SOMO report: The profit behind your plate
22-12-2006
During Christmas days, consumers enjoy the increasing and varied offer of ready made and special food products in the supermarkets. But who gets most of the profit and who is able to supply the food we eat remains invisible for the daily shopper. In her new report ‘The profit behind your plate’ SOMO shows how the opportunities for developing countries to share the profits of the processed food industry are limited. At the same time, supermarkets increasingly control the processed food markets to their benefit, which is felt throughout the chain from small processors in developing countries to the big food multinationals such as Nestlé and Unilever.
In many developed and developing countries a few supermarket chains are rapidly increasing their shares in the processed food market through low prices, downward pressures on food suppliers’ prices and the introduction of their own labels also called private labels (huismerken). This trend, together with the growing importance of discount chains, is changing the food production and processing around the world.
World sales of processed food are growing and account for thee quarters
of all food sales, but the participation of developing countries in
this growth is still small, especially in global processed food trade.
Given the importance for developing countries of growing added value
and incomes from their agricultural production, SOMO has looked at the
structural, market, private and governmental obstacles they face in
processed food production and trade. The SOMO report shows that
increasing concentration at national and regional level limits the
opportunities for developing country manufacturers and traders in
processed food to enter or remain active in the market. Through
investment liberalisation measures, profitable markets in developing
countries can quickly be taken over by the largest multinational food
companies. Moreover, the SOMO report has revealed (alleged)
malpractices by these companies in developing countries such as bad
working conditions and environmental damage.
Exports of processed food by developing countries remain much smaller
than those of developed countries and experience all kinds of trade
restrictions and distortions like anti-dumping rules and export
subsidies to the processed food industry in the North. To these
problems are added the traditional bottlenecks for developing a food
processing industry in developing countries.
“With the market structures unveiled in this research report, the
profits in the food industry are unlikely to grow for developing
countries but flow to the headquarters of the food multinationals and
supermarket chains based in the North”, says Myriam Vander Stichele,
senior researcher at SOMO. Free trade agreements and corporate social
responsibility initiatives are not adequate to resolve this problem.
While trade in processed foods remains limited to 6% of the value of
total retail sales the trade rules negotiated in the WTO nevertheless
can have a negative impact on the whole primary and processed
agricultural production in developing countries.
SOMO gives examples of ways to redress the problems to achieve poverty
eradication and sustainable development such as in the area of
competition policy and free trade negotiations in agriculture and
retail services.
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Editorial Notes:
For further information, contact:
Myriam Vander Stichele (m.vander.stichele@somo.nl) or Sanne van der Wal (s.vander.wal@somo.nl). Tel: 0031 20 6391291
The report The Profit behind your Plate: Critical issues in the Processed Food Industry is available at SOMO. Journalists can request a free copy.
