Investing in the food industry: second thoughts

Najma Sadeque

 

One of the most popular areas of investment, both local and Foreign Direct Investment, is in the food industry. It is frightening to think that just a couple of dozen or so Western food corporations dominate the food-consumption of America and most of the West, and has an eye on taking over the rest of the world as their market. Their coming may not have been obvious earlier to developing countries, but the strategy and efforts started a century ago.
It came at a heavy global price that impacted on the entire natural environment of the world on which healthy agriculture was totally dependent on. Industrial agriculture, as it came to be known, made liberal use of chemicals for its pesticides, herbicides and fungicides, as well as excess water; and since it became heavily-mechanised, needed oil to power them. So the oil industry has a big stake in agriculture too, not only to drive the tractors and combines but also for manufacture of chemical inputs and distribution by road and sea transport all over the world.
The cost has been a heavy and not a worthwhile one. Today we have the world's rivers, lakes, seas and oceans poisoned by toxic chemicals and industrial waste, with hundreds of species of marine life being rendered extinct before they reach the fishing nets, farmlands equally poisoned and degraded, and in short, investors still killing the geese that lay the golden eggs.
Not surprisingly, the focus was on the major food crops, starting with wheat, quickly followed by cash crops, such as cotton. But food-related investment remained on top of the list; it was both a means of breaking into struggling Third World economies whose governments were either naïve and poorly-informed or corrupt and purchaseable. Selling the idea of industrial agriculture as modern technology and therefore the 'correct' and 'advanced' choice to make, was easy enough. It required no hard-sell. Nor did it strike anyone that man-made technology could make serious mistakes.
By the time Third World agricultural economies began to collapse, making easy pickings of the agricultural and food sector by foreign investment, it became painfully clear, that even in trade and commerce, nothing operated any longer in the mutual interest - although it was made to seem that way. It was a one-way street of going into a foreign country to invest, extracting whatever was possible with no concern whatsoever as to sustainability or environmental or human consequences, and when there was no more left to squeeze out, to take what was left of the money and to run.
In the process came the highly concentrated food industry in the West. The agro-based companies were no longer content with growing the food, processing and packaging and wholesaling it. Now they wanted the market of the world's billions of individuals directly. And that was through the food services industry which then became locked in with food manufacture, processing and distribution. The junk food industry was born, and popularised with heavy advertising, promotions and public relationing, illusion-creation, and lobbying in government circles for support.
Did it bring health and related benefits, at least to the West, where it is most prevalent? Hardly. Firstly, food variety - because industrial agriculture which kills off biodiversity and focuses on only a few crops - has narrowed down from thousands to a few dozen. To prevent monotony, the food industry relies on creating food addiction with high use of salt, sugar, rich dairy inputs and other additives in mass food-production. Without them, the food, which has already lost most of its nutrition as well as its taste because of chemicals and processing, would not be edible anyway - which is why food additives is a separate, highly-specialised industry in itself, devoted to making food taste better, and which also means use of artificial ingredients. It is ironic that industry first destroys the nutrition and taste of naturally-grown food - an unintended consequence of industrialising agriculture and food processing - and then has to find artificial means of making it fit to eat!
Secondly, in America, the centre of processed and fast food, far from having an easier and healthier life, people were getting increasingly diseased, not from lack of food, but bad food. Obesity was on the rise and with it a whole range of diseases, and the tendency was being spread to other countries, including the developing world to a lesser but growing degree. Health institutions in America as well as Europe and UK began to view the situation with alarm, but because of the financial clout and influence in the media as well as heavy lobbying by the American corporate sector in Congress, action on the issue was stifled for a long time.
But it could not go on forever, especially since 'democratic' America does not have a free National Health Service. Last year, obesity was declared a national crisis in America. Ready-made food had served not only to create overweight adults weighing two to four hundred pounds, but children as young as a year or two old weighing three to four times their normal weight! The only ones who gained was the clothing industry manufacturing super-sized clothes for human giants. Not that it surprised anyone. But they were very late indeed.
It however helped to spur civil society and NGO action against irresponsible food provision. Many US educational institutions have banned fast food and bottled drinks on their premises, and the pressure is on to make it universal. While Europe is also taking action, there is little notice being taken in the developing countries, including Pakistan. Instead, first-time visitors to the country, instead of being welcomed with indigenous food and culture at the airport, are given an uninspiring panorama of a junk-food outlet that most citizens who use the airport, cannot even afford, which perhaps is just as well.
The control by a couple of dozen food-related multinational corporations, with corporate and brand names familiar to most people around the world, was however serious enough for the World Health Organisation (WHO) to take notice of. "For many years," it says in its World Health Report 2002 mandated by UN-member states "evidence has built up about the health impact of dietary and food cultural change….. indicated that mortality, morbidity and disability attributed to the major non-communicable diseases currently account for about 60% of all deaths and 47% of the global burden of disease."
On the health situation as a result of industrialised food, their findings in a nutshell, were as follows: -
- Chronic Diseases - in which the key risk factors include high cholesterol, high blood pressure, low fruit and vegetable intake.
- Cancer - accounted for 7.1 million deaths annually or 12.5% of the global total.
- Cardiovascular diseases - accounted for 16.7 million, or 29.2% of global deaths.
- Diabetes - 171 million worldwide, according to the latest WHO estimate, which is likely to be more than double by 2030.
- Obesity and overweight - which WHO says has reached epidemic proportions globally, with more than 1 billion adults overweight - at least 300 million of them clinically obese.
- Physical inactivity is estimated to cause 2 million deaths worldwide annually.
What is tragic and outrageous is that just the causes are all preventable, as they lie in food, which until the last century was naturally grown and healthy. "This reflects a significant change in diet habits and physical activity levels worldwide as a result of industrialisation, urbanisation, economic development and increasing food market globalisation," states WHO. To address this, WHO has adopted a broad-ranging approach and has developed the Global Strategy on Diet, Physical Activity and Health, which was endorsed by the May 2004 World Health Assembly.
WHO also finds a disturbing and continuing trend of reduced fruit and vegetable consumption around the world and has produced a report on this problem as well. We find this in our own country as well, which is no different from other developing countries. Food aid and exports from the West especially, focus on staple, which is chemically-grown and does nothing for health. And what developing countries grow in fruits and vegetables are denied to their own citizens who need it most and are exported only to affluent countries or markets that overeat anyway.
Earlier this month, a report on the food industry and health commitments was released by a research team at City University's Centre for Food Policy in London reviewed health-related activities of the world's 25 largest food retail, manufacturing and food service companies. It found that, overall, commitments on the part of these 25 corporations to be weak. The committee's recommendations for action are directed not only to the WHO and national governments, but to corporations, civil society, researchers and investment bodies as well. (The 80-page report can be downloaded from the City University's website)
In a press release, it openly stated that the world's biggest 25 food corporations are not taking health seriously enough. Those who came under scrutiny included the top 10 food manufacturers, the top 10 food retailers and the top 5 food-service companies (which included the top 3 fast-food and top 2 contract-caterers). Under review came company policies, actions and commitments on a wide-range of health-related issues, including: R&D spending, marketing, advertising and sponsorship, whether health was part of Corporate Social Responsibility, policy on diet and physical activity, the healthiness of products, obesity and children, labelling, stakeholder engagement and whether companies gave health help to their own employees.
"The research is the first attempt to monitor whether and how these powerful companies are reporting on their impact on diet and health. We set out to shine a light on what these mostly publicly-quoted companies are doing, or report they are doing. Our findings are worrying. There is a pretty poor overall picture, with too many companies appearing not to care a jot," concludes the team. "The smallest company we investigated had a turnover five times that of the WHO's entire annual budget, so they cannot use lack of resources as an excuse."
The committee revealed that "retailers, who often present themselves as the consumer's friend, in fact came out worst performing sector. Food manufacturers who have been under attack for selling fatty, salty sugary foods in fact reported most activity. The same was true for foodservice where fast food companies have been in the health firing line."
"This suggests that the best way to get companies to take health seriously is to have critics outside giving them a hard time. The critics are unpaid watchdogs. Eventually the companies wake up. But if companies keep their heads below the parapet, no health innovation or consciousness seems to take root inside corporate culture. The danger is that health criticism is focused only on certain high profile companies, and not across entire sectors, which is what is needed…..We want to encourage investors, consumers, NGOs, public health departments and governments to start health auditing companies based in their countries." The City team was advised by two financial analysts on the project.
"The findings of this report suggest that the world's food companies are not yet fully engaged with the seriousness and urgency of the demands to tackle diet-related ill-health worldwide. There are some honourable exceptions, which are highlighted in each section of this report."
"Companies should be wary about doing the minimum or presenting a few hurried initiatives in self-promotional terms…. Company actions must move from being purely defensive or centred on obviating threats to their reputations."
While the report focuses on existing food corporate wrongs, it has implications for all countries where local partners are considering new or expanded foreign partnerships in the food industry. This is no longer a localised matter. And since it has been taken up by the World Health Organisation which comes under United Nations, civil society and NGOs will receive all their backing when they take on resisting governments and the private sector.
It will be much more in the public interest - as well as a profitable one - to focus inward on indigenous, naturally-grown and processed food - which has also become a top priority of Western imports with the growing rejection of chemically-grown and processed foods. Business at the cost of public health translates into damaging a country's economy and therefore its stability and future. That can't be good for local business either.