The world’s top four grain traders, which have dominated the global grain market for decades – have seen record or near-record profits or sales. The record bonanza amid soaring food prices around the world, raising concerns of profiteering and speculation in global food markets that could put staples beyond the reach of the poorest.
Food prices have surged more than 20% this year, according to the UN Food and Agriculture Organisation. About 345 million people are experiencing acute food insecurity, according to the World Food Programme, compared with 135 million before the Covid-19 pandemic.
Olivier De Schutter, a co-chair of IPES-Food (the International Panel of Experts on Sustainable Food Systems) and UN special rapporteur on extreme poverty and human rights, said:
“The fact that global commodity giants are making record profits at a time when hunger is rising is clearly unjust, and is a terrible indictment of our food systems. What’s even worse, these companies could have done more to prevent the hunger crisis in the first place.” Four companies – the Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus, known collectively as ABCD – control an estimated 70-90% of the global grain trade. “Global grain markets are even more concentrated than energy markets and even less transparent, so there is a huge risk of profiteering,” said De Schutter.
He said this year’s food price surge happened despite what are thought to be abundant global grain reserves, but there was insufficient transparency from the companies to show how much grain they hold and no way to force them to release stocks in a timely way. “We need to be looking at the grain giants and asking what they could have done to avert the crisis, and what they could be doing now,” De Schutter said.
Cargill reported a 23% increase in revenues to a record $165bn (£140bn) for the year ended 31 May, while Archer-Daniels-Midland made the highest profits in its history during the second quarter of the year. Sales at Bunge surged by 17% year on year in the second quarter, though its profits were affected by previously incurred charges. Louis Dreyfus reported profits for 2021 up by more than 80% on the previous year, as revenues rose by nearly a quarter to $1.62bn.
An NGO analysis suggests some food companies may be increasing their margins too. Archers-Daniels-Midland increased its profit margin to 4.46% in the first quarter of this year, up from 3.65% in the same quarter in 2021, and Cargill’s margin increased from 2.5% last year to 3.2% this year.
Sandra Martinsone, a policy manager at Bond, a network of international development charities, said, “[The big agrifood companies] are clearly capitalising on the reduced supply and increased demand, further exacerbated by commodity trading,” she said. “When supply is significantly lower than demand, it gives space for price increase. But this is also exacerbated by speculative stock markets, since wheat and other commodities are traded on stock markets and therefore prices fluctuate.”
Alex Maitland, a senior adviser at Oxfam, said: “There are fears that speculation could be a driver in food price rises. Anything that causes hunger and starvation is immoral.”
Natalie Bennett, a UK Green party peer, explained, “...the handful of companies, with significant cross-ownership from hedge funds, that from seeds to supermarkets are major contributors to the inflation that’s driving the cost of living crisis to new heights.”
Vicki Hird, the head of sustainable farming at the UK food coalition Sustain, pointed out, “While farmers, consumers and food workers are suffering in the face of spiralling food and fuel prices, those sitting in the middle of the food chain – a small number of huge, dominant grain traders – are raking in vast profits.”
Despite rising input prices in the form of energy and fertiliser, all four of the ABCD companies profits look secure.
De Schutter said: “Ultimately, we need to break up the monopolies that have a stranglehold on the food chain. A handful of companies control global seed and fertiliser markets, animal genetics, the global grain trade, and food retail. They are making huge profits at the cost of farmers, consumers and the environment.”