Putting Globalization and Concentration in the Agri-food Sector into Context

Current Agriculture, Food & Resource Issues

and five meat-processing acquisitions in the 1996-2000 period, but divested two milling
companies, one in Canada and one in Belize to ADM. Large multinational corporations
are only interested in markets above certain size thresholds. “Whenever that consolidation
occurs it spins off a whole bunch of small and medium sized companies or entrepreneurs
who get into the business and start to find a niche.”³

Spin-offs may also result from government intervention due to concerns over loss of
competition. FTC approval of the Albertson’s-American merger in the United States
required the sale of 140 stores in 57 cities (Kaufman, 2000).

Convergence brings competitors into the field.

In some cases, powerful new competitors enter a business as a result of convergence,
the process whereby distinctions between traditional business lines become blurred. The
Time Warner/AOL merger is the highest profile example of convergence, as the
distinctions between entertainment and the Internet disappear. The food industry is replete
with examples of convergence, particularly at the retail level. Wal-Mart’s entry into the
food retail business has been accomplished by adding food retail to existing retail
operations. Building on its relations with customers through consumer products Wal-

Figure 9 Distribution of reported transaction value in Canadian agri-food sector from
1996-2000 (millions of Cdn.$)

Source: Annual Directory of Mergers and Acquisitions in Canada, 1996-2000

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