Why Grow More Food: Squeezing Profits from Long Value Chains
The concept of a value chain is useful in understanding how our food system works. As food moves from the field to the table, various people including farmers, distributors, investors, and end sellers become linked together because they each play a part in turning farmers crops into food. Each one of these people becomes a link in the chain, and most squeeze some value (i.e. profit) out of the commodity.
A simple value chain for foods would look something like this: an organic farmer grows food in her field using resources that she made in her previous harvest, such as traditional seeds, organic fertilizers, and even weeds. She then sells the food to a consumer at a stand she set up on the roadside next to her field. This value chain has only two links: the farmer and the consumer. All of the money transferred and the profit earned is between these two people.
Shorter value chains mean that there is a direct relationship between the consumer and the seller. If you participate in a short chain, you may may meet a farmer by visiting a vegetable stand or know the farmer through the internet because you support a CSA. There are many benefits to knowing famers directly or indirectly. Farmers can explain how they grow our food, what they use for fertilizers, why a crop has failed in a particular season, and how much they earn for their crops. A short value chain also allows farmers to be attentive to their customers. Shorter chains foster more communication and thus more democratic control over our food.
The two to four link chain we are discussing at the moment exist in some places, but much larger chains exist too. Today our food system is global. This means that some of the food each of us eats comes from places all over the world. At your local grocery store you will find asparagus from Peru, quinoa from Bolivia, avocados from Jamaica, chicken from China, and the list goes on and on. People all over the world are connected through the food they eat, but this does not mean that they have a direct relationship with their farmer. Rarely do farmers have the technological and financial resources needed to bring their crops to far away markets. Instead, farmers and consumers depend on agribusiness corporations and national governments to enter into value chains. Only these institutions have the power and resources to link farmers and consumers over such long distances. These long chains also require huge amounts of fuel for transportation and produce considerable air pollution.
Corporations and governments (that operate like corporations) in the middle of value chains, however, think about food in a completely different way than the farmers and consumers at the ends. To corporations food is not for survival, sustenance, or enjoyment, but is a means to earn a profit. The central goal of any corporation is to earn profit (dividends) for its shareholders, and corporations want to squeeze profit out of every link on the food value chain. Because corporations are controlled by investors, the same investors can control every link too. It is for this reason that only a few agribusiness corporations control so much of the global food system. It is for this reason that 5 grocery store chains control over 50% of all grocery sales in the United States.
Food prices have been on the rise for decades, but farmers are getting a smaller and smaller share of the profits every year, and the price of food is rising.
Agribusiness corporations want us to believe that longer value chains are more efficient and productive, but evidence shows that longer value chains are neither, especially when it comes to basic foods. Longer values chains are only more profitable for large agribusiness corporations and their investors.
Do you know where your food comes from, how much profit was made from it, or how that profit was distributed? Is it even possible to know the answer to these questions with a global food system like ours?