Iain Dalton, Socialist Party National Committee
Increasingly feeling the need to put items back as you’re going round the supermarket doing your weekly shop? Worrying about how much it’ll come to when you reach the checkouts?
You’re not alone, and stats back it up. According to the Office for National Statistics, annual price inflation for food and non-alcoholic beverages reached 19.2% in March, the fastest annual rate since 1977.
The justification for the government’s measly 5% pay offer to NHS workers, and even less for school and local authority staff, is that inflation is supposed to be coming down. But the cost of food continues to accelerate upwards.
44% of people in Britain are cutting back on food spending, and 14% are skipping meals, according to the Trades Union Congress. Food bank use is rising. Globally, 828 million are affected by hunger, and 2.3 billion are moderately or severely food insecure.
Meanwhile, the world’s 20 biggest food companies delivered $53.5 billion to shareholders in the last two financial years, according to research by Greenpeace. As a Greenpeace spokesperson puts it: “What we are witnessing is an enormous transfer of wealth to a few rich families that basically own the global food system, at a time when the majority of the world population is struggling to make ends meet.”
Ukraine war
Food supply has been hit significantly by the war in Ukraine, in addition to the impacts of Covid-19 pandemic supply disruptions – both themselves symptoms of increased tensions in a capitalist world in crisis.
28% of the world’s fertilisers made from nitrogen and phosphate came from Russia and Ukraine before the conflict erupted. Limits on Russian exports of gas have curtailed fertiliser production in Europe too. Tonnes of Russian-made fertiliser are stuck in warehouses elsewhere in the world, unable to be exported due to sanctions.
Farmers who were paying £281 per tonne of fertiliser in April 2021 were paying £785 per tonne in April 2022 – a 180% increase. Prices have remained at a high level since.
Like in other industry, record-high wholesale energy prices (in part another byproduct of the Ukraine conflict) have driven up production costs.
It has a direct impact on farmers themselves, particularly on those growing crops in greenhouses that require heating. A spokesperson for the National Farmers’ Union (NFU) said: “At the moment we’ve got a lot of glasshouses that would be growing the tomatoes, peppers, cucumbers, aubergines that are sitting there empty because they simply couldn’t take the risk to plant them with the crops, not thinking they’d get the returns from the marketplace.”
A recent survey by Farmers Weekly showed a third of respondents had reduced their output in the past 12 months due to increased costs.
The increased cost of natural gas has other knock-on effects too. Production of carbonated drinks and brewing has been hit by the closure of the CF Fertilisers plant in Billingham, Teesside – the last UK ammonia plant, where carbon dioxide is produced as a byproduct.
In 2019, Russia and Ukraine exported more than a quarter of the world’s wheat. In 2022, the year of the invasion, grain production in Ukraine had dropped by 40%. Three fifths of the world’s sunflower oil is produced in Russia and Ukraine but production of these dropped 25%. Prices of these staples are soaring. So too their substitutes such as olive oil, which has increased by 18%, despite production of it increasing by 11%.
All this disruption is a reflection of the new unstable era of global capitalist crisis with heightened geo-political tensions. The impact on ordinary people, directly and indirectly, is so much small change for the major capitalist powers trying to extend their influence.
If the impact of wars and pandemic wasn’t enough, add to that the increased rate of extreme weather events as a result of climate change.
In the UK, last summer’s heatwave led to reduced yields of a whole series of crops, from apples to peas, potatoes to salads. A Mediterranean cold snap, particularly affecting Spain and Morocco, was an additional factor in the shortages of salads and tomatoes in British supermarkets at the beginning of this year.
But it’s not just extreme temperatures affecting crops. Last year’s floods in Pakistan destroyed $1.3 billion of rice, sugarcane and cotton in the Sindh province alone, plus a further $374 million of tomatoes, onions and chilies, according to research from the International Centre for Integrated Mountain Development.
Food and climate change
The food industry itself accounts for 26% of global greenhouse gas emissions, the majority from animal products.
All this highlights the need to rapidly transition to net zero carbon emissions, and to plan and develop environmentally friendly energy and food production methods. But capitalism’s profit drive, where individual capitalists compete to maximize profits, means firms are reluctant to invest at the scale and pace needed to drastically reduce emissions.
Capitalist states, representing the dominant interests of their own capitalist classes, compete too – incapable of the international collaboration, investment and planning necessary to tackle climate change.
Disruptions to food supply plays a part in driving up prices. But capitalists are taking advantage of opportunities to boost profits by inflating prices further still. This was alluded to by Bank of England governor Andrew Bailey, in a recent interview with the Today programme on BBC Radio 4.
Having last year told workers to show “restraint” in their demands for pay to keep up with the cost of living, after a year of workers’ strikes, he addressed “price setters” (capitalists) instead.
The recently published “Unite Investigates: Profiteering Across the Economy – it’s systemic” lays bare the soaring profits made by many of the big companies in the food sector, where market share is dominated by just a handful of companies.
For example, the global grain trade is dominated by four big companies (Archer-Daniels Midland, Bunge, Cargill and Louis Dreyfus), which account for 90% of the market, and whose profits soared by a whopping 255% from 2019 to 2021.
Three companies, Tesco, Asda and Sainsbury’s have a majority of UK supermarket trade, 56% – together they increased their profits by 97% between 2019 and 2021.
Food manufacturers have also made huge profits. Eight out of the top ten manufacturers in the UK that Unite could find data for reported a £22.8 billion profit for 2021, a 21% increase on 2019.
Between the food manufacturers and the supermarkets there have also been battles over the share of these profits – with the most high profile being the disappearance of Heinz products from Tesco shelves in summer 2022.
Food prices internationally are being hit by profiteering, climate change and increased global tensions. British capitalism faces additional disruptions and instability from the Tories’ ongoing disorderly process of leaving the EU bosses’ club.
30% of UK food is imported from the EU. Tory Brexit has led to additional costs for transnational shipments of agricultural goods and food, such as customs duties.
The implementation of the new post-Brexit inspection regime has been delayed four times so far, and the industry body, the Cold Chain Federation, has suggested its implementation will deter EU firms exporting to the UK.
British capitalism has long relied on food imports. It has been a strategy of the capitalist class dating back to the repeal of the Corn Laws in 1846.
Since joining the European Economic Community in 1972, British capitalism increasingly relied on food imports. In the 1980s Britain’s food self-sufficiency was nearly 80%; this has since dropped to around 50%.
By using cheaper labour elsewhere in the world, capitalists hold down wages and realise more profits.
Farming
The agriculture and food production industry in Britain is dependent on low-paid migrant labour. EU residents who had previously been employed without restriction have, since 2018, needed to apply for a seasonal work visa, reducing numbers. Pandemic travel restrictions exacerbated this further.
With big farm owners unable to easily recruit the same levels of low-paid labour, as much as 30% of crops have gone unharvested in recent years.
The EU Common Agricultural Policy (CAP), a cornerstone of EU membership, contributed as much as 55% of UK farmers’ income in 2014, although 80% of funding went to just 20% of farms. According to the National Audit Office, around 42% of the 85,000 farmers receiving CAP subsidies in 2017 would have made a loss without them, and a further 16% made a loss despite receiving them!
Now out of the EU, the government has promised to maintain farming funding for the course of this parliament and move to a new framework through a seven-year ‘Agricultural Transition’ to focus more on “public money for public good”, rather than on food production explicitly.
For many farmers, non-farming activities are becoming increasing important to keep afloat – 47% of farmers let out buildings for non-agricultural use, while 22% have solar panels on their land. For 19% of farmers, relying on such diversified business has become their majority source of income.
According to consulting firm Anderson, the number of farmers is expected to fall from 54,000 in 2020 to 42,300 in 2030. It is the nature of the concentration of capital that squeezes smaller, less profitable firms out of the economy, regardless of the consequences for food supply. Whatever gives the big capitalist investors the biggest returns.
There are a whole number of books and other publications that will point to the many problems with food systems around the globe, and even more so in the UK. What does Greenpeace say needs to be done to stop the “enormous transfer of wealth to a few rich families”, for example?
Often such critics offer very limited solutions beyond begging big multinationals to act more responsibly in relation to people, the environment or both, or calling upon capitalist governments to legislate and force them to do so.
Very few raise the potential for working-class collective action to challenge these big businesses and governments through industrial action, or with the establishment of working-class democratic control in the industry – such as elected committees of workers’ representatives to monitor, check and organise price controls, for example.
Unite the Union’s document on profiteering correctly identifies how industrial action can force employers to give up a portion of their profits to higher wages. This has been demonstrated by numerous victories of Unite members during general secretary Sharon Graham’s time in office. However, the report doesn’t raise the issue of who fundamentally owns and controls these companies.
If profiteering across food and other industries is systemic, then it requires a systemic alternative.
As it is, the food industry, and the economy at large, is driven by capitalism’s need to produce ever-increasing profits for those at the top – the capitalists who own the factories, the big farms, the banks and so on.
If these major levers of the economy were brought into public ownership, production and distribution of food could instead be organised to meet the needs of all. By drawing up a socialist plan, based on what different parts of the food industry can produce and what is being sold, investment into those areas can be planned – democratically decided by elected representatives of workers in the industry and the wider working class.
The food and drink industry is dominated by a small number of monopolies in production, distribution and retail, but it also contains many small businesses – small shops, restaurants, small farms, and so on. The policies of the giant food companies can have a huge effect on the economic viability of smaller producers and outlets. At present it is these smaller companies which are under threat of collapse. The National Federation of Fish Friers reported last year that between 20 to 40 fish and chip shops were closing every week across Britain.
Socialism
Socialists don’t aim to ‘nationalise every fish and chip shop’, but we do raise the need to nationalise the big companies that dominate the sector. This would include many of those pointed to in Unite’s report – the grain traders, supermarkets, food processors. The dominance of these companies means that such measures would have a decisive impact.
Taking land into public ownership, for example the estimated 18% owned by corporations and 30% by aristocrats and gentry, would mean its use could be democratically decided upon – to be leased to small farmers, or for use by publicly owned farms, for example.
A nationalised banking system, under working-class control and management, could extend cheap credit to finance aspects of the food industry when necessary.
There are other ways smaller producers could be supported, including direct subsidies in key strategic sectors, or by providing purchase price guarantees to farmers to encourage certain crops to be grown. Where supply was short for any reason, decisions about how to prioritise the distribution of goods could be democratically decided, as could plans to step up production in different ways.
Socialist planning would mean these decisions would not be subject to the whims of a handful of capitalists, but democratically discussed and decided upon by elected representatives of workers. Such methods of organising society, to put the needs of people and our environment first, could lay the basis to ensure that the abundance of food that is currently squandered by capitalism could be produced affordably, sustainably and with good quality. It would allow humanity to put an end to the horrors of hunger that have given rise to food banks here in Britain, and the horrors of famine in some parts of the world.
