JANUARY 10, 2001
NEW REPORT FROM U.S. CONFIRMS:
RETAILER AND FOOD PROCESSORS CONSOLIDATING SWIFTLY
WITH POTENTIALLY HUGE COSTS FOR FARMERS AND CONSUMERS
SASKATOON, Sask.--A report written by Dr. William Heffernan and Dr. Mary Hendrickson, released earlier this week, found that in just three years the five largest food retailers in the U.S. nearly doubled their share of the food retail market, from 24% to 42%. In similar fashion, the Canadian retail market is dominated by five firms. Heffernan and Hendrickson's report is available from the U.S. NFU at www.nfu.org
The report chronicles Wal-Mart's explosive growth into a global food retailer. The authors state: "Trends suggest six or fewer global food retailers will evolve over the next few years."
The report also notes that these retail giants are linking to processors. Wal-Mart has beef supply agreements with IBP, Farmland, and Smithfield. Kroger has similar arrangements with Excel (Cargill). The report notes that in the U.S., "today 20 feedlots feed 50 percent of the cattle and are directly connected to the four processing firms that control 81 percent of the beef processing either by direct ownership or through formal contracts." In Canada, just two firms, IBP and Cargill, control 74% of the beef packing capacity.
In addition to retail, the report also focuses on increasing consolidation in the U.S. dairy sector. That sector has rapidly consolidated in the last three years. Four firms (including Phillip Morris [Kraft]) have taken over several co-operatives and smaller companies. The three largest food processors in the world (Nestle, Unilever, and Phillip Morris) are now directly involved in dairy processing in the U.S. These huge transnationals are consolidating control of dairy processing worldwide, including Canada.
In February, 2000, the Canadian National Farmers Union released a report entitled: "The Farm Crisis, EU Subsidies, and Agribusiness Market Power." That report chronicled the growing power of giant transnationals in this country's food system. The report drew a direct link between the huge market power of these corporations and the ongoing crisis on family farms. And it noted the negative impacts that consolidation and market power has on consumers food prices. This report is available at www.nfu.ca
The release of the Heffernan/Hendrickson study confirms that explosive growth and consolidation is proceeding at every link in the agri-food production and distribution chain and this has dire consequences for farmers and consumers.
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For More Information:
Fred Tait, Vice-President: (204) 252-2773
On Dairy issues: Jan Slomp, NFU Alberta Board member: (403) 843-2068
Darrin Qualman, Executive Secretary: (306) 652-9465