On August 1, 2024, the European Commission approved yet another consolidation of monopolies in agri-food commodities, the acquisition by the giant Bunge of the largest Canadian cereal company based in the Netherlands, Viterra.
1) Bunge – Viterra, notification of concentration
On June 13 2024 the European Commission has received prior notification – pursuant to Regulation (EC) No 139/2004, Article 4 – of the concentration planned by Bunge Global SA with the acquisition of exclusive control of Viterra Limited, through the purchase of all of its shares.
Bunge is a publicly traded agribusiness company headquartered in St. Louis, Missouri, USA, primarily engaged in the sale of oilseed flours and oils and other vegetable oils. Bunge also sells grains, including corn, wheat, barley, and milled products, such as wheat flour, as well as unprocessed oilseeds and other products, such as sugar.
Viterra is an agribusiness company headquartered in Rotterdam, the Netherlands, owned by Glencore, CPP Investments, BCI and VEBT. Viterra focuses on the purchase and sale of unprocessed commodities, especially cereals and oilseeds. Viterra also sells other unprocessed commodities such as cotton and sugar, as well as milled products (e.g. wheat flour) and oilseed products (e.g. flours).
2) European Commission, the investigation
The investigation into the concentration conducted by the European Commission found that:
– Bunge and Viterra are both vertically integrated global agribusiness companies engaged in the production and/or purchasing, trading and processing of agricultural products. With 'significant overlaps in the oilseed sector (i.e. rapeseed, soybean and sunflower)';
– the concentration, in the proposed scheme, 'would have reduced competition in the markets for oilseeds and related products, including oilseed meals for animal consumption, crude oilseed oils and refined oilseed oils for human consumption or for the production of biodiesel';
- 'In particular, the transaction would have negatively impacted competition in Central Europe, where both parties are active along the entire supply chain';
- 'the transaction would have led to a significant concentration of oilseed processing capacity in Central Europe, with potential negative effects on farmers and downstream customers'.
3) Brussels, green light with commitments
Parts responded to the Commission's 'competition concerns' by offering to divest all of Viterra's oilseeds operations in Hungary and Poland, and a number of related logistics activities.
'These commitments fully address the Commission's competition concerns by eliminating horizontal overlaps and vertical links between the parties' activities in the oilseeds sector in the territories concerned'. (1)
The European Commission, consequently, has:
- 'received positive feedback during market test'
- 'concluded that the transaction, modified by the commitments, no longer raises competition concerns'
– entrusted to an English 'monitoring trustee' (Evelyn Partners LLP, London), with all due respect to Brexit, the verification of compliance with the commitments.
4) Possible impacts on farmers' incomes
The aggregation in question – of unprecedented magnitude in a sector already concentrated in the domain of a few (see the following paragraph 5) – inevitably increases the dominant position on the market of its protagonists.
The victims are the smaller competitors (traders), but also and above all the suppliers and customers. That is to say farmers, breeders, food processing companies, as well as consumers downstream in the food supply chain.
A preliminary study on the impact of the Bunge-Viterra operation on Canadian agriculture, conducted by several economists, concluded that it would reduce farmers' incomes by USD 770 million/year. (2)
5) Monopolies on commodities and agri-food inputs
ABCCD– that is, the five corporations ADM, Bunge, Cargill, COFCO and Louis Dreyfuss – controls 70-90% of global trade in agri-food commodities. And Bunge (US$ 59,540 billion in revenue, 2023), even before the acquisition of Viterra, was the fifth largest grain trading corporation on the planet.
The Commodity Monopolists – as highlighted in a specific report by iPES FOOD (3) – have among other things triggered the global food crisis of 2022, through systematic speculations that have allowed them to increase their annual net profits by between 75% and 260%.
The Western Colossi (ABCD, excluding only the Chinese Cofco) are also in the hands of the investment fund managers Vanguard, BlackRock, State Street Global Advisors (SSGA) and Geode. Which, as we have seen, also control the global monopolists of pesticides and seeds (Basf, Bayer, Corteva) and those of fertilizers. (4)
6) Competition and concentrations in the EU
The recent report of the European Commission on Competition (2024) recognises that over the last 25 years, in a wide range of sectors:
– concentration has increased both at the sector and market level
– revenues and profits have grown dramatically. Profits on average nearly doubled for the 'global superstars' (ie Coca-Cola, Nestlé, P&G, Philip Morris, Gillette), from 11% to 18% between 1998 and 2022
– the gap between industry leaders and 'followers' in terms of profit margins, profits and productivity has increased, while
– the dynamism of firms has decreased, as measured by indicators such as the volatility of market shares among leading firms or entry and exit rates. (5)
Merger Regulation (EC) No 139/04, on the other hand, actually applies only in cases where concentrations demonstrate a concrete capacity to significantly impede competition in the European market.
7) Sellers' inflation
A recent study (Weber and Schulken, 2024) identifies as 'seller inflation' – referring to large traders, and their impact on the macroeconomy – the phenomenon otherwise known as 'greedflation', when referring to retail trade. (6)
The Corporations transnational corporations, equipped with internal intelligence on global agricultural markets superior to that of states, therefore play a crucial role in the financialization of food markets. Taking advantage of crises and volatility.
8) Provisional conclusions
'Food sovereignty' – a leitmotif that recurs in the propaganda of the governments of some member states and also in the 'Strategic Dialogue for the Future of Agriculture in the EU (7) – remains pure wishful thinking, without effective political intervention to put an end to the monopolies mentioned above.
Dario Dongo
Footnotes
(1) European Commission clears Bunge's acquisition of Viterra subject to conditions. Press release. 2.8.24 https://tinyurl.com/yp5xyu2n
(2) Richard Gray, James Nolan, and Peter Slade (2024). The Economic Impact of the Proposed Bunge-Viterra (BV) Merger on the Grain Sector in Western Canada: A Preliminary Assessment. University of the Saskatchewan, Department of Agricultural and Resource Economics https://tinyurl.com/2uavfn5d
(3) Dario Dongo. The tentacles of finance on food sovereignty and our food. GIFT (Great Italian Food Trade).
(4) Marta Strinati. Rising prices and food crisis in times of war. Background in the iPES FOOD report. GIFT (Great Italian Food Trade). 10.5.22
(5) European Commission: Directorate-General for Competition. Protecting competition in a changing world – Evidence on the evolution of competition in the EU during the past 25 years. Publications Office of the European Union, 2024 https://data.europa.eu/doi/10.2763/089949
(6) Isabella Weber, Merle Schulken (2024). Towards a Post-neoliberal Stabilization Paradigm: Revisiting International Buffer Stocks in an Age of Overlapping Emergencies
Based on the Case of Food. Political Economy Research Institute (PERI), University of Massachusetts Amherst https://tinyurl.com/yckcewca
(7) Dario Dongo. Strategic dialogue on the future of agriculture in the EU. GIFT (Great Italian Food Trade).
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
