The dominance of a small number of large companies in the global food chain is increasing, helped by the increasing use of “big data” and artificial intelligence, new research finds.
According to the ETC Group, an eco-justice organization, only two companies control 40% of the global commercial seed market, compared to 10 companies that share the same share of the market 25 years ago.
Agricultural commodities trade is similarly concentrated, with 10 commodities traders in 2020 dominating a market worth half a trillion dollars.
Food prices have risen sharply in recent months, following the disruptions caused by the war in Ukraine and the ongoing effects of the Covid pandemic, which have skyrocketed the profits of major commodity traders and grain producers.
Chinese companies are also emerging, according to the ETC Group’s latest 141-page report published Thursday. China’s state-owned company Cofco is now the second largest agricultural commodities trader, behind Cargill in the US, with 2020 sales of just over $100 billion (£89 billion), compared to $134 billion for Cargill.
The next largest trader, Archer-Daniels-Midland, had sales of $64 billion in 2020, according to the latest data on which the report is based.
Syngenta, the seed, pesticide and biotech company, is now largely owned by the Chinese government through Sinochem and ChemChina. The group controlled about a quarter of the global agrochemicals market in 2020, with sales of $15 billion, far more than its closest rivals Bayer and BASF.
Two of the other top 10 agrochemical companies are also Chinese, as is the seventh largest fertilizer company, Sinofert.
ETC also pointed to growing interest from the Middle East. The report reads: “By 2020, the sale of 45% of one of the world’s largest commodities companies, Louis Dreyfus, to a state holding company in the oil-rich United Arab Emirates indicates that money-rich countries are positioning themselves towards the climate. -proof food security through offshore food production with little attention to sustainability or the notion of regional food self-reliance.”
Jim Thomas, of ETC Group, said the increasing market dominance of a small number of companies was worrisome, particularly at a time of high and rising food prices, a deepening climate crisis and biodiversity crisis. “Power over the global food system is concentrated in a very small number of hands, and that’s something we should be concerned about,” he said.
He added that increasing digitization also worked to further consolidate that power, allowing businesses to avoid transparency, automate transactions and influence consumer demand. He also warned that farm workers were at risk of being thrown off the land as robotic technology began to be used in an increasing number of countries.
“We have discovered a massive digital restructuring of the commercial food system, including AI, robots, drones, blockchains,” he said. “It includes manipulating customers, taking away decision-making from farmers, replacing and algorithmically controlling workers in the food chain, and the climate costs of data use.”
Food companies argue that their use of such technology provides much greater efficiency, reducing the use of valuable resources such as water, fertilizer and pesticides, and streamlining their operations to reduce costs for consumers.