This perspective article by Jennifer Clapp examines the effects of corporate consolidation in the global seed and agrochemical industry. Clapp argues that corporations in this sector with concentrated power can influence the wider food system in many ways, including by influencing markets, technology and governance. The global seed and agrochemical sector is dominated by just four firms - Bayer, Corteva, ChemChina-Syngenta and BASF - down from six in the early 2000s.
This issue is particularly important in the run-up to the UN Food Systems Summit, notes Clapp, since civil society has raised concerns that the Summit does not sufficiently address the issue of corporate power.
The paper sets out ways in which concentrated corporate power can influence the food system, including:
- Shaping market dynamics:
- Potential negative impacts on market competitiveness, since the top four firms control 60% of the global seed market and 70% of the global pesticide market, particularly because new market entrants face significant barriers in the form of high research and development costs.
- Multiple studies have concluded that market concentration in crop seed markets contributes to higher seed prices.
- Firms can limit the choices available to buyers. For example, in the United States it is getting harder for farmers to access non-genetically-modified versions of seeds, as firms can incentivise sales of GM seeds, limiting the ability of farmers to save seed for replanting.
- Mergers can lead to job losses, and research suggests that workers’ share of income in the US falls as firms become more consolidated.
- Shaping technology and innovation pathways:
- Firms aiming to merge often argue to regulators that they need to consolidate to be able to put more funds into research and development, which can result in wider benefits such as lower costs for consumers. While increased seed innovation did follow some mergers in the 1970s to 90s, innovation slowed during the 1990s and 2000s as consolidation continued. For example, herbicide firms focused almost entirely on modifying herbicides to work with existing herbicides.
- In concentrated sectors, firms can focus on high-tech and proprietary innovation pathways that are most profitable to them, instead of developing technologies that are more affordable and accessible to small-scale farmers in the developing world.
- Focusing on certain technologies can produce “lock-ins”, such as farmers using the herbicide glyphosate because many seeds have been genetically engineered to be resistant to it. (See also the TABLE summary of the paper Losing practices, relationships and agency: ecological deskilling as a consequence of the uptake of modern seed varieties among South African Smallholders.)
- Where governments have pulled back from funding agricultural research and development, the innovation agenda can be set by firms whose primary goals is profitability.
- Firms can gain control of additional new technologies - such as digital platforms for agriculture or computer-assisted genome editing - through acquiring startups.
- Shaping the policy agenda:
- Large firms can afford to spend millions of dollars on lobbying governments to try to influence policy on issues such as GMO labelling.
- Potential conflicts of interest can arise when agribusiness lobbyists work in government roles where they can influence matters relating to their former employers, and then cycle back to industry jobs.
- Large firms can spend a lot on public relations to influence narratives about their products, and hence indirectly influence the policy landscape.
- Through “structural power”, firms can influence policy simply by being big employers - hence, governments can be reluctant to take measures that might cause firms to leave and take jobs with them.
The paper concludes by setting out strategies for reining in corporate power over the food system, including:
- Stronger competition policies that pay attention not just to consumer prices but also to the potential impacts of mergers and acquisitions on wider society.
- Greater public sector support for agricultural R&D, including on agroecological production systems.
- Stricter regulation of corporate influence on the policymaking process.
What are the potential consequences when a relatively small number of large firms come to dominate markets within the global food system? This Perspective examines the implications of corporate concentration and power in the global seed and agrochemical industry, a sector that has become more consolidated in recent years. It outlines the pathways via which concentrated firms in this sector have the potential to exert power in food systems more broadly—both directly and indirectly—in ways that matter for food system outcomes. Specifically, concentrated firms can shape markets, shape technology and innovation agendas, and shape policy and governance frameworks. This Perspective makes the case that a range of measures are needed to ensure that corporate concentration and power do not undermine key goals for food systems, such as equitable livelihoods, sustainability and broad-based participation in food system governance. These include measures to strengthen competition policies, to bolster public sector support for diverse food systems, and to curb corporate influence in the policy process.
Clapp, J., 2021. The problem with growing corporate concentration and power in the global food system. Nature Food, pp.1-5.