A recent report by Oxfam International has found that 62 new “food billionaires” were created during the pandemic. The report, released ahead of this year’s World Economic Forum in Davos, Switzerland, highlights the record profits made by industry titans.
Food and agribusiness billionaires reportedly raised their collective wealth by 42 per cent in the past two years, all while global food prices soared by 33.6 per cent in 2021, and are expected to rise by another 23 per cent in 2022.
Cargill, the food company giant, is expected to report record profits this year, surpassing even last year’s record-breaking US$5 billion. Indeed, three members of the Cargill family joined the Bloomberg Billionaires list in mid-April.
Canadian food corporations are also posting strong growth. Loblaws reported that its first-quarter earnings rose almost 40 per cent compared to last year.
Sky-rocketing food inflation
While inflation is caused by several factors, one of the more pernicious can be traced back to the extreme levels of corporate concentration along the food supply chain.
The pandemic initially exposed cracks in our supposedly efficient industrialized food system through supply chain breakdowns, worker shortages and trade restrictions. Now, we can add high food prices and growing inequality to the list.
Food price inflation has grown much faster than general inflation for decades. Canada’s general inflation rate is at its highest since 1991, and the food inflation rate in the country has reached 7.4 per cent.
According to this year’s Canada Food Price report, the average grocery bill increased by a whopping 70 per cent between 2000 and 2020, and median incomes have not kept pace.
In the midst of this, companies have experienced record profits. This indicates that they have the market power to insulate themselves from these shocks by passing the risk along to the consumer.
Concentrated food supply
Canada is home to one of the most concentrated food systems in the world: Cargill and JBS Foods slaughter 95 per cent of Canadian cattle, while Weston Bakeries and Canada Bread account for 80 per cent of the bread market. Loblaws, Sobeys, Metro, Walmart and Costco all hold roughly 80 per cent of grocery market sales.
Consumers are not the only ones suffering the consequences. Retailers have continued to raise food prices, while farmer profits have remained stagnant or declined for decades.
Corporate concentration is intimately linked to the industrialization of food systems. Agricultural industrialization favours mechanization and specialization, both aimed at increasing efficiency.
Economies of scale — gains that are realized as a result of increased scale — and government policies aimed at increasing production have resulted in a drastic decline in the number of farms in Canada and the U.S. between the mid-20th century and today.
This shift has led to a concentration in business competition and along supply chains, facilitated by lax government oversight. Companies were also motivated to merge with and acquire others as a strategy to deliver shareholder value.