A/HRC/13/33 importance, often imposed through codes of conduct adopted by retailers.13 Vertical integration has increased, with wholesalers and retailers seeking to secure stability of supply by the use of explicit contracts (long-term arrangements with producers) or techniques such as preferred supplier lists. Procurement is increasingly centralized, as the procurement shed (the area from which companies source) expands from the national to the regional and thence to global networks. 8. As a result of these developments, concentration in the food production and distribution chains has been significantly increasing over the past years.14 The resulting market structure gives buyers considerable bargaining strength over their suppliers, with potentially severe implications for the welfare both of producers and consumers. Current measures adopted to encourage companies to act responsibly are unable to tackle this structural dimension.15 Concentration in buying markets is particularly worrying, and even more so than concentration in selling markets, because dominance in buying markets can be achieved with a relatively small market share; for instance, the United Kingdom Groceries Market Investigation concluded in 2000 that retail grocers with as little as 8 per cent of the total retail market have substantial buyer power over sellers.16 9. Due to the deeply unequal bargaining positions of food producers and consumers on the one hand, and buyers and retailers on the other hand, the latter can continue to pay relatively low prices for crops even when the prices increase on regional or international markets, and they can continue to charge high prices to consumers even though prices fall on these markets. Thus, one main reason why prices in developing countries have remained high despite the bursting of the bubble in the commodities markets in July 2008 — in a number of countries, prices were higher in July 2009 than they were a year earlier17 — is because of the dominant position of certain traders in these countries. These imbalances of power in the food systems must be corrected. The Special Rapporteur is convinced that the relationships between the actors concerned cannot any longer be based solely on their relative bargaining strength. Instead, they must be collaborative, and based on other modes of communication than price signals. 13 14 15 16 17 GE.09-17776 S. Ponte, Standards, Trade and Equity: Lessons from the Speciality Coffee Industry, Centre for Development Research (Copenhagen, 2002). For example, in the Brazilian soybean market there are roughly 200,000 farmers attempting to sell to five main commodity traders; three large transnational commodity buyers (ADM, Cargill, and Barry Callebaut) dominate the Ivorian cocoa industry. Food processors sometimes also achieve the same degree of concentration: in 1996, two transnational food and beverage companies, Nestlé and Parmalat, shared 53 per cent of the Brazilian dairy processing market, driving off a large number of cooperatives who were led to sell their facilities to these companies. For these and other examples, see Peter Gibbon, The Commodity Question: New Thinking on Old Problems, United Nations Development Programme, Human Development Report Office, occasional paper, 2005/13; Bill Vorley, Food Inc.: Corporate Concentration from Farm to Consumer, United Kingdom Food Group, 2003, available at http://www.ukfg.org.uk/docs/UKFG-Foodinc-Nov03.pdf; Mary Hendrickson and others, The Global Food System and Nodes of Power, 2008, available at SSRN: http://ssrn.com/ abstract=1337273; Molly Anderson, A Question of Governance: To Protect Agribusiness Profits or the Right to Food?, Agribusiness Action Initiatives, 2009; I. Sheldon and R. Sperling, “Estimating the extent of imperfect competition in the food industry: what have we learned?”, Journal of Agricultural Economics, vol. 54, No. 1 (2003), p. 89. For example, the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises have no provision on fair prices to be paid to producers, nor on a living wage for workers. Competition Commission, Supermarkets: A Report on the Supply of Groceries from Multiple Stores in the United Kingdom, 2000. See A/HRC/12/31, para. 5; and FEWSNET (Famine Early Warning Network), USAID, October 2009, Price Watch: Urban Food Markets, available at http://www.fews.net. 5