A Conspiracy Theory

I am reading the book, "Eat your heart out" by Felicity Lawrence. It hits hard at current business practices in the Food Industry.

The first chapter itself is a revelation. This post is about that.

In 1999, Cargill controlled 45% of global grain business, including 42% of US corn exports, a third of all soya bean exports and about 20% of wheat exports. It is the world's largest crusher of oilseeds such as soya and rapeseed.

Archer Daniels Midland (ADM), another US-based grain trading corporation, controls 30% of the world's grain trade. It is one of the largest processors of soya beans, corn, wheat and cocoa.

Bunge, is the world's largest exporter of soya beans and a major corn and oil processor.

Louis Dreyfus group of France, has vast grain, sugar and energy trading interests around the world.

These four global companies control much of the world's agribusiness.

Now, having got statistics out of the way, let me see what I learned from the book.

One of the points Lawrence makes is that packaged food and breakfast cereals, such as cornflakes and oats, and other stuff that flood our market is not nutritional and has adverse effects on health. They contain minimal nutrition -'Rats fed on a diet of ground-up cereal boxes with sugar, milk and raisins were healthier than rats fed the cereals themselves', says Robert Choate-, they are carcinogenic, and, high on salt and sugar, they make us obese. They are wasteful on money and energy.

That is a big topic, and even that I get out of the way, because okay we can do without them, no one is forcing us to buy them.


But there is a larger picture which shocked me:

People who manufacture processed cereals make a gross profit of 40 to 45 percent. Rice, wheat, corn and Soya which form the bulk of these products is almost wholly subsidised by the US Government. It is not people who grow these products in US, it is corporations.

What happens is this. Because they get almost all their money back as subsidy, these corporations buy whatever land is available. So the small farmer is booted out. And because of the heavy subsidy, they can grow as much as they want, and export grain at less than the cost of production. This means, practically no other country can compete with these American Corporations.

Lawrence writes, "Corns and other hard grains have in other words long been part of an economic policy designed to promote the export of US agricultural surpluses while bringing the money from added-value markets back home". This means, they dump their products on us, and the profit they take home is from the processed cereals we buy (remember, they make 45% profit on that).

This started with Marshall Plan. In Europe, agriculture was wiped out by war. So, they had to buy food grain from US. To encourage their farmers to grow them, the American Government gave them substantial subsidy. At one point, US supplied half of the world's total wheat trade.

Once this pattern was set, it was impossible for the Government to go back on subsidies. They had to grow surplus to keep the AgriIndustry happy, and they had to export it or otherwise there won't be profit.

So Eisenhower passed an act that helped poorer countries buy food at huge discount and long repayment terms. He said its aim was to 'lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands'. Later, Kennedy updated the Act, stating, 'Food is strength, and food is peace, and food is freedom, and food is a helping to people around the world whose good will and friendship we want'.

Admirable words, but the facts are otherwise. When global prices are high,  the food aid by US dries up. And along with the food aid, come conditions which stipulate that the local markets have to be opened up. The food aid and subsidised imports flood the local markets and depress the prices of local products. And when food aid is cut, it is replaced by commercial imports, and the demands of the urban populations who have adopted the diet of the West.

Peter Rosset of Food First describes this: "The US exports corn and wheat at prices below the cost of production. The US agricultural system has been designed to give American grain-trading giants like Cargill and Archer Daniels Midland the edge in capturing the domestic market of other countries.

"These companies penetrate Third World markets with a one-two punch. First the companies work closely with the US government representatives and negotiators at institutions like the World Trade Organisation, World Bank and IMF to force Third World countries to open their markets to agricultural exports. Once their markets have been forced open, these companies must still be able to out-compete local farmers.

"To do that, they need an abundant low-cost supply of commodities, and indeed they are able to get grain so cheaply that nobody else has any chance at all of being able to compete, because the second punch is delivered like clockwork every six years by a new farm bill designed to depress US farm prices to, and in many cases below, the cost of production."

You get the rough idea?

So don't enjoy those advertisements, don't go out and get those packaged food articles.

That is the least we can do for the good of the health of our body and economy.