THREATS TO THE TRADERS The history of the traders is imposing, in some cases extending over 150 years. The companies have successfully grown and evolved to create enormous fortunes and to wield very significant power – economic, political, and social – in the world’s food systems. But nothing lasts forever. The ABCD commodity traders are not immune to challenges. Here is a short list of the most pressing, which are areas for further research. First, the traders’ imperative to grow and keep on growing (Cargill likes to boast that it doubles in size every seven years) carries inherent risks and difficulties. Finding new and creative ways to attract new capital is a constant challenge. Second, the retail sector has transformed itself, and with it many aspects of the food system. Although the supermarkets’ direct engagement with farmers and production has focused on fresh produce, where the traders are not present, the challenges posed by supermarkets to some of their big customers, especially food processors, cannot go unnoticed by the traders themselves. For example, Nestlé has started to move back down the supply chain in its chocolate operations, creating competition for the historically dominant traders, including Cargill. Third, the technologies of globalization, particularly information technologies, are eroding some of the advantages cornered by the global traders. Global networks have become cheap, quick, and accessible to many more people than was the case even ten years ago. Fourth, global food markets have undergone a series of profound and possibly game-changing shocks in the past few years. The food crisis, the financial crisis, and the mounting evidence of how climate change is already disrupting food systems have all undermined confidence in global trade as a reliable mechanism for the delivery of food security. The agenda of trade liberalization that the ABCDs have invested significant energy in securing is in question in many developing countries, and in some richer countries as well. The companies are well placed to influence the newly emerging powers of the global economy, especially Brazil and also China and Russia to some extent. But they face new and important challenges to the free market ethos that has allowed them to consolidate so much power over the past 20 years.
CONCLUSIONS The business model of the agricultural commodity trading companies combines specific and unique features that have enabled them to become major and significant actors in the ongoing restructuring of the overlapping food, feed, and fuel complexes. Through their roles in biofuels investment, large-scale land acquisition, and the financialization of agricultural commodity markets, the ABCDs are at the forefront of the transformation that is determining 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 bounty of each harvest. They are also, directly and indirectly, shaping the world in which the majority of the worlds’ food producers – primarily female small-scale producers in developing countries – must somehow survive, and be allowed to thrive. The wide-scale restructuring of the food and agricultural landscape now in evidence has significant implications. New kinds of investment and the size of those investments are reshaping the relationship that smallholder farmers in developing countries have with the land and natural resources (especially water), as well as their access to food. They have also reshaped public discourse about agriculture and food security, and the processes that determine how public investments will be made and how markets will be regulated. New investments by traders also influence the degree of food price volatility and have physical impacts by changing the physical face of the land, particularly when ecosystems are altered to accommodate plantation-style production.
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Cereal Secrets: The world’s largest commodity traders and global trends in agriculture