industry Competitiveness, Confederation des
industries agro-alimentaires de l’ue (CIAA), July 2005,
http://etp.ciaa.be/documents/CIAA%20Reflection%20Paper%20on%20Food%20and%20Drink%
20Industry%20Competitiveness.pdf
1127
‘Food sector: analysis and opinion on M&A activity across Europe’, Corporate Finance
Insights 2005, PriceWaterhouseCoopers, 2005,
http://www.pwcglobal.com/Extweb/service.nsf/docid/0B444AD0DFAD865080256D430035E26
E/$file/2174_Food_Insights.pdf
1128
'Acquisitions in Europe poised to rise', www.cee-foodindustry.com, 25 July 2005,
http://www.cee-foodindustry.com/news/ng.asp?n=61485-pwc-acquisitions-europe
1129
‘Food sector: analysis and opinion on M&A activity across Europe’, Corporate Finance
Insights 2005, PriceWaterhouseCoopers, 2005,
http://www.pwcglobal.com/Extweb/service.nsf/docid/0B444AD0DFAD865080256D430035E26
E/$file/2174_Food_Insights.pdf
1130
‘Wise moves: exploring the relationship between food, transport and CO2’, Transport 2000
Trust, London, 2003
1131
‘Food sector: analysis and opinion on M&A activity across Europe’, Corporate Finance
Insights 2005, PriceWaterhouseCoopers, 2005,
http://www.pwcglobal.com/Extweb/service.nsf/docid/0B444AD0DFAD865080256D430035E26
E/$file/2174_Food_Insights.pdf
318
1132
‘Food sector: analysis and opinion on M&A activity across Europe’, Corporate Finance
Insights 2005, PriceWaterhouseCoopers, 2005,
http://www.pwcglobal.com/Extweb/service.nsf/docid/0B444AD0DFAD865080256D430035E26
E/$file/2174_Food_Insights.pdf
1133
‘Food sector: analysis and opinion on M&A activity across Europe’, Corporate Finance
Insights 2005, PriceWaterhouseCoopers, 2005,
http://www.pwcglobal.com/Extweb/service.nsf/docid/0B444AD0DFAD865080256D430035E26
E/$file/2174_Food_Insights.pdf
1134
'Acquisitions in Europe poised to rise', www.cee-foodindustry.com, 25 July 2005,
http://www.cee-foodindustry.com/news/ng.asp?n=61485-pwc-acquisitions-europe
1135
'Feeding Growth: the role of private equity in the food and drink industry', 3i Sector Report,
Economist Intelligence Unit, 2003
1136
CIAA Reflection Paper on Food and Drink Industry Competitiveness, Confederation des
industries agro-alimentaires de l’ue (CIAA), July 2005,
http://etp.ciaa.be/documents/CIAA%20Reflection%20Paper%20on%20Food%20and%20Drink%
20Industry%20Competitiveness.pdf
1137
CIAA Reflection Paper on Food and Drink Industry Competitiveness, Confederation des
industries agro-alimentaires de l’ue (CIAA), July 2005,
http://etp.ciaa.be/documents/CIAA%20Reflection%20Paper%20on%20Food%20and%20Drink%
20Industry%20Competitiveness.pdf
1138
‘From the Farm to the Table: The Transformation of North American Food Processing and
Implications for the Environment’, Pan-American Partnership for Business Education, Guy
Stanley, L’École des HÉC (Montréal)
1139
‘From the Farm to the Table: The Transformation of North American Food Processing and
Implications for the Environment’, Pan-American Partnership for Business Education, Guy
Stanley, L’École des HÉC (Montréal)
1140
Taken from the Cargill website, http://www.cargillbrandidentity.com/strategy/vision.htm
1141
Cargill: Company Profile, C. Daniel, Financial Times, London, UK, February 25, 2004, Page
7
1142
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
Initiative, Conference on Corporate Power in the Global Food System, William Heffernan, Ph.D.
and Mary Hendrickson, Ph.D., 2005
1143
From Supply Push to Demand Pull: Agribusiness Strategies for Today's Consumers, Martinez
& Stewart, Economic Research Service, USDA, 2003
http://www.ers.usda.gov/amberwaves/november03/Features/supplypushdemandpull.htm
1144
Concentration of agricultural markets, Mary Hendrickson and William Heffernan,
Department of Rural Sociology, University of Missouri, Columbia, January 2005,
http://www.foodcircles.missouri.edu/CRJanuary05.pdf
1145
‘Economic Impact and Impacts of Continuing to Proceed as We Are Now’, Sustainable
Agriculture Newsletter, Volume 10, Issue 11, Neil E. Harl, November 2002,
http://www.econ.iastate.edu/faculty/harl/EconomicImpact.pdf
1146
‘Economic Impact and Impacts of Continuing to Proceed as We Are Now’, Sustainable
Agriculture Newsletter, Volume 10, Issue 11, Neil E. Harl, November 2002,
http://www.econ.iastate.edu/faculty/harl/EconomicImpact.pdf
1147
‘Economic Impact and Impacts of Continuing to Proceed as We Are Now’, Sustainable
Agriculture Newsletter, Volume 10, Issue 11, Neil E. Harl, November 2002,
http://www.econ.iastate.edu/faculty/harl/EconomicImpact.pdf
1148
‘Economic Impact and Impacts of Continuing to Proceed as We Are Now’, Sustainable
Agriculture Newsletter, Volume 10, Issue 11, Neil E. Harl, November 2002,
http://www.econ.iastate.edu/faculty/harl/EconomicImpact.pdf
319
1149
‘Economic Impact and Impacts of Continuing to Proceed as We Are Now’, Sustainable
Agriculture Newsletter, Volume 10, Issue 11, Neil E. Harl, November 2002,
http://www.econ.iastate.edu/faculty/harl/EconomicImpact.pdf
1150‘Consolidation in the Food and Agricultural System’, Report to the National Farmers Union,
prepared by Dr. W. Heffernan, Dr. M. Hendrickson, Dr. R. Gronski, University of Missouri, 1999
1151
‘Cargill expands vegetable oil market in Russia’, Food Production Daily, 26 January 2005,
http://www.foodnavigator.com/news/ng.asp?n=57596-cargill-expands-vegetable
1152
‘Cargill buys Romanian oilseed processing plant’, Food Production Daily, 27 May 2005,
http://www.foodproductiondaily.com/news/ng.asp?id=60286-cargill-buys-romanian
1153
‘A Vision For The Dairy Industry’, National Farmers Union, September 2005
http://www.nfu.org.uk/stellentdev/groups/public/documents/policypositions/avisionforthedairyi_i
a432169a4.pdf
1154
‘A Vision For The Dairy Industry’, National Farmers Union, September 2005
http://www.nfu.org.uk/stellentdev/groups/public/documents/policypositions/avisionforthedairyi_i
a432169a4.pdf
1155
'Concentration and Technology in Agricultural Input Industries', Agriculture Information
Bulletin Number 763, Economic Research Service, USDA, King, March 2001
1156
Agrochemicals in China: China Risks and Rewards, PricewaterhouseCoopers, December
2004
1157
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1158
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1159
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1160
‘Oligopoly inc. concentration in corporate power’, ETC group communiqué,
November/December 2003 http://www.etcgroup.org/documents/Comm82OligopNovDec03.pdf
1161
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1162
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1163
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1164
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1165
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1166
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1167
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1168
'Corporate control over seeds: Limiting Access and Farmers' Rights', Mulvany, Patrick, IDS
Bulletin, Volume 36, Number 2, pp. 68-73, Institute of Development Studies, June 2005
1169
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
320
1170
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1171
‘PANNA Corporate Profile: Monsanto Company’, Pesticide Action Network North America,
http://www.panna.org/campaigns/caia/corpProfilesMonsanto.dv.html#_edn10
1172
‘Products & Solutions’, www.monsanto.com, 18 July 2005
1173
‘Survey: Agriculture and technology: growing pains’, The Economist, 23 March 2000
1174
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1175
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1176
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1177
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1178
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1179
Monsanto & Genetic Engineering: Risks for Investors, Analysis of company performance on
intangible investment risk factors and value drivers, Innovest Group, prepared for As You Sow
Foundation and funded by the Center for Food Safety, January 2005
1180
‘Survey: Agriculture and technology: growing pains’, The Economist, 23 March 2000
1181
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1182
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1183
‘Statement on: Industrial Concentration in the Agri-food Sector’, L. Guyau, World Farmers
Congress, Egypt, May 2002
1184
‘Statement on: Industrial Concentration in the Agri-food Sector’, L. Guyau, World Farmers
Congress, Egypt, May 2002
1185
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1186
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1187
‘Genetically Modified: Food for Thought’, Abraham and Suprapto, Natural Selections,
Rockefeller University, October 2005, http://selections.rockefeller.edu/cms/editorials/geneticallymodified-food-for-thought.html
1188
‘Global Seed Industry Concentration – 2005’, ETC group communiqué, Issue No. 90,
September/ October 2005, Action Group on Erosion, Technology and Concentration, 6
September 2005, http://www.mindfully.org/Farm/2005/Global-Seed-Industry6sep05.htm
1189
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
321
1190
‘Agrochemical markets soar – pest pressures or corporate design’, Pesticides news 68, June
2005, http://www.agribusinessaccountability.org/pdfs/324_Agrochemical-Markets-Soar.pdf
1191
‘Survey: Agriculture and technology: growing pains’, The Economist, 23 March 2000
1192
Ten Reasons to worry about Food Systems Mergers, and What Farmers Must do in Response,
Levins, Department of Applied Economics Minnesota, 2004
1193
‘Survey: Agriculture and technology: growing pains’, The Economist, 23 March 2000
1194
‘Annex: Agriculture and Environment in Eight European Countries’, Environmental Aspects
of the Agenda 2000 Proposals on Agriculture, European Environmental Advisory Councils,
1999, http://www.eeacnet.org/workgroups/pdf/WGAgriculture_Agenda200_Proposals_1999_Annex.pdf
1195
‘Annex: Agriculture and Environment in Eight European Countries’, Environmental Aspects
of the Agenda 2000 Proposals on Agriculture, European Environmental Advisory Councils,
1999, http://www.eeacnet.org/workgroups/pdf/WGAgriculture_Agenda200_Proposals_1999_Annex.pdf
1196
Eurostat,
http://epp.eurostat.cec.eu.int/portal/page?_pageid=1996,39140985&_dad=portal&_schema=POR
TAL&screen=detailref&language=en&product=Yearlies_new_agriculture&root=Yearlies_new_a
griculture/E/E1/E11/eda24848
1197
Fatal Harvest: The Tragedy of Industrial Agriculture, Andrew Kimbrell (ed.), (Island Press),
May 2002
1198
Corporate Agriculture and Family Farms, John Ikerd, University of Missouri, Jan 20, 2001
1199
Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2001,
http://www.ers.usda.gov/publications/aib768/aib768.pdf
1200
Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2001,
http://www.ers.usda.gov/publications/aib768/aib768.pdf
1201
‘Ripe for Change: Rethinking California's Foood Economy’, The International Society for
Ecology and Culture, K. Mamen, S. Gorelick, H. Norberg-Hodge, D.
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1202
Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2001,
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1203
Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2001,
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1204
Structural and Financial Characteristics of U.S. Farms: 2004 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2004,
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1205
Fatal Harvest: The Tragedy of Industrial Agriculture, Andrew Kimbrell (ed.), (Island Press),
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1206
Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report,
Economic Research Service, United States Department of Agriculture, May 2001,
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1207
Corporate Livestock Production, Implications for Rural North America, Ikerd, John, 23
November 2002, http://www.agribusinessaccountability.org/page/156/1
1208
‘From the Farm to the Table: The Transformation of North American Food Processing and
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1209
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1210
‘Farm structure: questions and answers’, Briefing Room, Economic Research Service United
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1211
Eurostat,
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1212
Eurostat,
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1215
Eurostat:
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Eurostat,
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Eurostat:
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TAL&screen=detailref&language=en&product=Yearlies_new_agriculture&root=Yearlies_new_a
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1218
Danish Agricultural Council 2000 Handbook , cited in ‘Family Farms: The Next Endangered
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1219
Danish Agricultural Council 2000 Handbook , cited in ‘Family Farms: The Next Endangered
Species?’ Australian Nuffield Farming Scholar, Steve Dilley: "Perivale Orchards Pty Ltd", July
2004
1220 ‘The Farm Crisis: How we are Killing the Small Farmers’, International Soceity for
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1221
‘Showing the public why farming counts’, Countryside, NFU, 9 September 2002,
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1222
‘Farmers struggle with the supermarket squeeze’, BBC News Online, 2 September 2004,
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1223
‘Farmers and the Supermarket Code of Practice’, Friends of the Earth, 2003,
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1224
Eurostat
1225
Environmental challenges in farm management, Agriculture, policy and development,
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1227
‘Water, Food and Farm Campaign Polish Farm Leaders Investigate Smithfield’, Sierra Club
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1229
‘CHART 1.1 Trends in net farm income in the United Kingdom’, The farm business survey,
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1230
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
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1231
The Global Food System: A Research Agenda, Report to the Agribusiness Accountability
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1232 ‘Chicken breeder Aviagen plans to rule the roost after changing hands in GBP 255m deal’,
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1233
‘Aviagen becomes part of the Erich Wesjohann Group’, Genetics Science News, April 27,
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Eurostat
1236
‘Food Retailing in the 21st Century —Riding a Consumer Revolution’, Food Marketing
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ACNielsen cited in ‘Price pressure on identical food brands across EU set to continue’,
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1238
Eurostat
1239
Eurostat
1240
Food and Drink Federation/Food From Britain / National Statistics, updated 4 Aug 2005,
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1241
Eurostat
1242
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Datamonitor survey cited in ‘Mega-trends: convenience food and health to double in ten
years’, www.foodnavigator-usa.com, 19 August 2005, http://www.foodnavigatorusa.com/news/ng.asp?n=61970-food-convenience-trends
1245
‘Wise moves: exploring the relationship between food, transport and CO2’, Transport 2000
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1246
The changing face of the global food industry, presentation OECD conference the Hague, JanWillem Grievink, 6 Feb 2003
1247
‘Time use survey, 2001’, Key Note Fast Food – September Report, Key Note report,
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1249
‘Ripe for Change: Rethinking California's Foood Economy’, The International Society for
Ecology and Culture, K. Mamen, S. Gorelick, H. Norberg-Hodge, D.
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1251
‘Wise moves: exploring the relationship between food, transport and CO2’, Transport 2000
Trust, London, 2003
1252
‘Farmers struggle with the supermarket squeeze’, BBC News Online, 2 September 2004,
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The changing face of the global food industry, presentation OECD conference the Hague, JanWillem Grievink, 6 Feb 2003
1254
‘Hot Items in cool market’, Private Label Magazine, Karsten Knothe, Spring 2003,
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1255
A Review of the UK Food Market, prepared by Ruth Huxley for Cornwall Agricultural
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1256
'Obesity Policy and the Law of Unintended Consequences', Amber Waves, Kuchler et al.,
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1257
Retail Sector Responses to Changing Consumer Preferences: the European Experience, J.
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Retail Sector Responses to Changing Consumer Preferences: the European Experience, J.
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1260
‘Organic Food sales Growing by £2.3 million a week as local markets boom', Soil
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1261
Italy: agri-food trade synopsis, Agriculture and Agri-food Canada, 2004, http://atnriae.agr.ca/europe/3653_e.htm
1262
‘Who’s Organic in the UK?’, Organic Food and Farming Report Summary 2004, Soil
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From Supply Push to Demand Pull: Agribusiness Strategies for Today's Consumers, Martinez
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‘Organic Food sales Growing by £2.3 million a week as local markets boom', Soil
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From Supply Push to Demand Pull: Agribusiness Strategies for Today's Consumers, Martinez
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Retail Sector Responses to Changing Consumer Preferences: the European Experience, J.
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1268
'Feeding Growth: the role of private equity in the food and drink industry', 3i Sector Report,
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1269
‘Emerging Markets: Special Report’, Functional Foods and Nutraceuticals, NPIcenter,
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'Feeding Growth: the role of private equity in the food and drink industry', 3i Sector Report,
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1271
‘Emerging Markets: Special Report’, Functional Foods and Nutraceuticals, NPIcenter,
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‘Emerging Markets: Special Report’, Functional Foods and Nutraceuticals, NPIcenter,
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'Factory Farming in the Developing World' Nierenberg, World Watch, May/June 2003,
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Let it Reign: the New Water Paradigm for Global Food Security, Swedish International
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1275
'Factory Farming in the Developing World' Nierenberg, World Watch, May/June 2003,
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1276
‘How Sustainable Agriculture Can Address the Environmental and Human Health Harms of
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Changing Structure of Global Food Consumption and Trade, Agriculture and Trade Report
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Changing Structure of Global Food Consumption and Trade, Agriculture and Trade Report
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Changing Structure of Global Food Consumption and Trade, Agriculture and Trade Report
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The globalizing livestock sector: impact of changing markets, Food and Agriculture
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The globalizing livestock sector: impact of changing markets, Food and Agriculture
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'Factory Farming in the Developing World' Nierenberg, World Watch, May/June 2003,
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Let it Reign: the New Water Paradigm for Global Food Security, Swedish International
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Changing Structure of Global Food Consumption and Trade, Agriculture and Trade Report
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1285
'Factory Farming in the Developing World' Nierenberg, World Watch, May/June 2003,
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1286
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1287
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1288
'Consumption patterns and their effects on land required for Food’, Ecological Economics,
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1289
Changing Structure of Global Food Consumption and Trade, Agriculture and Trade Report
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U.S. Department of Agriculture, Anita Regmi, (ed),
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1290
‘Electronic Systems in the Food Industry: Entropy, Speed and Sales’, J. Kinsey, University of
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1291
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1292
‘Causes and consequences of fast food sales growth’, Away from home foods, January-April
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‘Food Retailing in the 21st Century — Riding a Consumer Revolution’, Food Marketing
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1294
'The Price is Right', Amber Waves 20 Vol. 3, Variyam, Economic Research Service, USDA,
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1295
‘Farm Business Practices Coordinate Production With Consumer Preferences’, USDA
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‘Causes and consequences of fast food sales growth’, Away from home foods, January-April
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The Demand for Food Away From Home, Full-Service or Fast Food?, Stewart et al,
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1299
The Demand for Food Away From Home, Full-Service or Fast Food?, Stewart et al,
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1300
The Demand for Food Away From Home, Full-Service or Fast Food?, Stewart et al,
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1301
‘A wholesale shift in European groceries’, The McKinsey Quarterly, 2003 number 1, Javier
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1302
‘Stakeholder accountability in the UK supermarket sector’, Race to the Top, International
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1303
‘Key Note Fast Food – September Report’, Key Note report,
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Italy: agri-food trade synopsis, Agriculture and Agri-food Canada, 2004, http://atnriae.agr.ca/europe/3653_e.htm
1305
‘Take it from the top: The 2005 R&I Top 400 Chains display leadership and muscle’,
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‘Take it from the top: The 2005 R&I Top 400 Chains display leadership and muscle’,
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‘Take it from the top: The 2005 R&I Top 400 Chains display leadership and muscle’,
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Fast Food Nation, E. Schlosser, Houghton Mifflin Company, US, 2002
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A Review of the UK Food Market, prepared by Ruth Huxley, for Cornwall Agricultural
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1310
Trading away our rights: women working in global supply chains, Oxfam, 2004,
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1311
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