Christopher Bonasia
The Advocate
Increasing consolidation of agro-chemical companies and high grocery prices for consumers are straining the food system from both sides, while Canadian farmers are caught in the middle, a new report says.
The Canadian Anti-Monopoly Project’s report — From Plow to Pantry: Monopoly in the Canadian Food System — describes a “U-shaped power asymmetry,” with companies that buy inputs or purchase products at the upper ends, while “Canadian farmers are price-takers trapped in the middle.”
Andrew Nixon, one of the report’s authors, told a recent webinar that agricultural producers caught in this trend feel like they’re between “a rock and a hard place.”
Nixon noted that the price commodity squeeze has pushed some smaller producers to switch to selling higher-value products, but larger operations may be locked in by greater committed costs, like higher mortgages and more expensive equipment. He related one quote that summed up the dilemma, from a producer interviewed for the report who said their “vision in the last 25 years has been to basically take the path of least resistance on the easiest market.”
Farmers feeling trapped
“I’m talking about all farm organizations, farmers as a whole,” the producer continued. “And by doing that, we’ve now trapped ourselves. We’re basically following the map of the corporation.”
Cathy Holtslander, director of research and policy with the National Farmers Union, told the same webinar that similar consolidation a century ago gave rise to resistance by farmer organizations, which resulted in creation of the Canadian Wheat Board.
The report builds on one theme that is hammered on repeatedly in the national media — the rising price of groceries — while giving attention to the incessant pressure that industry consolidation places on Canadian farmers. For the most part, Canadians’ anger has been directed at the grocery sector, as Canada’s three top grocery companies have increased profits by 50 per cent in the past four years, even while the number of Canadians accessing food banks rose 78.5 per cent. The high profits in recent years has been the focus of several parliamentary hearings.
But when it comes to consolidation on the other side of the food system, regulators have been less visibly proactive — with 31 significant mergers and acquisitions reviewed by Canada’s Competition Bureau since 2000. None of those mergers have been blocked.
Mergers continue
Meanwhile, a possible merger of agri-business giants Bunge and Viterra is currently pending.
The ongoing consolidation undermines farmer autonomy by removing options for purchasing inputs and by slowing research and development. Ultimately, they constrict the options available to producers. At the same time, companies are profiting from farmers’ personal data that is now also being resold by equipment manufacturers and seed and chemical companies to inform yield and weather data sets.
Opportunities for selling products is also limited as Canadian grain trading and port terminal capacity is largely concentrated among four companies: Richardson, G3, Cargill and Viterra. That consolidation will only become more acute if the pending Bunge-Viterra merger proceeds.
“All along the agricultural supply chain, Canadian consumers, producers and entrepreneurs face fewer choices and are forced to contend with domestic and global giants,” the Canadian Anti-Monopoly Project reports.
“While the sticker shock now familiar to Canadians is one consequence of this path, there are more subtle ways in which consolidation of the supply chain causes harm.”