Is Big Food Getting Even Bigger?
For proponents of localized, sustainable food systems, a nightmare scenario is one where the Kelloggs, ConAgras, Krafts and General Mills’ of the world control even more of the supply and production of foods Americans buy.
If that’s how you feel, you may want to stop reading now to keep from Hulking out.
Because some industry leaders say that after Warren Buffett shocked the food world by purchasing H.J. Heinz Co. last week, the table has been set for massive consolidation within a packaged foods industry that has suffered in recent years under increasing costs.
“The signals are clearly there,” Gary Rodkin, CEO of ConAgra, said during an interview with Dow Jones Newswires, referring to a strengthening manufactured foods industry and low borrowing costs. Rodkin was unwilling to take his prediction further than that, adding only that “we’ll see” whether anything comes of it.
Other industry observers speak more confidently on the issue. Greg Cannon, senior vice president of U.S. Bank Food Industries, told FoodManufacturing.com recently that he expects to see more and more large food companies purchasing smaller, independent businesses.
“Many of these companies are small, specialty businesses that focus on a specific type of restaurant or operation,” Cannon said. “The vast majority are privately held and family owned, and are also experiencing generational ownership changes. The fact that they serve niche markets makes them attractive acquisition candidates of large distributors looking to grow market share.”
But while increased market share may be good for Kellogg and ConAgra, many believe further industrialization of our food system is the last thing we need. Food manufacturing is more concentrated than most other sectors of the food system, says Dr. Parke E. Wilde, associate professor at the Friedman School of Nutrition Science and Policy at Tufts University. As proof, he points to the cereal and meat industries: The top four boxed cereal companies control about 80 percent of the market, he says, and the top four beef packers have an even greater market share.
“Consumers already pay attention to the nutrition qualities and environmental impacts of their food choices,” he tells TakePart. “But how many consumers think about the economic concentration of the companies they support with their food dollars?”
Some have compared the U.S. food system to an hourglass: At the top are many producers, and at the bottom, millions of consumers. The narrow part of the hourglass represents the small number of companies that largely control how food is passed between producers and consumers. The industries at this bottleneck—including food processors and retailers—can have considerable influence over who produces food, how it is produced, and what, ultimately, is eaten.
If Rodkin, Cannon and other food industry experts are right, consolidation could mean that fewer, larger plants will process the foods we eat. And as smaller plants shut down, small producers may be left without any nearby facilities to process their crops and animals.
But sustainable food advocates say consumers can fight back by supporting regional and local food systems, eating mostly whole foods, and choosing manufactured foods from smaller companies.
“By choosing generic-labeled products or even cooking from real food ingredients, when time permits, consumers can easily find choices with better nutrition and less packaging than most branded manufactured food,” Wilde says. “As an added bonus, while saving money, a higher fraction of the food dollar will go to farmers. In terms of consolidation and market power, farming is generally much more competitive than food manufacturing.”
Is more food consolidation coming? How are you responding?