The world’s top four grain traders, who have dominated the global grain market for decades – have posted record or near-record profits or sales. They predict that demand will outstrip supply at least until 2024, which is likely to lead to even higher sales and profits over the next two years. Food prices have risen more than 20 percent this year, according to the UN’s Food and Agriculture Organization. Some 345 million people are acutely food insecure, according to the World Food Programme, compared to 135 million before the Covid-19 pandemic. Olivier De Schutter, co-chair of IPES-Food (the International Panel of Experts on Sustainable Food Systems) and UN special rapporteur on extreme poverty and human rights, said: “The fact that global commodity giants are making record profits every times when hunger is on the rise is clearly unfair and a terrible indictment of our food systems. Even worse, these companies could have done more to prevent the hunger crisis in the first place.” Four companies – the Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus, known collectively as ABCD – control about 70-90% of the world’s grain trade. “Global grain markets are even more concentrated than energy markets and even less transparent, so there is a huge risk of speculation,” said De Schutter. He said this year’s rise in food prices occurred despite what were believed to be ample global grain stocks, but there was insufficient transparency from companies to show how much grain they held and no way to force them to release stocks in time. “We have to look at the grain giants and ask what they could have done to prevent the crisis and what they could do now,” De Schutter said. Cargill reported a 23% rise in revenue to $165bn (£140bn) for the year ended May 31, while Archer-Daniels-Midland posted its highest-ever profit in the second quarter of the year. An inland Cargill grain terminal near Nesbitt in Manitoba, Canada. Photo: Terrance Klassen/Alamy Bunge’s sales rose 17% year-on-year in the second quarter, although its earnings were hit by earlier charges. Louis Dreyfus reported 2021 profits up more than 80% from a year earlier as revenue rose by nearly a quarter to $1.62 billion. John Rogers, an analyst at credit rating agency Moody’s, said it was not surprising that supply constraints and a recovery in demand had boosted food prices and led to higher profits. “I don’t think they are colluding for big profits,” he said, adding that many more companies are also taking an increasing share of global grain markets. “I don’t think they’re acting unethically – they’re not deliberately raising prices.” He said profits for grain companies were rising overall, but their margins were not up significantly on a percentage basis. “This is a relatively efficient market – I don’t think these guys can raise prices.” But unpublished analysis by an NGO, seen by the Guardian, suggests some food companies may also be increasing their profit margins. The analysis found that Archers-Daniels-Midland increased its profit margin to 4.46% in the first quarter of this year, from 3.65% in the same quarter in 2021, and Cargill’s margin increased from 2.5% last year to 3.2% this year. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Sandra Martinsone, policy officer at Bond, a network of international development charities, said a windfall tax would be a way to restore some balance to food markets and help the poorest. “[The big agrifood companies] are clearly capitalizing on reduced supply and increased demand, further exacerbated by commodity trading,” he said. “When supply is significantly lower than demand, it gives room for the price to rise. But this is also exacerbated by speculative stock markets, as wheat and other commodities are traded on exchanges and hence prices fluctuate.” Oxfam also called for a windfall tax on food company profits. Alex Maitland, senior adviser at the charity, said: “There are fears that speculation could be a driving force behind food price rises. Anything that causes hunger and starvation is immoral.” UK Green Party colleague Natalie Bennett joined the call. “As a short-term measure there is a strong case for a windfall tax on the food oligopoly – the few companies, with significant cross-ownership by hedge funds, from seeds to supermarkets are major contributors to cost-driven inflation living through the crisis to new heights” , he said. Vicki Hird, head of sustainable agriculture at the British food coalition Sustain, stopped short of calling for a windfall tax as she said it was difficult to isolate the impact on prices in supermarkets where consumers buy most of their food. But he asked the government to regulate to stop the abuse. “While farmers, consumers and food workers suffer in the face of spiraling food and fuel prices, those sitting in the middle of the food chain – a small number of huge, dominant grain traders – reap huge profits.” If governments reject a windfall tax, they will have to consider other means to curb prices, Martinsone said, including price caps or tighter regulations on trade in commodities, such as a ban on the trade of commodities imported into India for limiting inflation and price increases. He said food companies and commodity speculators were also blamed for fueling the food price spikes seen more than a decade ago, when rising prices led to riots in many countries. The causes of rising food prices are complex. The Ukraine war played a big role as Ukraine is one of the world’s leading producers of grain, sunflower oil, corn and fertilizers. The war sent food prices soaring to their highest levels in March, although some have eased slightly since then. The standoff with Russia over the transfer of grain shipments from Ukraine for export has been partially resolved and some shipments have now been moved, but harvests from Ukraine and Russia will be affected this year and next. Rising energy and fertilizer prices, which have also risen due to the invasion of Ukraine, are having an impact, while the recovery in demand after the Covid lockdowns has added further pressure. Grain harvests in Europe, North America and India have also been affected by the climate crisis. Last year’s heatwave in Canada hurt wheat crop yields there, and this year’s high temperatures and wildfires are likely to wreak havoc. All this creates a rosy picture for grain producers. Demand for their products is growing, supplies are tight, and despite rising input prices in the form of energy and fertilizers, their profits seem secure. The Guardian contacted all four ABCD companies for comment but has not heard back. De Schutter said: “Ultimately, we have to break up the monopolies that have a stranglehold on the food chain. A few companies control global seed and fertilizer markets, animal genetics, global grain trade and food retailing. They are making huge profits at the expense of farmers, consumers and the environment.” In the UK, food prices have risen for many staples, adding to the woes with energy prices set to top £3,500 a year this winter for the average household. Poverty campaigners have warned people face tough choices this winter about whether to eat or heat their homes.
