A case study of Latin America and the detrimental effects globalisation and multinational food retail companies have had on it’s local farmers. ‘Commodity prices have fallen dramatically, by some two thirds over the past 30 years, so that farmers have had to triple production just to maintain their incomes. One example among many: in just the last three years, Tanzanian farmers experienced a decline of 50% in the price of coffee. ‘ (OXFAM 2001) ‘While farmers earn less, consumers have been paying more.
‘ (O’Neill 2001) Although, according to the U. N. Food and Agriculture Organisation, Latin America produces four times the amount of food needed to feed the population, 58 million people are still malnourished. Introduction: During the 1980’s a transformation within Latin America began; this transformation was one that would shape the future of farmers all over the continent for decades to come. For some it would be a positive change, however a large majority found it to be the opposite.
The transformation I talk about is opening up of trade barriers within Latin America in order to allow food retailing companies access to the regions ‘un-commercialised’ and fertile lands. During the 1990’s the revolution in food retailing within Latin America accelerated extraordinarily as countries unbolted their economies to suit conditions for financing from the International Monetary Fund and the World Bank. As Latin America’s overall FDI significantly increased; multinational food retailers bought out local chains and entered joint ventures with the obstinate ones.
The greatest fears for farmers in the region were realised when the multinational companies introduced unfair trade rivalry from American and European growers with weighted financial backing. Small farmers are constantly left to compete with the biggest world players as these food retailing chains (products of globalisation) move from large cities to smaller towns and from economically sound countries to ones still developing their economic and social systems (Dugger 2004).
These chains are now the prevailing force in the trade of processed foods and they’re produce sales are growing to a similar reputation. When global food retail companies dominate a market, there are scenarios whereby it can be seen to be advantageous for all the citizens within that community. Such a scenario would be when the economy, of the region being taken over, is growing energetically and spawning decent jobs for globalisations losers, because in spite of everything the chains ‘are’ creating cheaper, cleaner and safer shopping environments for these societies.
Samuel Morley, a visiting research fellow at the International Food Policy Research Institute (IFPRI), has written extensively on inequality and labour economics in Latin America, he stated that “It would be an appealing transformation of the sector if alternative jobs could be made available,” however these scenarios never seem to materialise in Latin America and other developing countries/continents around the world as they do not have economies of great strength. As Latin America’s population grows its economic situation trails further and further behind.
In Latin America, 220 million of the total regional population of 500 million people are poor. The case study that I will shortly talk about outlines just how bad the situation in Guatemala is, Guatemala is actually one of Latin America’s ‘better off’ regions, with supermarkets controlling 10-15% of grocery sales. Therefore the case gives you an indication of what the more unfortunate farming communities, in Latin America, must have to endure. For example in Argentina supermarket chains control 30% of this industry and in Brazil; 50% (Dugger 2004).
Rural markets shrink throughout the continent, even though the victims of globalisation are pushed to trade within them, these rural markets are slowly but surely lost in the black holes that we call multinational companies. Within a single decade Latin America’s farming communities have been transformed by food retail giants such as Ahold and Walmart. These multinational goliaths have transfigured food distribution by offering low prices, a range of choices and convenience; they are now also changing the face of food growing (Dugger 2004).
This could seem positive to some, however it is far from that; there are thousands of Latin American farming communities who have been devastated by the unforseen and overwhelming challenges that these companies bring (Dugger 2004). The major visible impact that these changes have had within the farming communities over the past decade is the great increase in the number of, now penniless, farming migrants entering the urban slums of their own countries and crossing the American border to seek refuge from their new ‘corporately governed’ country side.
Guatemala’s Local Farmers Suffer (Case): Within the serene confines of the extraordinarily fertile and incredibly poor Guatemala, supermarket giants have crushed farmers to the point where they are no longer able to maintain operations within the land they once called home. Guatemala was once, not long ago, a place where people swapped produce for service and service for produce, money ‘was’ required to sustain they’re everyday living, however, life was effortless and uncomplicated up until the multinational giants arrived on Latin American shores.
Guatemalan man Mario Chinchilla would inspect his field of sickly tomatoes on a daily basis; he would labour all day trying to meet the requirements of the new supermarkets which had opened up in town, however no amount of labour could possibly turn his crop into the stout, flawless product that Guatemala’s leading supermarket chain offered to it’s customers (Dugger 2004). A better product at a cheaper price, it seems good all round doesn’t it, but at the end of the day it has ruined many people lives. The chain I talk about is a giant Dutch multinational company named Ahold (Worlds 3rd largest retailer).
The Chain is so large it includes names such as Bi-Lo and Stop & Shop under its ‘assets’. For some time Mario headed a farmer’s cooperative that was managing to sell produce to the chain however this proved to be an ephemeral opportunity whereby the multinational chain ran away with the locals hopes and dreams, leaving them to sit in their unsold crops of rotting vegetables. The reason for this was because the multinational retailers require farmers who encompass the proficiency and capital to invest in modern farming technologies such as; ‘greenhouses, drip irrigation and pest control’ (Dugger 2004).
“They wanted consistent supply without ups and downs,” said Mr Chinchilla. “We didn’t have the capacity to do it” (Dugger 2004). Inequality, rebellion and violent repression within Latin America has been a recurring problem for many decades, during the 1990’s there was already a gap between rich and poor and the supermarket chains have simply added to this gap. This time Latin America has tried a different (non-violent) approach. In order to fight for their right to live comfortably in their homeland farmers joined forces; there are rare success stories, however many (like Mario Chinchilla and his Co-op) have suffered a more common fate.
In Guatemala there is a tiny farming community named Lo de Silva; more than 300 farmers who originally belonged to Mr. Chinchilla’s co-op, ‘the Association of Small Irrigation Users of Palencia’, were from this village (Dugger 2004). Out of those 300 farmers there are only 8 still enduring the torment that globalisation has brought them. These remaining farmers aren’t even able to sell to the supermarkets they sell their product to middle men for severely discounted prices; to top this off the only product the middlemen will accept from them is salad tomatoes.
Mr. Chinchilla’s case is an ideal example that demonstrates how the opportunity of success for small farmers is a remote prospect to most. Small farmers are simply getting left behind due to their lack of market pull and marketing/operational techniques (Dugger 2004). A ‘survival of the biggest’ situation has been created – ‘only the big can serve the big; the small need not apply, as global companies wipe out local distinctions in establishing a level economic playing field.
‘ (Hannaford 2006). During the 1990’s food retail conglomerates went from controlling between 10 and 20 percent of the Latin American market to totally dominating it (Economist. com 1997). During this period, in Guatemala specifically, the quantity of supermarkets has more than doubled; as their share of food retailed has reached 35 percent. The smaller shops and open air markets still remain and retail a great deal of fruits and vegetables in Guatemala.
For customers to leave these historically enriched and characterised markets and enter the newly opened supermarkets in the region, is to leave behind Guatemala and enter a commercialised shopping centre that could reside in Hong Kong or London, with it’s marked down jumbo packages and symmetrical fruits in plastic trays. None of this, however, matters unless the bottom line is understood.
The bottom line is that the rules of the World Trade Organisation are actually taking second place in importance to the privately set standards of the food retail giants. Also pressures from the I. M. F. and the World Bank to allow greater foreign investment into Latin America were proposed to formulate more competitive economies for them; however it is obvious that this model didn’t have a community element at its centre. Hardships have come from; not only what I described previously (the fact that the farmers must sell they’re produce at much cheaper prices, better quality and in a more convenient matter) but also from the fact that that they are now competing with the rest of Latin America, the United States and even the world because trade borders have been opened to allow almost ‘anyone’ import and export capabilities.
Rigid opposition from internationally renound growers is now a reality for Central and Latin American farmers; at a distribution centre, for a subsidiary company of Ahold in Guatemala City, shipments of ‘apples from Washington, pineapples from Chile, potatoes from Idaho and avocados from Mexico’ are brought in (Hannaford 2006). Conclusion Globalisation has positive and negative affects on our society. This paper has outlined in great detail the negative affects of globalisation and multinational food retailing companies on Latin America’s and the world’s small farmers.
The reason for this is due to the fact that there were; only on occasion, very rare and unusual success stories to be found about smaller farmers succeeding in their sales to companies such as Ahold and Walmart, within Latin America. After researching farming communities’ around the globe, it can be deduced that Latin America is not alone in this battle to produce food and sell it at competitive prices, while still maintaining some sort of meaningful social existence.
Asian, African and Indian farmers; have been heavily exploited. Even farmers within more developed countries such as Australia have had to sell their products at severely discounted prices in order to satisfy multinational company standards. Farmers world wide, are however, not alone. Traditional strategies of help to farmers that feel the hardships of globalisation, such as providing fertilizers and improved seeds, are no longer enough to enable them to sustain their businesses.
Professors and agronomists are banding together to document trends and develop new methods of help that will allow the fleeing farmers of Latin America, Africa and Asia to compete with others in selling products to the multinationals. In the midst of the these methods a few techniques stand out, such as; regulations put upon the multinationals that require farmers be paid promptly, laws that restrain these companies from dominating entire markets (such as mergers of supermarket chains) and enhanced hygiene and convenience through technology at open-air markets.
After reading this paper I hope you too can conclude it is important that societies living within the limitations of this amazing world are given the chance to experience life’s pleasures and break out of the chain of inevitable failures that multinational corporations have brought to them. Being given the chance to make an honest and fair living, is only basic compassion and mercy; two marvellous characterises that any individual can encompass. If multinational food retail companies and global companies in general were able to, in some way, display this, then Anti-Globalisation would be a much less used expression.