Mergers disempower consumers & reduce resilience in the food system

Last month’s news headlines in the UK ‘Sainsbury’s vows to slash prices after Asda merger’, were on the face of it good news for consumers were they not? Sainsbury’s promised that shoppers would get a 10% cut in the price of popular foods as a result. After all, consumer research from Which? and others, show that day to day choices made by consumers, in terms of what to place in the supermarket trolley, are driven primarily by price and will more often that not, trump any other sustainability or ethical concerns consumers will have.

During the last couple of years there have been a wave of mergers across the food and agricultural sectors from those working on agribusiness, manufacturing and retail industry. All indications suggest this trend for consolidation will only intensify in the coming years, partly driven by Big Data, as a powerful new driver of consolidation, according to a report by IPES, allowing companies to bring satellite data services, input provision, farm-level genomic information, farm machinery, and market information under one roof.

The last few years have borne witness to record deals being struck in the food processing sector (Heinz and Kraft Foods – $55 billion), beverages (AB InBev and SABMiller – $120 billion) and retail (Amazon and Whole Foods – $13.7 billion). In addition, we are witnessing a significant rise in big brands buying or investing in healthy, sustainable and ethical brands. For example, Tyson Foods the largest U.S. meat processor, continues to raise its stake in plant-based protein maker Beyond Meat as it looks to tap growing demand for alternative sources of protein.

I for one, am not convinced that in the long term, consolidation, buy outs and mergers are a good deal for consumers or will indeed help ensure we move to a sustainable, equitable and fair food system.  In fact, all the evidence to date suggests that the opposite is in true – that concentration of power tends to lead to a bad deal for producers and consumers. There are still too many companies that use their size to defend their market share, shaping policies and using their buying and influencing power to fit their needs – not on delivering the innovation we need to build sustainable resilient food system.

As the natural world demonstrates, it is diversity, not consolidation & homogenisation, that builds resilience. Whilst food on the face of it appears to have become cheaper, consolidation within the agri-food sector has in fact meant the true cost of our food is much higher and often hidden. A recent report by the Sustainable Food Trust, found that UK citizens pay twice as much for food as they realise. For each £1 spent on food in the shops, consumers incur extra hidden costs of £1 (50% being made up of by environmental impacts and 37% associated with health care costs.)

Is it morally or ethically correct that 70% of the UK grocery market becomes dominated by three retailers? In the rush towards consolidation and business mergers we are in danger of losing site of the long term need for a food system that ensures food security for all, rather then perceived short term benefits for the few. We need to tread carefully and governments and competition authorities need to start asking some questions.

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