Supermarkets push to the southern hemisphere, driving farmers out of business
The United States has made two great contributions to world cuisine over the last century: the fast-food franchise and the supermarket.
Temples of the cheap-food revolution, both institutions flourished in the 20th century, offering consumers convenience and the cachet of fast life. At the height of the post-war prosperity boom, before the yuppie-led backlash, fast-food and the supermarket occupied the cutting edge of food fashion in a rapidly suburbanizing nation.
At a Grocery Manufacturers Association convention in 1962, an air of hubris and self-celebration held sway that would not have been out of place at, say, a tech trade show in Silicon Valley, circa 1998. As Harvey Levenstein writes:
An executive at the American Can Company told the assemblage that “the package revolution” had helped give the American family not more time for women to work “but more time for cultural and community activities.” Charles Mortimer, head of General Foods, boasted that “built-in chef service” had now been added to “built-in maid service” [i.e., the dishwashing machine, etc.] implying that housewives could now lead the lives of the leisured upper class. [Quoted by Richard Manning in Against the Grain.]
Among the ironies of these pronouncements was that those very women would soon be sucked en masse into the menial end of the American workforce, as the post-War boom faded and wages could no longer keep up with the dreams of consumption (or in many cases, the bills).
But the supermarket and the “package revolution” marched on. According to Amber Waves, an online publication of the U.S. Department of Agriculture focusing on the “Economics of Food, Farming, Natural Resources, and Rural America,” supermarkets controlled between five and ten percent of U.S. food retail sales in the 1930s. By 2001, that figure had risen to 80 percent.
The result has been, to paraphrase Adorno, disaster triumphant: environmental ruin, failing health, and, not least, horrible food. Apologists for the system crow that it at least produces cheap food. I counter that the costs associated with collapsing health and a damaged environment have merely been shuffled off of the balance sheets of the food-processing giants, whose share prices have ballooned the waist lines of the people those companies purport to nourish.
But after explosive growth in the post-war decades, growth in overall supermarket sales in the United States has slowed to about 2 percent annually, roughly equal to population growth. It’s what Wall Street calls a “mature market” — stable, lucrative, and stagnant.
Stagnation is causing all manner of disruption in the grocery industry. Wal-Mart, for one, is leveraging its low-wage model to steal market share from old-line regional warhorses like Safeway and Kroger. At the high end of the market, health-food chains like Whole Foods and Wild Oats are boosting sales and profits by luring customers from the old-line chains with health claims and yuppie cachet. But the overall grocery pie is not growing, and the stocks of Safeway and it peers are being punished accordingly. (The chart in that link shows that Safeway shares have plunged by about 50 percent since Wal-Mart made its big push into groceries five years ago — a far worse performance than the broader stock market.)
The resulting strategy has been to head south — to globalize. The post-industrial world’s grocery market may have matured, but there are still plenty of people in the southern hemisphere who nourish themselves within traditional, localized food networks. As southern-hemisphere governments have opened their markets to foreign investment over the past 20 years, prodded by the IMF and other transnational institutions, an enormous opportunity has arisen for multinational food processors and grocery giants.
“The largest firms, based in Western Europe and the United States, are expanding their sales in numerous foreign markets to maintain growth, while growth in the home markets stagnate,” according to the Amber Waves article linked above. They’ve been extraordinarily successful so far:
Until 1990, there were only a small number of supermarkets in most Asian and Latin American countries, existing mainly in major cities and wealthier neighborhoods and primarily financed by domestic capital. By the early 2000s, supermarkets had penetrated the middle-class neighborhoods, and even the poorer urban neighborhoods and rural areas, particularly in Latin America. While supermarkets accounted for 15-30 percent of the national food retail sales before 1990, they currently account for 50-70 percent of the retail sales in many Latin American countries, registering in one decade the level of growth experienced in the United States in five decades. The development of the supermarket sector in Asia is similar to that of Latin America, but 5-7 years behind in its expansionary process. However, supermarkets in Asia are growing at a faster rate compared with those in Latin America. [Emphasis added]
In the the cold governmentese of the Amber Waves piece, here’s how the trend has affected the food systems of these nations:
The changes in the food retail sector have resulted in a trend toward centralization of procurement, whereby large distribution centers have taken over the distribution functions of myriads of smaller centers and middlemen. A Carrefour [multinational French supermarket giant] distribution center in São Paulo may serve 50 million consumers in three different States, and an Ahold wholesaler in Costa Rica may serve the entire Central American food retail market for Ahold.
Translated loosely, that means that farmers and the local middlemen that distribute their goods are getting knocked out of business, and thus off the land and into poverty. The New York Times can be as bland and officious as any government agency. On this topic, however, the paper published a frank article by Celia Dugger (unfortunately available only for a fee) late last year.
Titled “Survival of the Biggest: Supermarket Giants Crush Central American Farmers,” the article states that:
Across Latin America, supermarket chains partly or wholly owned by global corporate goliaths like Ahold, Wal-Mart and Carrefour have revolutionized food distribution in the short span of a decade and have now begun to transform food growing, too.
The megastores are popular with customers for their lower prices, choice and convenience. But their sudden appearance has brought unanticipated and daunting challenges to millions of struggling, small farmers.
The stark danger is that increasing numbers of them will go bust and join streams of desperate migrants to America and the urban slums of their own countries. Their declining fortunes, economists and agronomists fear, could worsen inequality in a region where the gap between rich and poor already yawns cavernously and the concentration of land in the hands of an elite has historically fueled cycles of rebellion and violent repression.
In short, the buyers of farm goods in these countries are rapidly consolidating, giving them huge leverage to dictate price and other terms. Second, these companies push high-margin processed food, which means more profit for processors and less for farmers.
This post originally appeared in Bitter Greens Journal.