The food system’s biggest problem lies in the impact on consumers of almost a billion incomes reduced or lost. The UN estimates that the economic fallout from Covid-19 could see the number of people suffering from acute hunger double to 265m over the course of this year. Developed countries are not immune. In America queues at food banks in some cities stretch for kilometres. In these circumstances even quite small dislocations in the food system could, by increasing prices further, lead to great suffering.
Although farms are, by their nature, local, much of the rest of the food industry is global. The supplies of seed, fertiliser, machinery and fuel that farmers need come from far afield. The companies that tie the system together—giant middlemen like America’s ADM, Bunge and Cargill, Louis Dreyfus, based in the Netherlands, and Olam International, based in Singapore—all operate on a worldwide basis, sourcing, storing and shipping agricultural commodities for foodmakers like Kraft or Unilever. Their size and global reach lets them make a lot of money on quite narrow margins. They can quickly swap one source for another to accommodate changes in supply or demand, smoothing prices and keeping the system flexible.
Connectivity is what the world’s agro-industrial complex is all about. Four-fifths of the planet’s 8bn mouths are fed in part by imports; the $1.5trn that was paid for them last year was three times 2000’s bill. Battalions of lorries and fleets of ships connect tens of millions of farms to hundreds of millions of shops and kitchens.
In the past 20 years the industry has seen increased concentration of ownership as firms chase the advantages of scale. Half of America’s poultry market—the largest in the world—is now controlled by just four firms. Two of the six largest mergers in the 2010s were between companies in food and drink. Emerging markets, where changing diets and urbanisation create fresh demand, have spawned giants of their own. Brazil’s JBS is the largest meat-processing company in the world. China’s largest food manufacturer, COFCO,has gobbled up a bevy of established traders as it keeps the grain flowing to Beijing.
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