Supermarkets and global inequality

An important article appeared in The New York Times today, "Supermarket Giants Crush Central American Farmers". But this article gives us insight into much more than grocery shopping in Central America.

The nexus of agriculture and elite globalization is - along with the great migrations of industries and people that are part of the same process - the most important social development of our time. Its effects are everywhere: the way the global economy works, the globespanning power of multinational corporations from the rich world, the slums of Latin America, the factories of China, the steadily wasting environment, the cultural homogeneity spreading across the world.

The story told by reporter Celia W Dugger is rooted in Latin America. She writes

The transformation of Latin America's food retailing system began in the 1980's and accelerated in the 1990's as countries opened their economies, often to satisfy conditions for loans from the International Monetary Fund and the World Bank. As foreign investment flooded in, multinational retailers bought up domestic chains or entered joint ventures with them.
We can see here the tremendous power of free trade doctrine to expand the control of the already powerful: corporations from America and Europe. One terrible effect as been heavily subsidized food exports from the rich countries flooding into the newly opened economies, driving Latin American farmers from their land into the constantly expanding slums of São Paulo, Bogotá, México, Caracas, Santiago (as well as Manila, Mumbai, Dhaka, Jakarta, Mombassa, Lagos, Johannesburg...).

But the article highlights a different transformation, the trend of expanding supermarkets which is reinforcing the impact of foreign agricultural imports. Taking advantage of their massive scale and huge resources, and appealing to consumers' desire to be more "modern", supermarkets have been steadily destroying their smaller competitors. The process affects not just smaller food markets, but also those who grow the food in the first place. Supermarkets demand a steadiness of supply and a homogeneity of produce that only large producers can meet, so smaller producers are finding themselves with fewer and fewer outlets for their goods.

The implications are huge. First is the nature of agriculture in Latin America. Cash crops (coffee, sugar, coca) have long been organized as plantations, with one landowner employing many waged workers and reaping most of the profits. Increasingly this model is being extended to food crops as well, as small producers are driven out of business and the refugees of the small farm end up under the glower of the field foreman, in the slums of the city, or as illegal immigrants to the United States.

And the deepening poverty is not being mitigated by the growth of sweatshop jobs as it is in China, since what export factories existed in Latin America are leaving for the even cheaper labor of China.

The environmental effects, not mentioned in the article, are also important. The American style of large monoculture crops, maintained by the heavy use of chemicals, will follow as its organizational form spreads - poisoning and draining the land as it has in the USA. Moreover, supermarkets' use of centralized food distribution is also a problem ("At La Fragua's immense distribution center in Guatemala City, trucks back into loading docks, where electric forklifts unload apples from Washington State, pineapples from Chile, potatoes from Idaho and avocados from Mexico.") The environmental impact of moving such large amounts of food over such vast distances is not to be ignored.

The trends captured in the article apply not just to Latin America but to the entire world. The massive centralization of economic power in a handful of corporations from the rich countries is the face of a coin whose other side is the concentration of wealth and power, both within countries and between them. What drives this growing gap is the freeing of markets. Markets are built on inequality, and left unregulated they will naturally increase it as the winners use their greater resources to institutionalize their power and privilege and demand even further concessions from the losers.

The phenomenon is well understood by its victims. As one small farmer from Guatemala, on the verge of losing his livelihood, says, large supermarkets exploit their size by playing their suppliers off against one another. "There are a lot of competitors here," he said, "a lot of small farmers trying to sell to them, so the prices are low."

The same methods have allowed a handful of corporations from the rich countries to dominate the world's commodity markets (copper, diamonds, coffee, cocoa, &c) as the many small producers are at the mercy of a few buyers. (The only important exception is oil, whose price has been kept low in a different way, viz. the political domination of the USA over the Middle East.) The rich world buys cheap to supply its factories, but maintains its domination over industry by relentlessly attacking economic nationalism - the only force that has ever industrialized a country - and by maintaining ownership over those factories it builds in the poor countries. Thus the rich world continues to dominate the global economy 50 years after being forced to yield political control over its colonies.

In Dugger's article we can see the human face of these abstract forces. The weakest members of society are driven to destitution as the relatively privileged engage in Western-style consumerism. Faceless Western corporations move inexorably into a controlling position over the economies of countries in the global South. Expanding wealth is used not to help everyone but to reinforce the position and privilege of those who already have too much of both.

Things have been moving in this direction for the last 20 years. How much longer can it continue?


Steve said...

Umm, Jake, as long as I can buy delicious bananas for 29 cents a pound, I don't really care if those poor brown people get crushed under Safeway's proverbial boot. Really, let's look at the big picture here.

Jack said...

Comment on Steve’s reply to Jake’s comment on the Dugger article.
Ten months have passed since the publication of Dugger’s excellent article appeared and want to comment on it by addressing myself principally to Steve’s “umm” reply to Jake’s comment. It is a typical one of those people who believe they have a grasp of the big picture but in reality are focused in on being personally satisfied with eating a cheap banana, even though it is made possible at the expense of others.
I ask, why are so many of us U.S. people so concerned about the numbers of immigrants arriving to our country that was founded by immigrants; why is the U.S. living a permanently traumatic state due to the fear of terrorism, so much so that we are willing to forfeit some of their individual rights; why the preoccupation with the increasing presence of the pandilleros and of violence in the U.S and as well as the majority of the countries of the world; and why do we tax payers permit the government to provide billons of dollars in farm subsidies for products that are “dumped on” or exported to the poorer countries, contrary to the WTO rules related to international commerce game that is ironically called “free trade”? The truth is, that many of the answers to these questions, and to the many more that could be included, are related to the answer of why it is that the supermarket chains can make certain people happy simply because they provide a deliciously cheap banana.
Celia Dugger’s article (NYT, 12/28/05) is so correct. In a Nicaragua newspaper of 9/21/05, it was announced that Wal-Mart bought 33.3 percent of Central American Retail Holding Company (CARHCO), the same mayor controller of supermarkets en Central America with 332 stores and almost $2 billion in sales in 2003 that Durrer mentions in her article. Just three weeks ago, on 9/21/05, the Nicaraguan supermarket chain “La Union”, with 25 stores, that belongs to the CARHCO group, announced that it will be opening a new supermarket in the key ‘out of the way’ northern city of Ocotal.
I have been living and collaborating with the small farmers both in northern Bolivia (1968-1987) and northern Nicaragua since 1988 until the present. Nicaragua is an agricultural country with thousands of small family farmers, with a north central region that is highly productive. With an excellent corn crop this year and with harvest time being in its initial stages, the prices offered to the individual producers and to small farmers’ cooperatives have never been so low. As these farming families depend on loans for production, they are extremely fearful that they will not be able to cancel them, and as a consequence, they will lose their lands, animals or whatever else they have happened to use as guarantees for the loans.
The whys of the extremely low prices are somewhat simple to understand: 1) the Central American Free Trade Agreement has been signed by all with the exception of Costa Rica and will go into affect this coming 1 January of 2006, and 2) the reality of the invasion of the supermarket chains to the region, that Dugger so concretely explains. These two realities, along with the previously mentioned ‘unfair’ farm subsidy practices, will have a yet more profound negative impact in the lives of thousands of small farming families, their communities and countries. The U.N. 2005 Human Development Report states that global poverty, unemployment and hunger continue to annually increase. The U.S. the European Union countries and others of the so called ‘developed’ ones are by no means immune to the negative effects of what is happening globally. The Chinese competition factor is an example of this, as is that of ex-Chancellor Schroeder of Germany, who a few months ago pleaded with the nations’ companies not to abandon it by establishing themselves in China, because of the serious existing unemployment.
I thank Dugger for her excellent article on the supermarket threat to the campesinos, small family farmers. I have recently translated it into Spanish and sharing with the many of the groups and organizations of small farmers, with the hopes that they may be able to understand more clearly the gravity of the situation and become more belligerent with its demands on the government.
May the ‘umms’ of the world that are in approval of the cheap prices of products be a bit more concerned about whether or not they are a result of the cheapening of the quality of life of those who are the primary producers.
Jack, Nicaragua, 10/13/05

Kely said...

Hello I want to congratulate to you. This site is fantastic, looks like entertained and very good to me it elaborated. I invite them to that they explore a little on my site of the Web
Our real estate listing includes great opportunities on Costa Rica Central Valley’s provinces such as San Jose, our Capital, with remarkable cities as Escazu at the west, or Curridabat at the east, experiencing a great development on both commercial and residential properties, making their real estate pricing highly attractive to investors; on other hand, Alajuela city gathers places with a very special warm weather such as Grecia, La Garita and Atenas, or beautiful farms for agricultural, cattle or nature preservation purposes as those located on San Carlos or Sarapiqui. We also offer land properties in Guanacaste, which is the province, along with Puntarenas, with the most beautiful tropical beaches on the Pacific Coast such as Tamarindo, Playa Grande, El Coco, Playa Hermosa, Nosara, Samara, Herradura, Jaco, Manuel Antonio, Dominical and Golfito, where the real estate business occupies the first place as the local economic activity.
Great investment opportunity at Costa Rica Pacific Coast, Preconstruction condos in costa rica
Condo sales in costa rica, Retirement property in costa rica. Visit us for more info at: http://www.costa-ricarealestate.com/

Omar Cruz said...

These articles are fantastic; the information you show us is interesting for everybody and is really good written. It’s just great!! Do you want to know something more? Read it...: Great investment opportunity in Costa Rica: costa rica for retirement, properties in costa rica, costa rica land for sale. Visit us for more info at: http://www.costarica4retirement.com

Anonymous said...

I like this blog is fantastic, is really good written. Congratulation. Do you want to see something more? Read it...:Great investment opportunity in Costa Rica: beach real estate, condo, condos for sale. Visit us for more info at: http://www.jaco-bay.com