Globalisation and regulation of food risks. A theoretical overview.

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Globalisation and regulation of food risks. A theoretical overview.

Paper for the Conference in Chiang Mai

‘Changing environmental governance in Asia. Globalization industrial transformation and new state-society relations’. 11-12 October 2003

Peter Oosterveer

Environmental Policy Group

Wageningen University

Abstract.

As globalisation process covers more and more aspects of life and includes food, it becomes increasingly important to develop consistent theoretical perspectives on this process. In this paper I will first identify different theoretical views on globalisation and build on the views of Giddens and Castells to analyse the globalisation of food production and consumption. This will lead to the identification of structural tensions in the regulatory options in this globalising agri-food networks. The concept of agri-food networks is introduced to analyse the tension between global and local regulation of food production and consumption.

1. Introduction.

Regulating the environmental consequences of food production and consumption as well as the safety of food is no longer the sole responsibility of independent national states. The development and implementation of the regulation of food is increasingly influenced by processes in other, sometimes distant, places. Global trade, including food trade, has grown rapidly during the last decades leading to a search for new ways to regulate the impacts on the environment and safety of food production and consumption. Thus the regulation of food is globalising, like many other aspects of people’s lives and understanding the changing practices of regulation needs to based on a consistent social science analysis. There are however different theoretical perspectives on globalisation within the social sciences and I will review them to identify the most promising views to analyse the regulation of food risks. Whereas some theorists see globalisation as an unequivocal process towards a global world economy, others like Giddens and Castells regard it as a much more diverse and contingent process and their views offer more tools for analysing regulation of food risks at the beginning of the early 21st century.

However, before reviewing these different theoretical perspectives I would like to summarise some empirical indicators about recent changes in international food trade.

2. Globalisation of food production and consumption. Empirical evidence.

The production and consumption of food has had international aspects for most of the known history of mankind. However, the recent process of globalisation has definitely shaped the scale as well as the structure of international food trade.

World trade in agricultural products has grown impressively over the last decade, while simultaneously world market prices for most agricultural commodities have gone down. See table 1.

Table 1: World exports in agricultural products:

(index: 1990 = 100)

Source: WTO International Trade Statistics 2002, table A1, p. 167.

In particular, the export of more luxury food products like fresh fruits and vegetables has known a marked increase over the years. See table 2.

0

Table 2: Fresh fruits and vegetables, three-year average export values (US$ 000s)

Source: Friedland, W. (1994), p 215.

The total value of food exports is estimated by the World Trade Organisation (WTO) to be around 442.3 billion dollars in 2000, representing a share of 9% in world merchandise trade and 40.7 % in the world exports of primary products (WTO International Trade Statistics 2001). A few developed countries responsible for 70% of both exports and imports have dominated this trade. See table 3.

Table 3: Top 15 agricultural exporters and importers, 2000

Source: WTO International Trade Statistics 2001, table IV.7, includes intra-EU trade

Despite the growth of global trade in agricultural products, most food is still consumed in the countries where it is produced, except for some typical tropical crops like coffee, cocoa, palm oil, and rubber (Einarsson, 2000. P. 10 – 12). For example, in the case of wheat, which is the largest export crop among the cereals, only 17% of global production is exported. The USA, Australia and Canada share 2/3 of total exports and almost 80% of it is sold to developing countries. And, only 6% of the world’s total rice production is exported, mainly by Thailand, Vietnam and China, and for 90% imported by developing countries such as Indonesia, the Philippines, Bangladesh, Iran and Brazil. For coffee on the contrary, 80% of the world’s production is exported by Brazil, Vietnam and Colombia and imported by the USA and the EU.

However not only the quantity of global food trade has changed, also its structure and this evolution during the last century can be distinguished in the following stages:

  • pre-fordism (manufacturism): where factories were established making individual products by individual workers and sometimes entire families. In agriculture the mixed farm was dominating, where still only a minor part of the production was sold, notably wheat. Food consumption is for an important part based on self provision and only specific products are bought on markets and in small shops. For example most people had a few chickens around the house for eggs and meat. A certain separation between food producers and food consumers is however already emerging, due to certain forms of production, storage methods and new forms of faster transport.
  • fordism: since 1920 an intensive system of accumulation developed around the mass production of standard products and high wages to a low skilled workforce and later combined with a developing welfare state (Keynesianism) ensuring a market for the goods produced. Homogeneity and standardisation of the products are characteristic for this phase. In agriculture typically large-scale production is becoming dominant (soybean and corn production) and intensive poultry and hog farming is developing, processing the corn and soybeans produced. Food for human consumption is mostly bought at shops and markets, (increasingly supermarkets) and the daily menu is mostly based on standard products. The continuing separation between food producers and food consumers is escalating, leading to a situation where large amounts of cheap foods are available but where producers and consumers of food are also separated in time and space. (Dickens, 1992)  
  • Post-fordism: since 1980 a flexible system of accumulation is developing in combination with a tendency towards state deregulation and specialisation (small-batch production of a variety of products, the use of flexible machinery and microelectronics and the employment of a skilled and flexible workforce). In agriculture, poultry production with an enormous range of chicken products is an example of the case. But regarding food production and consumption the changing role of retailers is even more important. Labour practices are reconfigured within retailing and redesigning retail-supply chain interfaces. Important changes led by retailers are: technological transformations (the introduction of the ‘cool-chain’), reconfiguration of labour practices (part-time by women), and reconfiguring the retail – supply chain interfaces (global sourcing, requesting large volume suppliers and the move into own-brand products). One interesting example of these changes is ‘relational contracting’: referring ‘to contracts that are based on interactive, flexible and stable supply networks. While the last two features may seem contradictory they designate different temporal dimensions: the day-to-day orders may vary and are thought of as flexible but the contracts are ideally in place for a number of years, which is where the stability enters. It is the time demanded between production and delivery that induced inflexibility, possibly more so for suppliers with Just In Time delivery.’ (Dixon, 2002. p 49) Food consumption is characterised by different styles of consumption and much attention is paid to issues of trust and distrust of food. The welfare state, fundamental to fordism, is dismantling due to the globalisation of the economy and the succeeding need to create global regulatory regimes. (Tickell and Peck, 1995)

These different stages in a continuous process of change result in new social practices, new systems of food provision new food risks and new forms of regulating these risks. 

The shifting structure of the production and trade of tropical food crops form a concrete example of some of these changing practices (see Gibbon, 2001). Between 1930 and 1990 the production of tropical food crops like coffee and cocoa, was mostly in the hands of smallholders producing largely undifferentiated crops, where the national state played the role of valorising peasant production through credit-based input schemes, extension services, national systems of quality control and pan-territorial pricing. International trade was dominated by a small number of big trading companies based in the US and Europe. Market relations between these transnational corporations and suppliers predominated over forms of direct control. The major mechanism linking suppliers with these international traders took the form of simple, inclusive quality conventions (international commodity agreements) combining price with certain crude physical crop properties chosen with producers’ or producer-country governments’ involvement.

Around 1980 this structure started to change and by 1990 the world of producing and trading tropical food crops was definitely transformed. International producer cartels had collapsed and public intervention and regulation at national level in developing countries were greatly reduced because of the implementation of structural adjustment programs imposed by the International Monetary Fund (IMF). Private contracts between producers, traders and industrial consumers began to dominate international trade in tropical food crops. The organisation of the producer-trader-networks involved displays a far greater diversity than before. Former state marketing monopolies have dissolved and a variety of different local market structures developed. Market co-ordination was reduced and therefor secularly falling prices have been accompanied by increasing price instability both in international and domestic markets. Reduced market predictability combined with a growing differentiation of consumer tastes resulted in falling margins and increased risks for traders, leading to a strengthening of the bargaining positions of processors and retailers. Vertical co-ordination by international traders persists and has become more important, accompanied by a proliferation of more direct forms of co-ordination (contracts, certification, etc).  The simple matrix linking crop quality and price has disappeared. On the one hand commodities are increasingly sold in undifferentiated forms as inputs for processing industries. While on the other hand, consumer-driven quality conventions are proliferating, distinguishing between products on the basis of origin, production process or certain quality characteristics, combined with increasing attention for the safety of food.

This example shows the changes in the structure of food production and consumption evolving towards increased complexity. The markets and the food products on these markets are differentiating, many more social actors are directly and indirectly involved and more dimensions of food and food production are included in regulations and concerns.

These changing scale and structure of food production and consumption require new ways and forms of regulation of the environmental and food safety risks involved. These new regulatory regimes can not be well understood without a consistent analysis of the principal societal change over the last decades, globalisation.

3. Social theories of globalisation and regulation of food.

During the last fifteen years many social scientists have attempted to make sense of the process of globalisation considered the principal characteristic of society at the beginning of the 21st century. The different theoretical views can be regrouped in different ways depending on the purpose of the overview. In this paper I will review different theories on globalisation with the intention of developing analytical instruments to understand the regulation of food. Although not all theorists have explicitly paid attention to the regulating of food, I will nevertheless attempt to link all different general theoretical views with the specific consequences for the regulation of food.

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Based on the classification by Held et al. (1999), I make a distinction between ‘hyperglobalisers’ and ‘transformationalists’. Hyperglobalisers look at globalisation as a process whereby people everywhere in the world are increasingly becoming subject to the disciplines of the global market place. Transformationalists on the contrary view globalisation as the central driving force behind the rapid social, political and economic changes that are reshaping modern society. However the direction of these changes remains uncertain, since globalisation is conceived of as an essentially contingent (and long-term) historical process replete with contradictions. Hyperglobalisers include Marxists and neo-liberals, but they all see globalisation primarily ...

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