Corporations & trade

GRAIN’s central focus is to support social movements across the world in their resistance to the growing corporate control over food production, markets and trade. We undertake research on how corporations – including agribusiness, large retail and the finance industry – displace millions of small-scale food producers and how trade and investment deals impose the legal conditions for it. Apart from our information work, we also support the efforts of partners and peoples’ movements to improve strategies, cooperation and popular action to challenge corporate power, and build capacity with them to achieve this.

 

In this edition of the Supermarkets Watch Asia Bulletin, we look at the expansion of multinational food companies and retailers from a widened point-of-view. These companies are adopting new strategies to expand their presence in Asia and across the globe. The editorial of this number of the Bulletin focuses on the aggressive actions of multinational supermarket chains in Africa. Their impact on local food systems has given birth to a new struggle across the African continent, led by small farmers, small vendors and consumers.

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Africa's food systems are a final frontier for multinational food companies and retailers. Most Africans still consume a healthy diet of traditional foods, supplied by millions of small vendors and small farmers across the continent. But this is slowly changing as global food companies and retailers adopt new strategies to expand their presence on the continent, led by the aggressive actions of some multinational supermarket chains. The livelihoods of millions of small vendors and local farmers are at risk, as are people's health and the continent's diverse traditional food cultures. While African governments do little but facilitate this expansion of foreign supermarkets, small vendors, farmers and urban consumers are coming together to defend their local food systems.

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The growth of the supermarket sector has been very rapid. Today, 30 global supermarket chains already control a third of the global retail food market, taking a huge share of the market of the food that the people around the world eat.  This is not just a modern trend, an evolution of the way things are sold.  Their vast expansion has been supported and promoted by Free Trade Agreements, investment liberalisation, government policies to promote foreign direct investment, and laws and regulations that make it more difficult for small-scale food systems to continue to operate. Supermarket distribution systems - just like the industrial farming system that produces the bulk raw materials that go into the cheap processed foods lining their shelves - are being tremendously subsidised by governments, using tax payers money.

 

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In Thailand, the development of modern retail puts consumers and farmers at a loss. According to BioThai, 75 percent of the price of a banana sold in a modern retail outlet goes to the retailer and its suppliers, while only 25 percent goes to the farmer. Moreover, the price of a banana in Thailand is almost the same as the price of one sold in Europe, where 80 percent of the price goes to the retailers and towards import taxes.

 

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Electronic commerce is expanding rapidly into food distribution and retail across Asia. In particular, the emergence of online food delivery services is generating significant changes to farm-to-fork food supply chains. Yet very few countries have regulations covering online food distribution, including food safety and health hazards, or even regulations covering cross-border e-commerce for food. Some of the world's largest e-commerce and retail companies are moving aggressively to take control of and expand online food retail, with major implications for local food systems, small vendors and farmers.

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Daewoo's overseas agribusiness expansion

GRAIN, TANY Collective, Yayasan Pusaka | 16 May 2018 | Against the grain, Corporations & trade

Ten years ago, headlines around the world reported the shocking news that a subsidiary of Daewoo Logistics called Madagascar Future Enterprise Corp., was negotiating a 99-year lease with the government of Madagascar for 1.3 million hectares of arable land – almost half of the country’s arable land. Their plan was to grow corn and oil palm in four regions of the island for shipment back to South Korea to produce animal feed and biofuel respectively. Today, far from the 1999 bankruptcy of Daewoo Motors, South Korea’s Daewoo is one of world’s largest transnational conglomerates and continues to expand a business empire that extends from manufacturing and trade to natural resources like oil and gas, minerals and food. 

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It has been two years since we first published this quarterly information bulletin about developments in the food retail and distribution sector in Asia. A few months ago, we thought it was time to assess whether the bulletin served its purpose and how it could improve. So we decided to run a survey and dedicate this issue to sharing some of its results.

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According to different sources, transnational supply chains currently account for 30 to 60 per cent of all global trade, and depend on the work of over 100 million workers globally. On average, companies relying on transnational supply chains only directly hire 6 per cent of the labour force they actually employ. The rest is “outsourced”, often scattered across several countries and amongst thousands of suppliers.

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The new wave of free trade agreements, written by and for corporate interests, provides little or no benefits for workers, communities, or the environment. Provisions being laid in these new trade deals turn most developing countries into sources of cheap and unprotected labour for transnational companies. Labour rights are being redefined in a way that allows transnational companies to impose brutal working conditions. Once these agreements are signed and ratified, the only legal protection that will fully stand is the abolition of slavery. All other labour rights will be disposable at the companies’ discretion under a wide range of circumstances. 

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India is being cornered to open up its markets at the ongoing negotiations of the Regional Comprehensive Economic Partnership (RCEP). A free trade agreement between 16 Asian countries, including massive manufacturers like China, RCEP will bring down import duties to zero on goods, both agricultural and industrial, for more than 92 per cent of tariff lines. Being the world’s largest trade agreement, it will impact half of the world’s population including 420 million small family farms that produce 80 per cent of Asia’s food.

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