Friday, May 17, 2013

Monopoly vs. the Guillotine

I had previously posted some interesting data on the inflation occurring in the animal feeds supplied to the Supply Management sectors.  Price of dairy and chicken feed (Supply Management monopoly) are up 60%, while dog & cat food ("Free Market, non-monopoly") are up just 20% in the same time period.

Professor Baines of York University, Toronto ON Canada has apparently had similar concerns.  In his paper published on April 22, 2013 "Food Price Inflation and Redistribution Toward a New Analysis of Corporate Power in the World Food System", I found the following graph of C4 indexes:

C4 is a measure of the market share by the four biggest companies in that market.  "ADM" is Archer Daniels Midland (USA).  ADM's Canadian subsidiaries sources, stores, transports and processes crops such as wheat, cocoa and oilseeds at a total of 42 facilities manned by more than 1,000 employees.

ADM, Bunge, and Cargill are like 3 peas in a pod.  Let's take Cargill as an example.  Cargill started as a US company in 1865, before Canada was born.  Today, it is a trans-national producer and marketer of food, agricultural, financial and industrial products and services with 142,000 employees in 65 countries. As world-wide as Cargill is, in 2011 it generated 37% of its world-wide revenues from its North American operations (Ref: Baines 2013, op. cit.).  That's why Cargill spends about $1.5 million per year lobbying the US government.  In Canada, Cargill Limited is headquartered in Winnipeg, Manitoba and employs over 8,000 people across Canada.  Leonard Penner, Cargill's Canadian President has done lobbying in Ottawa, 23 meetings with the Ottawa mandarins and bureaucrats in the 23 days between Feb. 26/13 to Mar. 20/13, sometimes meeting with 8 different people in one day.  Busy guy.  No matter how you slice it, Cargill is BIG, and they are used to throwing their weight around in Washington, Ottawa, and Queens Park.

As you can see, the flour milling, soy crushing, and wet corn milling sectors have been steadily over-taken by these 3 dominant players.  Soy crushing and wet corn milling are central to the animal feeds industry.  In 2002, these 3 players controlled 71% of the soy crushing market.  Control these critical processes, and you have a strangle hold on everything upstream and downstream.  Nobody can move without your permission.

As can be seen from Baines' Figure 9 above, the more people starve, the more profitable it is for the Agro-Traders Nexus (see below):

Now they have figured out how to maximize their profits by people starving to death.

Upon being informed that the citizens of France had no bread to eat, Marie Antoinette , Queen-consort of Louis XVI of France, exclaimed "let them eat cake".  She ended up losing her head for that shortly later.

Are we prepared for the consequences of the Agro-Trader Nexus maximizing their profits as their corporate Mission Statements compel them to do?

Alternatively, should we inquire if France has a few used guillotines for sale?

No comments:

Post a Comment

Off-topic commercial spam that's posted so as to help sell your wares will be deleted.

On-topic comments, where you behave yourself and play nicely, will remain posted; whether they are pro or con. Everybody needs to fully understand all points of view so that we can find a solution that encompasses everybody's concerns. Give it your best shot.

If you decide to post, your posting becomes part of the public record, and SFPFC has full rights to use it (or not) in any reasonable manner or medium that suits our purposes.

Before posting, please proofread, and correct as necessary. If you subsequently discover a need to fix your previous posting, make an additional posting that refers to the original posting, then set the record straight.