Hungry City: How Food Shapes Our Lives (16 page)

Other aspects of the London food supply were modernising too. Due to its rapid increase in population, London was struggling to feed itself for the first time in its history, and the government felt it had little choice but to extend the principle on which the city had always depended – the ‘hidden hand’ of commerce – as far as it could. By the century’s end, the nation was the world’s biggest importer not only of grain, but of processed and preserved foods too. While the urban poor dined on American wheat, middle-class Britons discovered the delights of tinned prunes, apricots and peaches from California and condensed milk from Switzerland. When the first shipload of frozen Australian meat arrived in London in 1880, still in perfect condition after many weeks at sea, the future pattern of British consumption was set.
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By the end of the nineteenth century, there was no shortage of food in London, but not all Londoners could afford to eat it. When Queen Victoria died in 1901, two thirds of the wealth in her realm was in the hands of just 2.5 per cent of her subjects, and as the social reformer Charles Booth revealed in his exhaustive 1903 survey
Life and Labour of the People in London
, many of the remaining 97.5 per cent lived in conditions as grim as those of ancient Rome (or worse: at least some Romans had received free bread).
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Booth’s survey, which ran to 17 volumes, made shocking reading. Many Londoners were living in slum
conditions, 30 per cent of them under the breadline. Booth castigated his contemporaries for their lack of empathy towards their fellow men:

The words ‘Give us this day our daily bread’ have not much meaning to us; do we ever think what they mean to the poor? I am constantly impressed with the different aspect of our life compared to that of those who live on daily wages, from day to day, from hand to mouth. Some of my friends will say ‘You mean the difference between the thrifty and the unthrifty’ but I do not think I do.
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What was becoming clear was that leaving the food supply solely to the ‘hidden hand’ of commerce had its downside. While the nascent food industries were very good at producing and transporting food, feeding the urban poor wasn’t their goal. Left to their own devices, they naturally sought to maximise profits, which meant targeting those who could afford to pay. While poorer city-dwellers disappeared off the food-supply radar, food companies competed for the lucrative end of the market by doing what every urban authority in history had sought to prevent them from doing: they consolidated.

By the start of the First World War, greater awareness of the nutritional benefits of milk had elevated it from a novelty drink into what the government called ‘a most necessary food’. Public access to ‘good, clean milk’ was now seen as a more urgent priority than bread; yet London’s milk was supplied by just five major wholesalers, two of which merged in 1915 to form United Dairies, gaining control of half the capital’s supply. While the House of Commons debated whether or not this constituted a dangerous monopoly, the new ‘milk combine’ answered the question itself, hoicking up its prices to such an extent that the government was forced to act. In 1918, it nationalised milk production under a new Milk Control Board; but the new regime was to prove short-lived. After a year spent wrangling with milk producers and retailers, the Board was unable to fix a fair price for milk, and it collapsed soon after. The ‘milk combine’ was then referred to the Standing Committee on Trusts, a forerunner of the Monopolies and Mergers Commission, and about as toothless.
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By the end of the war, the government’s failure to wrest control of
London’s milk supply was clear. United Dairies’ share of the trade had increased to 80 per cent, and in 1920 it augmented its business with the acquisition of 470 retail outlets in the capital. As a memo from the Ministry of Food noted, ‘if the State stands aside, this growth will continue unchecked, placing the consumer at the mercy of a powerful monopoly controlling an essential food’.
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But it was already too late. From then on, it would be the food industry, and not government, that would be calling the shots.

Things have moved on somewhat since London was first menaced by its ‘milk combine’. As Adam Smith foresaw – but on a scale that he could not have imagined – better transport links between city and country have indeed opened up urban markets to greater competition. But the global scale of those markets changes everything. The world’s industrialised nations now effectively represent one enormous city; the rest of the world their rural hinterland. In the new global village, we all eat the same food, supplied by the same companies, available in the same shops, and the laws of competition envisioned by Smith no longer apply. Throughout the twentieth century, consolidation within the food industry went virtually unchecked. Today, just 30 companies handle 30 per cent of all global trade in food; a neatly symmetrical statistic that gives some idea of the unprecedented power that major conglomerates now have over the food supply.
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Similarly awesome statistics are the annual sales figures of the three biggest: Nestlé, Philip Morris Co. Inc. (Kraft) and ConAgra Foods sold food worth $61 billion, $34 billion and $14 billion respectively in 2005. Never in the field of human consumption has so much been fed to so many by so few.

With food producers like that to deal with, no wonder retailers like Tesco are keen to expand: they need all the buying power they can get. Tesco might loom large on the British retail scene, but in global terms it is still a relative minnow. Its sales revenues of £38 billion in 2006 paled beside those of Wal-Mart, whose staggering sales of $312 billion (£167 billion) that year confirmed its status as top global grocery dog.
Wal-Mart’s annual report,
Building Smiles
, announced a 9.5 per cent sales increase that year, with an additional 537 stores and 50,000 employees (or ‘associates’, in Wal-Mart speak), making a global total of 6,100 stores and a workforce of 1.8 million.
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Reading statistics about Wal-Mart is rather like reading about outer space: the numbers are so huge they don’t really sink in. In 2000, the UN reckoned that the company’s sales were bigger than the gross domestic product of three quarters of the world’s economies. Six years later, those figures had all but doubled. The biggest smiles, one imagines, are on the faces of Wal-Mart’s shareholders.

Feeding cities these days is very big business indeed, but as seventeenth-century Polish grain producers discovered, you have to be at the right end of the food chain in order to profit. Power in the modern food industry has shifted more than ever away from farmers, to those who control the food supply chain. In 1996 the food policy expert Marion Nestle reckoned that a mere 20 per cent of US food expenditure went to producers; the rest went on added value, ‘labour, packaging, transportation, advertising and profits’.
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In the modern food industry, major conglomerates are a powerful tail wagging a very small dog.

Grain in the seventeenth century was a sufficiently valuable commodity to command a reasonable price, but as the food policy experts Tim Lang and Michael Heasman argued in their book
Food Wars
, in modern agribusiness, farming itself is ‘becoming irrelevant’.
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Basic foodstuffs such as grain and potatoes have become ‘commodified’, their intrinsic market value so low that farmers are often paid less than cost in order to produce them. Prices are set by retailers, whose decisions bear little or no relation to the products they are selling, often with devastating results. For instance, Wal-Mart’s decision in 2002 to slash the cost of its bananas by a third (a pure sales gimmick, since bananas are known to sell in equal quantities whatever their shelf price) created an immediate worldwide slump in banana prices. Other retailers were forced to follow suit, putting a squeeze on suppliers, who passed on their losses to their Caribbean and Costa Rican growers, who ended up being paid less than the legal minimum to produce the fruit.
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It is not just farmers in the developing world who are going to the wall either. When we pay 70–80p for a litre of milk in Britain, most of us assume
that farmers are getting more than the 18p many are in fact paid – representing a
loss
of 3p per litre for the average farmer.
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When you consider that an extra 3–4p per litre would keep British dairy farmers in business, it makes no sense at all.

Food manufacturers are affected too. Another Wal-Mart sales gimmick described by Charles Fishman in his book
The Wal-Mart Effect
involved the selling of gallon (yes,
gallon
) jars of pickles for the absurdly low price of $2.97.
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The bargain was so compelling that despite the fact that very few ordinary people have much use for a gallon of vinegary cucumbers (which, once the jar is opened, quickly go mouldy), the jars were soon flying off the shelves at the rate of 200,000 a week. The gimmick nearly sent Wal-Mart’s pickle supplier, Vlasic, to the wall. For two and a half years, despite sales volumes beyond their wildest dreams, the company was forced to expand, while making virtually no profit. As Fishman pointed out, the entire pickles market was a phantom, benefiting neither customer nor producer. The phenomenal scale of modern food conglomerates gives them the power to create their own reality.

Our competitors are our friends. Our customers are the enemy.

The modern food industry has provided us with what our ancestors always craved: cheap and plentiful food. Now that we’ve got it, few of us worry about how it gets to us. But the companies who supply our food have an extraordinary hold over us; one that should have us very worried indeed. Farming may be ‘becoming irrelevant’, but we still need to eat. So when it turns out, for instance, that 81 per cent of all American beef is in the hands of just four giant processing companies, who between them raise half the cattle in the USA, where does that leave the American burger-eater?
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Consolidation within the food industry isn’t limited to the US either: 85 per cent of the global tea market is controlled by just three companies, and a mere five control 90 per cent
of global trade in grain.
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Adam Smith must be turning in his grave.

At a global level, there is no such thing as free trade in food. Instead, an ever more powerful oligopoly of companies are slicing up the cake between them. Anti-competitive practice is endemic in the food industry: a recent report by Action Aid found that 85 per cent of all fines imposed for price-fixing were paid by agrifood companies. But fining transnational corporations for fixing cartels is about as effective as fining footballers for swearing. Paying fines is just one of the hazards of doing business. Wal-Mart’s recent track record with the judiciary reads like a serial offender bent on collecting ASBOs: the company has a varied portfolio of lawsuits that includes the biggest in history, concerning the underpayment of 1.6 million female staff.
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Companies like Wal-Mart behave as though they were above the law, and as long as their profits exceed their fines as comfortably as they do now, they might as well be.

In Britain and America, the supply of food has effectively passed beyond government control. Transnational corporations are relied upon to carry out this most vital of roles. In 2002, George Bush caused outrage when he announced that the US Senate would be paying a whopping $174 billion in subsidies to US farmers over the next 10 years, most of whom are not exactly the sort of folksy homesteaders of
Little House on the Prairie
. In truth, US agribusiness has a powerful role in government, and in shaping global food policy too. When Dan Amstutz, a former vice-president of Cargill, did a stint at the US Trade Office, he is credited with having helped draft the proposal that was subsequently adopted as the World Trade Organization’s Agreement on Agriculture.
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No wonder US agribusiness is consistently blamed for the failure to reach international trade agreements on food and farming. It is basically operating in a system of its own making.

The ‘revolving door’ between government and the food industry is less obvious in Britain, because we no longer have a powerful farming lobby in this country. However, that doesn’t mean that those links don’t exist. In his book
Captive State
, the journalist George Monbiot listed the policy decisions that the British Retail Consortium (BRC) has helped shape in the past few years, including the decision not to tax supermarkets for out-of-town car-parking; permission to use 41-tonne lorries on British roads; and amendments to the Competition Bill that
allowed, in his words, ‘“vertical agreements” of the kind that superstores strike with their suppliers’.
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In 1998, the Director General of the BRC, Ann Robinson, confirmed the cosy nature of the relationship, commenting that ‘BRC is no longer an organisation that simply reacts to Government proposed legislation or White Papers, but sets out to help shape them … the intention is to work in a non-confrontational way so we are involved at the beginning of any legislative process’.
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It seems farming isn’t the only dog the tail is wagging.