Wheat, corn and vegetable oil prices peaked in May 2022 in markets disrupted by the pandemic and then by the war in Ukraine. They have since come back down, but remain historically high.
Gold Archer Daniels Midland (ADM), Bunge, Cargill and Louis-Dreyfus – whose initials form “ABCD” -, control “70 to 90% of world grain trade”reminds AFP Jennifer Clapp, economist specializing in food security at the University of Waterloo in Canada.
The figures speak for themselves: the American giant Cargill, the largest agricultural trader in the world, climbed to the highest in 157 years according to the Bloomberg agency, reaching 6.68 billion dollars in net profit (+ 35%) at the end of its staggered 2021/22 annual financial year, which ended on May 31.
In 2022, “exceptional year”the American ADM posted a record net profit of 4.34 billion dollars, up 60%.
“As the food and energy security of millions of people is threatened due to rising food and commodity prices, traders are reaping record profits”denounced the Swiss NGO Public Eye in mid-January.
From “Dallas to Delhi”
“If they bought wheat in January 2022 for delivery three months later, before prices skyrocketed because of the war, they could then sell it at a much higher level”explains Jennifer Clapp.
The demand for cereals has not weakened since, and “we remain well positioned to capitalize on the upside opportunities ahead of us”pointed out in February Greg Heckman, CEO of Bunge.
Recalling that the company “does not set commodity prices”Cargill defended itself to AFP for having “take advantage of the crisis”. It claims to have contributed to the stability of the global food system, while disbursing nearly $162 million in aid to humanitarian organizations.
The ABCDs also highlight the explosion in their costs, from nitrogen fertilizers to maritime transport and fuels.
Because from “Dallas to Delhi”, as ADM puts it, these mastodons unknown to the public are not only intermediaries: they own land, supply seeds and fertilizer to farmers, buy their cereals then transport them by boat, store them, and resell them.
They therefore have a “privileged access to information” on harvests or cereal needs in the world, which gives them a dominant position, underlines Jennifer Clapp.
“It is impossible to say: ‘I will not work with Cargill or ADM’”abounds Pat Mooney, founder of the Canadian NGO ETC and specialist in concentration in the agri-food industry.
Solicited, Louis-Dreyfus, ADM and Bunge did not answer the questions.
Opacity and speculation
“The ABCDs have failed in their basic functions: to ensure that food reaches the people who need it at a stable price”says Pat Mooney, despite “abundant public and private reserves” of cereals.
Their profits have not sparked the same outrage as the “superprofits” oil majors.
A special tax, advocated by Oxfam, would correct certain shortcomings, but only temporarily, warn the experts of the international panel IPES-Food, in which Jennifer Clapp and Pat Mooney participate.
In a report, they denounce the fact that ABCDs are not “not required to disclose what (they) know about world markets, including their own grain stocks”.
This opacity favors speculation and could encourage them, according to them, “hold stocks until prices appear to have peaked”.
“It is high time that we call for a rigorous analysis of the food chain. How can we improve a system that works neither for those who cultivate nor for those who need to feed themselves? This is the third food crisis of the century (after 2008 and 2011, editor’s note), and the problem will arise again”assure Pat Mooney.