Opinion Agriculture Agricultural monopoly is a dangerous game in the Gulf Food prices have risen dramatically, thanks in part to agribusiness giants By Martin Keulertz August 1, 2024, 10:38 AM Getty Images/Unsplash+ If you've noticed a rise in the price of pizza, you're not alone: many restaurants are charging 50% more than in 2019 Hardly anyone we speak to in our daily lives has not been affected by higher food prices. Fortunately, most consumers in the Gulf are wealthy enough to weather the storm but I recommend a thought experiment with friends and colleagues. Think back to 2019 – just before the pandemic – and what you used to pay for pizza in a restaurant. And compare this to now. Also think about grocery bills and how much they have increased over a short period of five years. We are all aware that this has been an inflationary period. US dollar inflation has seen prices across the board increase by roughly 23 percent since 2019. However, what about food? Many restaurants are charging more than 50 percent more compared to 2019. Of course, much of this can be explained by higher wages, energy and freight costs. But not all of it. Researchers have calculated that about a quarter of price hikes are due to monopolies in the food system. NewsletterGet the Best of AGBI delivered straight to your inbox every week This is a silent contribution each of us makes as a result of a dramatically altered political economy of farming. A generation ago – back in the 1980s – the global farming system consisted largely of small farmers, farming on small plots of land. If they were lucky, they received subsidies from their governments, as in Europe, America or Japan. If not, they found it increasingly difficult to stay in business. Farm sizes increased across the world. For example, Jimmy Carter is still one of the most unpopular presidents in the American Midwest because his ban on exports to the Soviet Union led to many small farms going bust in America’s breadbasket. Investors hoovered up the land thanks to capital provided by agribusiness giants such as Archer Daniels Midlands (ADM), Bunge, and Cargill. Governments around the world are fully aware of the problem. Yet their hands are tied because the world of agriculture has changed In his seminal study on power in the US food system – Barons: Money, Power, and the Corruption of the American Food Industry – Austin Frerick of Yale University showed how US agriculture became further liberalised under another Democrat, this time Bill Clinton. What Frerick terms “the Wall Street Farm Bill”, sponsored by Clinton, was a policy shift towards more cultivation of land to increase yields and productivity at all costs. Once again, the main beneficiaries were US agribusiness giants such as ADM, Bunge and Cargill, but also COFCO of China and Louis Dreyfus of France – the so-called ABCCD companies which trade 70-90 percent of grains internationally. These companies are the ones that are benefiting from outsize returns on the Earth’s resources. You as the consumer just pay a bit more for your family pizza on a Saturday afternoon. How to deal with monopolies Governments around the world are fully aware of the problem. Yet their hands are tied because the world of agriculture has changed. Very few youngsters dream of a career in agriculture, certainly not when faced with early starts and low incomes. How can we deal with food monopolies? One option would be to regulate big food in the GCC, for example by imposing penalties on improper behaviour or forcing businesses to break up. But this means targeting multinationals, which are typically stronger than governments in an import-dependent region. Another option would be to invest in smallholder agriculture in developing countries, especially on the African continent. Across Africa, populations are still young and provide ample labour supply. Arab states must raise intra-trade to buffer against food shocks Food can transform the Gulf’s trade relations with Africa Careful what you wish for… AI and the future of agriculture Many countries in Sub-Saharan Africa have sufficient water and land supply to grow more food. There is a deal to be done with farmers in these countries to circumvent the power relations in the global political economy of food. Instead of paying money to middlemen such as the ABCCD companies, GCC countries could deal with farmers or other intermediaries directly. Countries like Egypt have begun to address the problem of monopoly control by investing more in domestic agriculture, despite looming water scarcity challenges. This is a race against time unless groundwater reservoirs turn out to be larger than expected. In the GCC, domestic agricultural production has limits. Grains such as wheat or corn cannot be produced at the national level to meet demand. A final option for the GCC could be to follow China’s example. This means aggressively investing in food storage to increase stocks to levels that can sustainably provide a buffer against future price hikes. The downside is that global prices would likely increase drastically over a short period of time before falling back drastically. There is no easy solution. But the GCC states have the resources to outsmart the monopolists. Martin Keulertz is a lecturer in environmental management at the University of the West of England, Bristol