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

Current Agriculture, Food & Resource Issues

Business is becoming more global and trade more important.

Since World War II, the proportion of global income accounted for by trade has
increased from 7 percent to 21 percent (Ireland and Hitt, 1999). The number of
transnational corporations has increased from 7,000 in 1970 to 53,600 in 1998, controlling
449,000 subsidiaries (French, 2000). The importance of trade is continually increasing. In
Canada, trade accounts for Cdn. $410 billion in goods and services, 43 percent of GDP.
Of that, agri-food trade accounted for $23.1 billion in 2000, with an agri-food trade
surplus of approximately $5.7 billion (figure 3). While the overall trade numbers increase
over the period 1993-2000, analysis of the composition of that trade (figure 4) reveals a
dramatic shift from bulk and intermediate goods to consumer goods.

Merger and acquisition activity is increasing.

There were more than 28,000 mergers worldwide in 1999, up almost one-third from
1998, with a total value almost six times the value of 1994 transactions. Food industry
mergers and acquisitions in the United States have been increasing (figure 5). In Canada
the trend is less obvious for food processing (figure 6).

The activity in the agribusiness sector is large, but not when compared to that in
sectors like information/communication technology. In 1999, the total value of mergers in
the EU reached US $1.5 trillion, up more than 50 percent from 1998. General Electric, for
example, was absorbing companies at an incredible rate, purchasing 134 companies for a
combined total of $17 billion in 1999 alone. In 2000, GE announced the $45 billion

Figure 5 Number of U.S. food industry mergers and acquisitions, 1993-1999

Source: The Food Institute, July 3, 2000 (excludes farms)

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