Untitled Document

The Political Economy Approach to Food Systems Reform*

Olivier De Schutter1

Abstract

The political economy approach to food systems steers away both from approaches that focus on biogeochemical flows and the embeddedness of food systems in the biosphere, and from classical economists’ approaches that address the role of prices in relating supply and demand. This article discusses what is specific to the political economy analysis, which places power at the centre of its inquiry; and it lists the challenges this approach faces in its attempt to contribute to the reform of food systems.

Keywords: food systems, political economy, entitlements approach, right to food, governance.

1 Introduction

A political economy approach to food systems is one that places actors, and the power relationships between them, at the heart of its analysis. In Section 2, I provide an interpretation of this theoretical gesture, and highlight the added value of framing food systems reforms through the political economy lens in Section 3. I then identify three major challenges the political economy approach faces today, which may be part of its next research agenda. These are how to understand the relationships between the different elements of the food systems – their technological, economic, cultural, and political components – in order to ensure the deep transformation of the food system that the current situation requires (Section 4); how to conceptualise power in food chains (Section 5); and how to design transitional governance so that changes can take place, in a coordinated and mutually supportive fashion, at different levels of governance, from the local to the international (Section 6). I conclude briefly in Section 7.

2 What is the political economy approach?

The political economy approach to food systems can best be understood in contrast to the approaches that currently still dominate the literature on how to address the challenges of hunger and malnutrition. In part because of its dependence on natural resources and on weather-related events, food production has often been approached with the tools of the natural sciences, agronomy in particular; even the (now more fashionable) Earth systems approach has maintained that close connection between food production and the sciences of nature (National Research Council 1988; The Global Environmental Change Programmes 2001; Billen, Lassaletta and Garnier 2014). Similarly, food consumption has largely been treated in relation to the physiological needs of individuals, rather than related to how tastes are shaped by advertising, social norms and habits, and the pressures of contemporary life.

Such approaches to food systems see the challenge primarily in quantitative terms. Even where they aim to incorporate a concern for food access for the poor, beyond the immediate concern for food availability, their chief concern remains to ensure that supply matches demand in order to keep prices within certain margins, thus depoliticising the debate about reform.

In contrast, the political economy approach to food systems denaturalises and politicises the question of food systems reform. The entitlements approach pioneered by Amartya Sen (1981) represented an important step in this direction, since it sought to move beyond the naive view according to which hunger and malnutrition are exclusively or primarily about increasing production. The political economy approach radicalises this initial shift. Not only does it move away from a focus on production and on satisfying the physiological needs of the individual, as if these were merely technical problems which the prowesses of technology could adequately address, but it also challenges the usual assumptions about the formation of prices reflecting the intersection between supply and demand.

At the macro level, in contrast to this tenet of classical economics, the political economy approach insists that prices really reflect the exchange value of commodities as determined by the purchasing power of the richest groups of the population (rather than the use value, reflecting how food satisfies the basic needs of the poor). At the micro level, at the different segments of the food chain, it notes that prices reflect the bargaining power of the actors involved, as defined by the range of options at their disposal. But these perspectives about price formation and the meaning of value are generally ignored in studies that see price variations as reflecting scarcity, or has having their source in the skies or in the soils: it is against this depoliticisation that the political economy approach is launched.

A political economy approach to food systems thus moves away both from descriptions that focus on the biogeochemical flows involved in the production, trade, and consumption of food, and from economic models focused on variations of supply and demand as they are linked by prices. Both these classic approaches to food systems are silent about the question of agency. They portray systems without actors; they see food chains without power; and they take the institutional framework as given, rather than as constructed and as the result of particular path dependencies or conflicts.

In contrast, actors, power relationships between actors, and the institutional framework within which actors operate and through which they interact, are central to a political economy approach. Such an approach starts by moving from the impacts (impacts of food systems, for instance, on soil management or climate change, on the health of the population, or on rural development) to the causes. It asks which policy or set of policies, adopted by which actors, may be responsible for the impacts. In that regard, the démarche of the political economy approach is very similar to that which is encouraged by the use of a human rights framework: that framework too insists on empowerment, participation, and accountability in food systems reform, encouraging states to adopt legislative or policy frameworks to introduce elements of food democracy and to involve civil society groups in the design and implementation of food policies (De Schutter 2014a).

3 The added value of the political economy approach

In part, the rise of the political economy approach to food systems is the result of the failure of the other explanatory frameworks to provide an adequate diagnosis of how to address the challenges food systems face. In the post-Second World War era, food insecurity was framed as having its source in a failure of agricultural productivity to match population growth and the increased demand resulting from urbanisation and associated shifts in diets (De Schutter 2011a, 2017). Such framing thus saw increased levels of production and the growth of agricultural productivity as the key challenges to be met: this explains the focus on mechanisation, on large-scale irrigation, on the use of new (so-called ‘high-yielding’ or ‘improved’) plant varieties, and on the intensive use of external inputs (pesticides of course, made even more necessary after monocultures became the norm, but also nitrogen-based fertilisers).

Driven by such technological advances conveniently summarised under the ‘green revolution’ label, the amount of calories per capita on a global scale has been impressive since the start of industrial agriculture in the 1920s in rich countries, and in the 1960s in most of the developing world (Everson and Gollin 2003). Yet, these advances have proven insufficient to eradicate hunger: the absolute number of hungry people has remained more or less stable throughout the years, although the relative number may have declined. Indeed, the 2017 State of Food Security and Nutrition in the World report alerted the world that 2016 saw the first increase in the number of hungry people in a decade (though largely as a result of conflicts and climate change-related weather events) (FAO, IFAD, UNICEF, WFP and WHO 2017).

Even where food intake is sufficient, moreover, inadequate diets can result in micronutrient deficiencies such as a lack of iodine, of vitamin A, or of iron. Globally, over 165 million children are stunted – so malnourished that they do not reach their full physical and cognitive potential – and 2 billion people globally lack vitamins and minerals essential for good health (De Schutter 2014b). In the 1990s, it is this failure of the green revolution that led organisations working on children, particularly the United Nations Fund for Children (UNICEF), to highlight the importance of adequate caring and feeding practices for the utilisation of the food consumed (its absorption by the body). Health and nutritional outcomes, these organisations came to realise, depend as much on child caring (including breastfeeding, adequate storage and preparation of food, and hygiene practices) as on food intake, and therefore a decisive factor in adequate nutrition is ‘the provision in the household and the community of time, attention, and support to meet the physical, mental and social needs of the growing child and other family members’ (Gillespie and Mason 1991; see also Longhurst and Tomkins 1995; and Haddad and Oshaug 1998).

Moreover, beyond the immediate causes of malnutrition, these organisations insisted on its underlying causes (at the household level) and on its basic causes (at the societal level): only by examining intra-household relationships and the choices made by the community was it possible to understand why, in a world of plenty, children continued to starve, or to have their development stunted (UNICEF 1998; Smith et al. 2003). Together with Sen’s entitlements framework, this attempt to work on the underlying and basic causes of malnutrition was a major contribution to the rise of the political economy approach to food systems reform, in particular because it forced observers to question the institutional frameworks in which such systems are embedded.

While its successes in the eradication of hunger and malnutrition were mixed, ‘green revolution’ approaches have also caused severe environmental impacts, leading to the pollution of soils and groundwater, the erosion of biodiversity, and the growth of greenhouse gas emissions due to a loss of carbon content of the soil: though Rachel Carson had already cautioned against such impacts in the early 1960s (Carson 1962), it is only in recent years that these trends – that threaten the very resource base on which we rely for our food, including the natural fertility of soils – have been taken seriously. The green revolution also encouraged dietary transitions that reduced diversity for many groups of the population, leading to the growth of non-communicable diseases such as type 2 diabetes, heart diseases, and gastro-intestinal cancers linked to poor diets (WHO 2016; Swinburn et al. 2019).

Perhaps the most disturbing failure of green revolution approaches is that they have failed to reduce rural poverty, instead encouraging growth of inequalities and agrarian concentration in rural areas (Griffin 1974; Stein 2010). Indeed, with the benefit of hindsight, it now appears that, far from being scale-neutral, the green revolution technologies favoured farmers who had enough land to make it worth investing in the acquisition of machinery and irrigation systems; who had access to capital, allowing them to buy the external inputs required to ‘benefit’ from the introduction of modern technologies in agriculture; and who had access to markets and long supply chains, allowing them to specialise into certain monocultures and to meet the expectations of major buyers of raw agricultural commodities.

As a result of the increases in production, the price of food could be kept down despite the substantial increase in demand. But some groups of food producers lost. Small-scale farmers generally were pushed out from farming, or (in poor countries) relegated to a form of subsistance agriculture because, under existing market conditions, and due to the last of the investment in the public goods that would have supported them, they are less competitive and unable to achieve economies of scale (Griffin 1974; Freebairn 1995; Stein 2010). In many developing countries, moreover, farmers with no title to the land they cultivated were unable to have access to credit, since they could not mortgage the land: they lost out, and women were disproportionately affected.

In the mid-nineties of the past century, the rise of food sovereignty as an alternative paradigm for agricultural development and food systems reform provided an opportunity to reverse these trends. Food sovereignty was initially invoked by the transnational movement of small-scale farmers, the Vía Campesina; but starting with the World Food Summit convened in Rome in 1996, it soon became a claim of a large range of social movements, who were opposed to the pressures resulting from the liberalisation of trade in agricultural products and from the globalisation of supply chains (Claeys 2012, 2014; and on the emergence of the Vía Campesina, Desmarais 2007).

Although the rise of food sovereignty during the past 20 years has faced strong resistance, it has offered a powerful counter-narrative to the mainstream discourse about food systems and how to improve them. It has moved the debate from the chiefly technical question of how to pursue the growth of agricultural productivity, to the political economy questions of who controls food systems, who benefits from the current organisation of food systems, and what are the obstacles to change. The following sections discuss three major lock-ins highlighted by the discussion launched since the rise of the claim to food sovereignty.

4 Co-evolution and resistance to change

A first insight from the political economy approach is a diagnosis about the source of the inertia of dominant food systems. The mainstream food systems, it argues, is the result of the co-evolution of a number of elements, that – because they are the product of a shared history and fit under the same dominant narrative – perfectly fit with one another and have become mutually supportive (Shove 2003; Shove and Walker 2007). The storage, processing, and communications infrastructures that have developed have supported primarily the production of major commodities, meant as inputs for the food manufacturing industry and large domestic markets or export markets; research and development of new plant varieties focused on a limited number of crops, such as maize, soybean, rice, and potato, while many other plants (particularly food plants cultivated for local consumption by farmers in the global South) were comparatively neglected (IPES-Food 2016).

These socio-technological choices in fact favoured large economic actors, the largest farms, and the big transnational agri-food corporations in particular, which were best equipped to achieve the economics of scale made possible by the expansion and globalisation of markets. It is these actors which benefited the most from agricultural policies, including the Common Agricultural Policy in the European Union, which grant subsidies on the basis of the volumes produced or later, with the ‘decoupling’ of subsidies to avoid distorting production, on the basis of the surface owned (IPES-Food 2019). Big commodity buyers and food manufacturing companies were ideally placed to pit farmers against farmers, as their foodshed (the range of suppliers they source from) expanded, and to impose on farmers compliance with certain standards that made it even more difficult for small-scale producers to compete. As economic globalisation was deepened by the lowering of barriers to trade in agricultural products, investments in research and development and in infrastructure were increasingly made in the interest of export-led agriculture. This primarily benefited the largest agri-food corporations controlling global supply chains, which gradually were able to strengthen their dominant position by network effects, by standard-setting, and by their ability to control the logistics of supply chains (Naseem, Spielman and Omamo 2010). In contrast, the needs of small-scale farmers, producing food crops to feed their own communities or to serve local markets, have been largely neglected. This concerns the development of new plant varieties, in which rewarding private plant breeders by strengthening intellectual property rights regimes has largely become a substitute for the funding of public research centres (De Schutter 2011b; Howard 2015). But it also relates to the building of communication and storage facilities, to agricultural machinery, or to the dissemination of agricultural knowledge by extension services.

The mass production of refined grains and of processed foods allowed by these developments fits perfectly well with lifestyle changes, and the new appetite of consumers for foods that are tasty and easy to prepare, although they are often also the least nutritious and the least healthy – since there is typically a tradeoff between the length of shelf life and the distance travelled by foods and their nutritional qualities. Finally, because the large food manufacturers and retailers, with their superior logistical networks and their ability to pay less at all segments of the food chain, can produce foods at a low price for consumers, they can relatively easily capture political influence, since they promise ‘solutions’ that allow politicians to ignore demands for stronger social justice: in practice, cheap food worked as a substitute for welfare policies that would have made quality diets affordable for all households. Of course, this ‘cheapness’ is in fact largely based on an illusion: the real costs of food production are shifted onto the taxpayers paying for the agricultural subsidies and to the next generation which shall pay for the mounting health-care costs linked to poor diets and for the environmental damage caused by industrial agriculture. But most governments, until now, have been too short-sighted, or perhaps too captive, to have an interest in dispelling the illusion.

This is how, in the mainstream food regime, technological choices combine with economic choices and cultural evolutions strengthen the dominance of the largest actors, allowing them to capture the political process. These actors promise to produce at a low price to consumers, thanks to the economies of scale they can achieve, the strong bargaining power they have vis-à-vis suppliers and agricultural raw materials, and their superior logistics: for governments, to support these actors is to support mass consumption, and thus to alleviate the impacts of growing inequalities and poverty.

What is most striking in a system resulting from such co-evolutions, is that, considered in isolation, each component of the system can be perceived as legitimate, even though the system as a whole is perceived as unsustainable: indeed, technological choices, the weight of the largest actors, food culture, and even the policymaking, can all be defended on the basis that they are the best adapted to the system as it has evolved. In Darwinian terms, one would speak of the survival of the fittest: the fittest technologies, the fittest companies, the fittest culinary cultures, the fittest political system – the fittest, in all these examples, to the objective of increasing calorie availability per capita and keeping prices for consumers down.

It has become a cliché in recent literature in food systems to refer to the ‘consumerist turn’: consumers henceforth, we are told, would be driving the system ‘fork to farm’, influencing the practices of retailers and producers rather than being shaped by them (Spaargaren, Oosteveer and Loeber 2012: 18–19). But the reality is both more depressing and more complex: since eating habits and culinary practices are shaped by the foods that are on offer, in addition to the other components of the food environments – from advertising to working times and from social norms to the organisation of space – we are caught, rather, in a cycle in which such habits and practices cannot change without the whole system changing. The problem is systemic, the political economy approach argues: so should be the solutions.

5 The measure of power in food chains

The political economy approach to food systems insists on the need to address power in food chains. This is in part because of a basic concern with equity: since small-scale farmers are gradually being squeezed out of business in rich countries, and constitute a large proportion, perhaps even a majority, of the hungry in the global South, strengthening their position in food chains would make a significant contribution to the ability of peasant agriculture to develop, as well as to the reduction of rural poverty. But addressing the question of power in food chains is not simply a matter of protecting the weakest party in the relationships between the different actors of food systems; it also is in the general interest. A significant portion of the waste in food chains, for instance, has its source in the practices of supermarkets and food manufacturers towards their suppliers, whether these buyers encourage overproduction before deciding, at the last minute, that they will not need to order all the food that has been prepared for them, or whether they reject some produce on purely cosmetic grounds, or because it is nearing its sell-by date (Stuart 2009, chapters 2 and 3).

It is also power in food chains, and our failure to address it, that explains how the growth of private standards in global supply chains disproportionately affected small-scale food producers: while motivated initially by the need to reassure consumers about the safety of their food and about the environmental sustainability of how it is produced, and while allowing certain efficiency gains, the setting of private standards by the dominant players in the agri-food systems has had exclusionary effects on smallholders, whose specific constraints have not been considered in the establishment of such regimes, and who are provided no avenue to complain (Dolan and Humphrey 2004; Maertens and Swinnen 2009; Boro de Batisti, MacGregor and Graffham 2009).

So, power in food chains must be addressed. But such power is difficult to conceptualise, let alone to measure. This difficulty may be another reason why it is difficult to tackle: in the absence of an objective measure of power, any attempt to make food chains more equitable will inevitably be denounced as ideologically biased, as if the existing status quo were by definition less suspect.

A common way to define power in food chains is by referring to the concentration rate (CR) at any particular segment of the chain in any particular chain. For instance, in a background document titled The Food Supply Chain published in 2017, the European Commission notes that,

concentration in the food processing industry and retail sectors is much higher than in the agricultural sector. The market share of the top five firms (or C5 concentration ratio) in the EU food industry was at an average of 56% in 2012 in 14 of the EU’s Member States. At the same time, in 13 Member States the share of the top five retailers exceeded 60% (European Commission 2017: 2).

The implication of such a finding is that the suppliers of raw agricultural materials (the farmers) are at a disadvantage in negotiating with the commodity buyers and the retailers, since the latter are far more concentrated than farmers are, and thus have a much greater ability to coerce farmers into making certain concessions or into accepting certain conditions. Indeed, the document was prepared in part in order to provide background explaining the proposal of the Commission for a Directive on unfair trading practices in business-to‑business relationships in the food supply chain (European Commission 2018).

It is this classic measure of power that is used in the visual representations of food chains, which the fair trade movement made popular, presenting such food chains as having an hourglass shape: a very large number of farmers, a relatively small number of commodity buyers, food manufacturers, and retailers, and a very large number of end consumers. (In fact, such models now increasingly include, at the top of the figure, the increasingly concentrated input providers – seed and agrochemical companies, which are now forming a single sector following a range of mergers and acquisitions.) This seems a convenient way of defining power, and it lends itself well to such visualisation exercises. Such a representation is misleading, however, and the attempt to measure bargaining power as derived from the CR in particular segments of the food chain is a gross oversimplification for a number of reasons.

First, such a measure is insufficiently precise to capture the various forms of relationship between suppliers and buyers along the chain. Yet, these relationships are extremely varied, between the extremes of vertical integration (in which the buyer totally controls the upstream segment) and of relationships as they may develop on the spot market, in the absence of any long-term contractual agreement between buyer and seller.

Second, how much bargaining power any single actor has also depends on a range of variables that cannot be captured by the CR alone. Consider, for instance, the relationships between the producer (the farmer) and the buyer of raw products. At the microeconomic level, what matters is whether any particular farmer has access to storage facilities (and thus may choose when to sell), or to local processing plants; whether she has the means to transport her produce to the city, or depends instead on a middleman (the ‘aggregator’, as such an intermediary is called in India) to that end; whether she joined a cooperative; whether she receives reliable information about market prices, and so forth. None of these elements are captured in a simple quantitative measure of the CR at different segments of the food chain.

Third, the strength of the bargaining positions of different actors at any particular segment of the chain depends not only on the concentration rates at the segments to which each actor belongs, but also on the shape of the downstream market. For instance, if a particular buyer has achieved a quasi-monopsonistic position in the market (i.e. for the seller concerned, there is in practice no other buyer he can turn to), the bargaining position of that monopsonistic buyer shall of course be particularly strong. The risks of that power being abused are far more significant, however; not if the buyer’s dominant position vis-à-vis the seller is combined with a monopolistic or dominant position of the same buyer downstream, but instead if the buyer faces strong competition in the downstream market. Perhaps paradoxically, the more any particular player is in a dominant position not only as a buyer but also as a seller on the downstream market, the more his dominant position vis-à-vis the producer whom he sources from shall be compensated by the absence of competition that he faces, as a supplier of the downstream market. The reason for this is simple: if the buyer faces strong competition on the downstream market, he cannot easily afford to make concessions to the supplier, since he may then lose out to his competitors. If, on the contrary, he faces no such competition, he can treat the suppliers more equitably, without having to fear that this may result in market losses downstream, because of the slight increase in prices that this may cause.

Fourth and finally, it is not only actual competition (as measured by the CR), but also virtual competition, that matters: any buyer will be hesitant to abuse his dominant position as buyer if he fears that new actors may enter the market, proposing more favourable conditions to the suppliers. Fair buying practices buy the loyalty of the suppliers, minimise temptations of side-selling, and make it less likely that competitors shall enter the market and seek to divert the suppliers into alternative supply chains.

These various sources of complexity make it very difficult to measure power in food chains: whereas unfair trading practices can be listed and prohibited, ensuring complete ‘fairness’ in the bargaining process is an infinite task. Indeed, in negotiations, each party per definition seeks to impose its terms on the other, and the strength of each party’s position shall depend on the range of alternative choices that party has. Power is ubiquitous: it is what bargaining is all about. The fact that there is no agreement as to how it should be measured, however, and that classic measures are deeply unsatisfactory, is a major obstacle to ensuring equity in food chains.

6 Multi-level governance

A final obstacle to effectuating change in food systems is that such systems typically are influenced by actions taken at different levels of governance, from the private governance by retailers imposing their own standards on suppliers (Backer 2007) to the international agencies such as the World Trade Organization promoting the growth of global trade and the adoption of global regulatory standards facilitating such trade, and including municipal/local levels of government, regions, and states.

The allocation of competences across these different layers of power varies of course, from jurisdiction to jurisdiction, although some regularities may probably be found across most world regions – for instance, public schools and the associated purchasing policies generally fall under the remit of local authorities, whereas the setting and enforcement of food safety standards are generally left to the national government, often in accordance with international guidelines. Land zoning is typically done at the local or regional level, but support to farmers generally depends on the national level. The trend towards decentralisation on the one hand, and delegation of powers to international organisations on the other hand, nevertheless appears to be a general phenomenon: states are being emptied out. Dona Freeman describes as ‘de-democratisation’ the current process in which central states delegate more powers to local authorities, privatise a number of services or standard-setting functions to corporate actors, and submit to disciplines in joining international regimes (Freeman 2017).

The impacts on food systems reforms are deeply ambiguous. On the one hand, the triple ‘de-democratisation’ we currently see occurring may reduce the risk of power being abused by the central government, since such processes in effect disempower the state – therefore also making it more difficult for certain interest groups to capture the state for their own benefit. On the other hand, however, this fragmentation of power makes it more difficult to achieve reform, since any attempt at reform at one level of government may be obstructed (whether prohibited or discouraged) by the other levels.

7 Conclusion

There exists a long and respectable tradition of political economy approaches to agricultural development. Over a span of about 30 years, for instance, Robert Bates and colleagues with whom he teamed documented the perverse role of governments in African agriculture, basically robbing farmers from the product of their work and exploiting them shamelessly in order to feed growing cities, or to export commodities on global markets in order to have access to hard currencies (Bates 1981, 2005; Azam, Bates and Biais 2009). In the same vein, Michael Lipton famously denounced the ‘urban bias’: the tendency of governments to favour the urban populations, on which their political stability depends, at the expense of the livelihoods of the rural dwellers – who, because they are often poorly educated and spread over large territories, often find it difficult to be organised (Lipton 1977). Contrasting the situation in Africa with that of South Asia, Birner and Resnick discussed in minute detail the essential role governments played in the successes of the ‘first’ green revolution, in the 1960s and 1970s (Birner and Resnick 2010).

Power, however, does not reside only with governments; it is pervasive within food systems, and it is perhaps private power that now deserves the greatest attention, because it lacks any accountability. The challenge of the political economy to food systems is to address private government: the unchecked power of incumbents in mainstream food systems, who oppose all change, and have managed to translate their economic dominance into political influence. This requires that we reassert the duty of states to control the dominant actors of the agri‑food system, but that we also insist on democratising the state to make it fully accountable to the population groups that the mainstream food systems have marginalised. This new phase is only just beginning.

Notes

* Funding for this IDS Bulletin was provided by IPES-Food in furtherance of their aim to apply a political economy approach in understanding and reforming food systems.

† This IDS Bulletin represents a collaboration between IDS and IPES‑Food. Both organisations are committed to holistic, sustainable, democratic approaches to improving food systems, and to applying excellent research and political economy approaches in working towards these goals. We hope this IDS Bulletin represents the breadth of debate at the 2018 workshop we co-sponsored, on ‘Political Economies of Sustainable Food Systems: Critical Approaches, Agendas and Challenges’, and that it contributes to the sharing of knowledge in the name of sustainable and equitable food systems.

1 Olivier De Schutter, Co-chair of the International Panel of Experts on Sustainable Food Systems (IPES-Food) and a member of the UN Committee on Economic, Social and Cultural Rights.

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© 2019 The Author. IDS Bulletin © Institute of Development Studies | DOI: 10.19088/1968-2019.115

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The IDS Bulletin is published by Institute of Development Studies, Library Road, Brighton BN1 9RE, UK. This article is part of IDS Bulletin Vol. 50 No. 2 July 2019 ‘The Political Economy of Food’; the Introduction is also recommended reading.