Big Meat is growing in the South

GRAIN

People in the South appear to be eating a lot more meat these days. The UN Food and Agriculture Organisation (FAO) says that per capita meat consumption in developing countries doubled between 1980 and 2005, while the consumption of eggs more than tripled. What happened? According to some, the main factor has been rising incomes in Asia. But the bigger factor is on the supply side. Agribusiness corporations, backed by massive subsidies and government support, have ramped up global industrial meat production to formidable levels over recent decades, with devastating consequences for people, animals and the environment. Much of this is now happening in the South, where a rising group of home-grown transnational corporations (TNCs) is joining ranks with the older firms from the North to push Big Meat into every corner of the planet.

What is fuelling the galloping market for meat in the countries of the South? The short answer is an abundance of cheap, factory-farmed meat, behind which stands an abundance of cheap feed. Today’s explosion in meat consumption in the South is really just round two of what happened years ago in the North, when companies began setting up factory farms and feedlots to convert mountains of subsidised cereals and oilseeds into animal protein for fast-food kitchens and supermarket aisles. The excess meat, from frozen chicken legs to cow entrails, was – and continues to be – dumped on poorer countries.

Big Meat – a collective name for the large corporations running meat production and trade – gets all kinds of subsidies in the US and Europe. Some argue that the actual price of a pound of hamburger meat in the United States should be around US$30 instead of the US$1–2 it sells for at mass retail centres.1 If subsidies on feed alone were removed, the operating costs for US meat companies would be about 10 per cent higher, and you would likely start seeing fruit and vegetable stands replacing KFCs and McDonald’s in poor neighbourhoods.2 Meanwhile, the average cow in the European Union gets US$2.50 per day in subsidies, while two-thirds of the people in sub-Saharan Africa live on less than US$2 a day.3 People in the US and Europe, especially the poor, are pretty much forced to eat cheap meat. And that model is now being pushed the world over.

Cheap feed is the bedrock of the US and European meat industry, and the lobbies of the transnational meat corporations such as Cargill, Tyson and Danish Crown, and their allies in food service and retail, are bent on making sure that these subsidies will not disappear soon. Of course, new sources of cheap feedstock have been opened up – especially the new expanses of soya production in the Argentine Pampas and the Brazilian Amazon – but this has not altered the dynamics. It has only fuelled the expansion of the meat industry to other parts of the globe.

Soya production has grown tenfold since 1960 (see Graph 1). The amount of fertile land devoted to producing this animal feed crop increased by 58 per cent since 1990, most of it in Brazil and Argentina. During the same period, the amount of land available for crops that people can eat directly has been in steady decline.4 Moreover, soya is just one of the commodities typically turned into animal feed. Cassava, maize and other cereals have also witnessed a tremendous expansion in their production and use as industrial animal feed.

Graph 1: Global soya production, 1960–1985 (million tonnes)

Table 1 shows the growth in the use of commercial feed around the world over the past 20 years. What is striking is the growth in the South. This increase in commercial feed mirrors an increase in industrial meat production. It tells us that factory farming is booming in poorer countries. People around the world are not just eating more meat, they are eating more industrial factory-farmed meat, and the implications of this are huge.

Big Meat, developed by corporations in the North, is now a global phenomenon. And, as we shall see, in its rampage across new frontiers its armies are now often marching with flags of countries from the South. The old North–South lens needs some readjustment.

Table 1: Use of feed concentrate by region, 1980 and 2005 (million tonnes)

Source: FAO

A new crop of meat giants

One of the reasons why industrial meat production is booming in the South is that the large meat conglomerates, like corporations in other sectors, have been using the architecture of neoliberal globalisation to shift their operations to poorer countries where they can produce more cheaply. US-based Smithfield, the largest pork producer in the world, has set up farms in Mexico and Eastern Europe. Another giant US meat company, Tyson, began producing poultry in China in the 1990s on a relatively small scale until 2010, when it brought two new poultry farms into production that will produce a total of 150 million birds per year. At around the same time, Tyson established a joint venture in India, bought into cattle feedlot operations in Argentina and took over three major poultry producers in Brazil. Several European poultry companies have also outsourced their operations to Brazil. The French company Doux, which led the transformation of the French poultry industry into a heavily industrialised export producer, began shifting its operations to Brazil in 1998 through the acquisition of a Brazilian poultry company and with generous incentives from the Brazilian government. By 2002, Doux, the world’s fifth largest poultry company, was producing half of its total output in Brazil.5 Japanese meat companies, for their part, have been actively relocating much of their production to China, while Danish pork producers have been relocating production to eastern Europe.

But it’s not just a story of big companies from the North. Increasingly, the fresh capital being put on the table to build factory farms and feedlots, produce and transport the feed and set up the meat-packing plants is flowing from and through companies from the South. As the United Nations Conference on Trade and Development (UNCTAD) points out, 40 per cent of all global cross-border investment in agricultural production in 2008 was South–South.6 In the process, a number of meat companies based in the South have grown into full-fledged transnationals, with their own aggressive overseas expansion strategies.

Graph 2 gives the global ranking of the top meat companies, and shows how transnational corporations from the South have joined the big boys’ meat club. But  a graph cannot convey the speed at which they are buying each other up, nor the complexity of their relations.

Graph 2: The top ten global meat corporations’ production, 2009 (million tonnes)

Source: Gira, Rabobank, GRAIN

Engines of expansion

A company needs capital to grow. And, as of late, the global finance industry, which sits on most of the world’s money, has been eager to funnel its investment into meat production in the South. Since the financial crisis of 2008, private investors, from hedge funds to pension funds, have developed a big appetite for equity stakes in meat and dairy companies in the South, and even for direct investment in farms. For example, Goldman Sachs and Deutsche Bank have invested hundreds of millions of dollars buying into China’s top pork producers over the past few years, as the market is in full growth. Barclays Bank is among several institutional investors that have acquired major stakes in Zambeef, Zambia’s largest agribusiness company. Further north, Citadel Capital, an Egyptian private equity fund buying up land for food production across Africa, has taken over a domestic farm of 11,000 cows (see Box 1).

But there is also a great deal of government manoeuvring to boost the bank accounts of meat companies in the South. Some governments, most notably Brazil’s, are determined to develop their own multinational meat giants that can take on the TNCs from the North in supplying international markets and fast-food chains. Brazil’s National Economic and Social Development Bank (BNDES) has dished out US$4.4 billion in financing to the four biggest Brazilian meat companies since 2008.7 The bank now owns 20 per cent of JBS and 14 per cent of Marfrig, the country’s two largest meat multinationals.

Other governments are more motivated by long-term food security issues. The governments of Libya and South Korea, for instance, are working with national companies to acquire farmland overseas to produce food for export back home or to the international market. When it comes to meat, this means both promoting offshore crop production to grow feed for domestic livestock and investing in livestock production overseas. China, for example, is securing land for the production of feed crops in Brazil and Argentina while negotiating livestock projects in the Bahamas and Tanzania. And its state-owned commodity trading giant COFCO is rapidly becoming one of the largest meat and dairy producers within China, while also getting a foot in the door overseas by taking a 5 per cent stake in the US pork producer Smithfield in 2007. Paradoxically, Singapore is looking to China for its future pork supplies. In 2010, a subsidiary of Temasek, Singapore’s sovereign wealth fund, announced a massive investment in a joint venture project with China’s largest pork producer that will eventually churn out one million pigs per year at farms in Jilin province, mainly for export to Singapore.
Many countries in the Middle East, with their populations booming and having limited access to arable land and water, are extra nervous about the vulnerability of their meat supplies. Meat imports have skyrocketed, as have imports of feed. Diplomatic assurances of future supplies from Brazil, New Zealand, the US and other major meat and feed exporters do not seem to be having the desired effect, since several governments in the region are continuing to support, if not actively promote, their private companies’ efforts to invest in meat and feed production overseas. Saudi Arabia’s fourth-largest poultry company, HADCO, which is owned by the Kingdom’s largest dairy company, Almarai, has started producing cereals and fodder on 10,000 hectares of land in Sudan, and says it will eventually raise production to 100,000 ha. State-owned Hassad Food is building new livestock farms in its home market of Qatar, while it acquires overseas lands for feed production and livestock projects in Australia, Brazil, Turkey and Uruguay. Iran, too, has joined the rush. In November 2009, the Brazilian government rejected a formal request from Iran to purchase farmland in the country. A few months later, it was reported that Iranian investors were launching a US$40-million cattle and feed mill operation in southern Russia, and contemplating the construction of a 1.2-million-bird poultry facility there.8

But these various governmental initiatives are just creating space for the big guys to move in. The global food system is run and managed by corporations, and corporate strategies define the investment flows. As Kentucky Fried Chicken expands in China, so does DaChan, one of Asia’s largest poultry companies and a KFC supplier. As African supermarket leader Shoprite sets up shops in Nigeria, Zambeef, its main supplier for southern Africa, constructs meat-packing plants nearby. As Wal-Mart expands into Mexico, so does Pilgrim’s Pride, the largest US poultry company, now owned by Brazil’s JBS. Likewise, when JBS buys feedlots and builds packaging plants in Uruguay, the US or Australia, it does so to be better able to supply beef to its global clients like McDonald’s and Carrefour in markets that are closed to Brazilian exports because of restrictions on foot-and-mouth disease (see Box: McMarfrig, p. 8). 

Flags of convenience

The role of governments in this game is mainly to help their companies and elites to navigate these markets, whether by signing bilateral trade and investment agreements or launching diplomatic missions to overturn import restrictions. The Thailand–Australia Free Trade Agreement, for instance, was mainly a horse trade (so to speak): Australian dairy companies took over the Thai dairy market, and Charoen Pokphand (CP), the Thai agribusiness giant, got the Australian poultry market.9 Or consider the recent trade negotiations between Brazil and China on poultry. In May 2009, when Brazil’s President Lula was in Beijing, he succeeded in getting the Chinese government to lift the trade sanctions it had imposed on Brazilian poultry imports because of outbreaks of Newcastle disease. This does not mean that “Brazil” is now free to export poultry to China, but that the five meat plants in Brazil authorised to export to China can resume exports. The first shipment to arrive in China after the embargo was lifted consisted of 300 tonnes of chicken sent by the French company Doux from its Brazilian subsidiary Frangosul. 

Similarly, in 2008, the EU lifted a six-year import ban on Chinese chicken by allowing in exports from Shandong province. An official with Shandong’s provincial department of foreign trade remarked, “It is good news for Chinese producers and especially farmers.” But this was hardly a victory for Chinese farmers. The European decision came just two weeks after Tyson took over one of Shandong’s largest poultry exporters – one of six companies that the European Commission has authorised for exports of chicken meat from China.10

If corporate chickens have identity issues, so do cattle. Ever since mad cow disease was confirmed in US herds in 2003, many countries closed their borders to US beef. Both Washington and the American meat industry lobby made enormous efforts in the years since to sweet-talk, if not arm-twist, foreign governments to open their borders again.11 They even rewrote the rules at the World Organisation for Animal Health (OIE), the global standard-setting body, to declare US beef safe.12 Nevertheless, citizen concern about not only the health implications but also the socio-economic and political impacts of US beef imports – primarily local farmers being pushed out of business – has had many campaigns going in Korea, Australia and Taiwan. So strong have these social movements been that “US beef” is commonly called “mad cow beef”. The terms, at least in Asia–Pacific, are interchangeable. However, what people often do not realise is that Brazil’s JBS has progressively bought up the largest position in the US beef-packing industry. The cows may be initially reared by independent herders on US farms, but the feedlots, abattoirs and processing plants are mostly run and controlled by Brazilian executives.

Counting the costs

What all these investment flows amount to is more industrial meat: more factory farms, faster assembly lines and more fast food. The cost to people and the planet is devastating.

Farmers are the first casualties. In the countries importing cheap meat, local farmers lose markets. In the countries where these companies set up operations, local farmers lose their livelihoods and simply get wiped out. The rise of China’s industrial poultry companies since the mid-1990s has forced 70 million small farmers to abandon poultry production.13 In a country like Romania, the opening of its markets to imports and the entry of corporations into pork production, by both foreign and domestic firms, has resulted in the dramatic loss of 90 per cent of its pig farmers between 2003 and 2007 – 480,000 farmers dwindled to 50,000 in just four years.14

Those farmers who remain in business have to accept the dictates of contract production arrangements or a precarious existence at the margins, where corporate concentration and private standards make it increasingly difficult for them to access markets and continue their traditional farming practices.15 Measures to combat bird flu in Vietnam, for instance, exclude small-scale poultry producers from major urban markets and prohibit backyard poultry, placing the livelihoods of millions of Vietnamese peasants in jeopardy. The measures are all the more ridiculous given that a CP farm is known to have been the source of an outbreak that led to the spread of the disease in northern Vietnam.16

Workers also suffer badly. In the US, workers in the meat-packing industry were able to organise unions and force the companies to provide decent wages and working conditions in the 1980s. But the meat packers fought back, using heavy union-busting tactics and hiring  migrant workers whose precarious legal status made union organising more difficult. The companies were able to push down wages to half of what they were in the 1980s while vastly speeding up production. Today, the average worker in a US poultry plant repeats the same movements from 10–30,000 times per shift, and the meat industry has become the most dangerous place to work in America.17

The US model is now being globalised. Meat workers’ unions in Europe are fighting similar battles against outsourcing, the hiring of migrant workers and the relocation of operations to countries with poorer wages and working conditions.18 In Brazil, where unions in the meat industry are strong, negotiations with the country’s meat companies are becoming more difficult as these firms go global. The last decade of export-oriented growth has been particularly nasty for workers in the poultry sector, most of whom are women.19 Sérgio Irineu Bolzan, a worker at a Cargill poultry plant in the state of Mato Grosso do Sul, says that the pace of work has doubled since he began working at the plant in 1997. He says that, as a result, repetitive strain injury among workers has risen exponentially, particularly among women, because they tend to occupy positions that demand high motor skills. A recent national study in Brazil found that a quarter of women working in Brazil’s poultry plants had serious repetitive strain injury, and that this was directly related to depression. Nearly 40 per cent of women in Brazil’s poultry industry suffer from depression.20 Workers say that the companies have created “epidemics” of severe health problems for them.21

Indeed, from a public health standpoint, industrial meat is a disaster. The crowding of large numbers of animals in factory farms, an obscene treatment of animals in its own right, causes the overuse of antibiotics and facilitates the emergence and spread of dangerous pathogens. It makes food that is toxic for people, and its scale means that when something goes wrong huge numbers of people are affected, as the recent salmonella outbreak in the US egg supply shows (see “A high-risk food system”, in Seeds,  p. 26) . Factory farms also make life miserable for local communities, releasing odours and hazardous gases that cause respiratory problems and pollute local water supplies. In China, where factory farms are expanding faster than anywhere else, the country’s first national pollution census, released in 2010, shocked many people when it reported that agriculture was a bigger source of water pollution than industry, with the authors putting the blame squarely on factory farms.22 It is for these reasons that companies generally locate their barns in poor communities with little political power.23

The scale of the environmental devastation  is huge. Factory farming is driving the loss of animal biodiversity (industrial pig production, for instance, relies on only five breeds),24 spewing out greenhouse gases (the meat industry is responsible for 18 per cent of total greenhouse gas emissions)25 and mowing down forests (both directly, by clearing forest for cattle, and indirectly, through the clearing of forest for the production of crops for animal feeds).26 Overall, the global boom in industrial meat is responsible for a massive expansion of industrial production of commodity crops such as soya, which push local communities off their lands and convert small-scale sustainable farms into corporate plantations, transforming and destroying rural landscapes in the process.

Upsetting the meat cart

Fortunately, struggles that challenge the expansion of industrial meat production in and from the South are underway. Groups in Thailand have joined together to take on CP and have started reaching out to groups in other countries where CP has operations, just as groups in Brazil that monitor and challenge the investments by the BNDES in Brazilian multinationals are starting to make connections with people in African countries where the companies are active. At the local level, communities in Mexico affected by factory pig farms are linking their struggles to national networks for social and environmental justice. And, from within the leading Southern meat multinationals, workers are building bridges across borders through their unions, as the Marfrig and JBS workers in Brazil are doing with their counterparts in Uruguay, Argentina and Europe.

It is crucial to support, learn from and build upon this alliance-building. Greater attention also needs to be paid to the flurry of deal-making going on between governments of the South. And more needs to be done to forge connections and cooperation between groups standing up to meat multinationals from the South  and people affected by their overseas expansion strategies. The stakes are high. Big Meat is too much of a big disaster to let its growth in the South go unchecked.

1 - This is claimed by Moby and Miyun Park in their book Gristle, New York, The New Press, 2009.
2 - “Below-cost feed crops: An indirect subsidy for industrial animal factories”, IATP, June 2006: http://www.agobservatory.org/library.cfm?refid=88122
KFC stands for Kentucky Fried Chicken.
3 - Gumisai Mutume, “Mounting opposition to Northern farm subsidies”, Africa Recovery, Vol.17, No. 1, May 2003,
http://www.un.org/ecosocdev/geninfo/afrec/vol17no1/171agri4.htm
4 - See GRAIN, “Global agribusiness: two decades of plunder”, Seedling, July 2010,
http://www.grain.org/seedling/?id=693
5 - Tristan Coloma, “Quand les volailles donnent la chair de poule”, Le Monde Diplomatique, July 2008,
http://www.monde-diplomatique.fr/2008/07/COLOMA/16084
6 - UNCTAD, World Investment Report 2009, Geneva, September 2009.
7 - Stuart Grudgings, “Cattle a tough target in Amazon protection fight”, Reuters, 1 June 2009.
8 - See http://farmlandgrab.org/cat/iran.
9 - “Behind every FTA lie the TNCs: examples from Thailand”, interview with Witoon Lianchamroon of BIOTHAI, conducted by Aziz Choudry of bilaterals.org, for Fighting FTAs, November 2007:
http://www.bilaterals.org/
10 - The three companies are Shandong Zhucheng Foreign Trade, Qingdao Nine-Alliance and Anqiu Foreign Trade.
11 - Arm-twisting is when the US government tells Taiwan or Korea that unless they open their markets to US beef the US will not give them a free trade agreement.
12 - See GRAIN, “Food safety, rigging the game”, Seedling, July 2008,
http://www.grain.org/seedling/?id=555
13 - FAO, “The state of food and agriculture, 2009”,
http://www.fao.org/publications/sofa/en/
14 - Doreen Carvajal and Stephen Castle, “A US hog giant transforms Eastern Europe”, New York Times, 5 May 2009.
15 - GRAIN, “Contract farming in the world’s poultry industry”, Seedling, January 2008; Isabelle Delforge, “Contract farming in Thailand: A view from the farm”, a report for Focus on the Global South, 2008; “Thailand Livestock Report”, Italia Trade Commission, 2008:
http://www.ice.gov.it/paesi/asia/thailandia/upload/177/Thailand per cent20Livestock per cent20Report.pdf
16 - GRAIN, “Bird flu: a bonanza for ‘Big Chicken’”, Against the grain, March 2007.
17 - Ana Grabowski of the UFCW, speaking in Brazil, 1 July 2008:
http://www.rel-uita.org/; Tom Philpott, “How the meat industry thrives, even as costs rise”, Grist, 13 September 2007: http://www.grist.org/article/hog-futures/
18 - See, for example, the Italian union CGIL FLAI Modena:
http://www.nuovocaporalato.it/
19 - Work in Brazil’s beef sector is not necessarily better. In 2007, 60 per cent of the allegations of slave labour or degrading treatment received by the Pastoral Land Commission occurred in the cattle industry. See REL–UITA: http://www.rel-uita.org/sociedad/hambre/hombres_esclavizados_ganado_subsidiado-por.htm
20 - See REL–UITA: http://www.rel-uita.org/agenda/encontro_setor_avicola-2008/con_sergio_bolsan.htm
21 - Carta de Atibaia, “Declaración Final del Encuentro Internacional de los Trabajadores en la Industria Avícola”, 18 June 2008: http://www.rel-uita.org/agenda/encontro_setor_avicola-2008/carta_de_atibaiahtm
22 - Jin Zhu, “Animal waste a threat to clean water supply”, China Daily, 15 July 2010; Mindi Schneider, “China: agriculture a bigger polluter than industry”, Pig Penning, 20 July 2010: http://pigpenning.wordpress.com/
23 - For more information, see the excellent interview with David Kirby on Democracy Now!, “The looming threat of industrial pig, dairy and poultry farms on humans and the environment”, 24 August 2010:
http://www.democracynow.org/2010/8/24/david_kirby_on_the_looming_threat
or Fabrice Nicolino, Bidoche : L’industrie de la viande menace le monde, Editions LLL, September 2009. For an important documentary on the community of La Gloria, Mexico, and its experiences with nearby hog farms, see Télévision Suisse Romande, “H1N1: Why did it strike the Mexicans first?”, September 2009:
http://www.grain.org/articles/?id=58
24 - For a larger analysis of the issue, see Susanne Gura, “Livestock breeding in the hands of corporations”, Seedling, January 2008,
http://www.grain.org/seedling/?id=528
25 - GRAIN, “The international food system and the climate crisis”, Seedling, October 2009, http://www.grain.org/seedling/?id=642
26 - During Brazil’s beef export boom, 1990–2002, the total cattle herd grew from 26 million to 57 million, and 80 per cent of this growth was in the Amazon. See Sven Wunder, Benoit Mertens, Pablo Pacheco and David Kaimowitz, “Hamburger connection fuels Amazon destruction”, CIFOR, 2004, http://www.cifor.cgiar.org/publications/pdf_files/media/Amazon.pdf