International Trade

Baroness Miller of Chilthorne Domer Excerpts

Thursday 23rd January 2014 Lords Chamber

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I want to concentrate my remarks in this debate on the agricultural and food sectors. I should begin by declaring an interest as a co-owner of Vignobles Temperley, our family vineyard, which makes and exports wine.

I was moved to speak in this debate because, with food production and the trade in agricultural products, there are two very different and often conflicting goals. One is to maximise trade and, in that case, big is certainly successful. The other is to ensure that the people of the world are properly nourished. In his excellent introduction, the noble Lord, Lord Harrison, spoke of the lack of parliamentary scrutiny of trade. At national, European and international level, there is a total vacuum when it comes to reconciling these two, very different goals.

Here in the UK, the food industry is very important. It employs 2 million people and has a turnover in excess of £70 billion. Farming—primary production—employs around half a million people but is just 0.7% of GDP. However, it supplies 60% of the country’s food needs. Of course, our farmers share many of the same issues with farmers throughout the world, whether that is unpredictable weather, difficulty accessing capital investment, cutting-edge science or markets without middle men taking so much of the profits, or a younger generation who do not see agriculture or horticulture as their ambition of choice. Consumers throughout the world share a surprising number of problems in common, too. Although there are enough calories produced throughout the world to meet the population’s needs, they are incredibly unevenly distributed. Noble Lords will know that roughly 1 billion people in the world are malnourished, and many severely, and about 1 billion people are obese, and some severely. Just this month, the Overseas Development Institute report highlighted the fact that since 1980 the incidence of obesity has almost quadrupled. Shockingly, almost one in three people worldwide is now considered obese.

The trade in agricultural products is massive but many of the poorest people in the world are farmers. One part of the problem is that the transnational corporations—the TNCs—that deal in agricultural products are among the world’s largest traders. The big four—known as ABCD—have an annual turnover bigger than some countries but very limited accountability. Of those big four, two are still private companies so especially unaccountable. They will be familiar names to many noble Lords. Archer Daniels Midland has a turnover of about $80 billion. All four have a lot in common but Bunge Ltd is a good example: it operates in 40 countries with about 35,000 employees. The point is that it buys, sells, stores and transports so much of the world’s foodstuffs, whether oilseeds or grains. It processes oilseeds to make protein meal for animal feed and edible oil products for commercial and consumers. These companies are also involved in producing sugar and ethanol. They are involved in food, fuel and often fertilizer production, too—so they are involved in the whole chain. “C” stands for Cargill, which last year had a turnover of $136.7 billion, and “D” is Louis Dreyfus, whose annual gross turnover exceeded $120 billion. Between them, these companies are said to control as much as 90% of the global grain trade. Other players are emerging in the market, such as Olam, Sinar Mas and Wilmar. Their presence varies from nuts in Africa to palm oil in Indonesia, but they are busy diversifying, too.

A couple of years ago, the Oxford Farming Conference commissioned a study on power in agriculture, which said:

“Consolidation of TNCs has seen some shifting of the focus of power, away from governments/supranational bodies towards corporate businesses. This could be a source of concern for farmers”.

I contend that that is a pretty mild comment. It continued:

“However the exercise of this power isn’t limitless and can be constrained by policy”.

My first question to the Minister is: how can it be constrained? What can the UK Government do to address this? Clearly, there is a role for BIS, Defra and DfID working together in this area of policy. I would be very interested to hear from the Minister just what forum there is for this sort of issue to be addressed.

Leaving a vacuum means that the ABCDs of this world determine where money in agriculture is invested, where agricultural production is located, where the produce is shipped and how the world’s population shares—or fails to share—the food produced. As consumers, we depend on a food chain that we neither understand nor have any power over. This concentration of power is not building a resilient food system—I could have spoken in the next debate—it is not fair on producers, and it is certainly producing appalling outcomes in terms of nourishing the world’s population, as I have outlined, whether obese or malnourished. We need to address these issues.

The food production system is highly vulnerable to weather—we have seen many examples of that this year—and to lack of natural resources, such as scarce water. We need to think about this and create other models of greater accountability to create a balance between a healthy trade that is bringing wealth to producers and their communities and the need of the world for food and resources.

There are models out there. I shall mention one today. There was a sustained fall in commodity prices in the second half of the 20th century, in which many prices halved, and the Fairtrade Foundation was born from that unhappy state of affairs. This year, it has been going in the UK for 20 years. It now has a turnover here of £1.5 billion, so it cannot be said to be a small, niche thing anymore. It has connected consumers meaningfully to producers in the developing world. I welcome the Government’s support for it. DfID Ministers have recently been active in their support for the importance of Fairtrade. Fairtrade farmers have explained to us that one of the problems that multinationals produce for them is that they may buy large volumes one year but not the next, when they need stability for investment. Price volatility is a massive challenge. For example, the price of coffee virtually halved between 2011 and 2013. Price volatility is perhaps the biggest enemy of the smallholder farmer. Fairtrade tends to balance out these issues and make life much easier for the investment we need for future food production if we are to be sure of a food supply.

Finally, I ask the Minister about the bilateral EU trade agreements that have rather taken the place of the failed WTO agreements. Decades of policies weakened small producers in developing countries, and at the moment there is not much in bilateral agreements about poverty reduction. There needs to be some concentration on the content of trade agreements so that the poorest people in those countries, who are often the people producing the goods that we will eat, are protected. There is a reconcilable conflict, but as long as there is a vacuum of governance in this area it will not be reconciled.