Cashing in on chips


Cashing in on chips

By Tom Kelly

In its path from Australia's 130,000 farmers to 17 million consumers, our food passes through around 30 major processing companies, involving 3500 individual factories, to only four supermarket chains. This degree of concentration is found nowhere else in the world.

In any given food sector there are often only two or three major competing companies, and rarely more than four. In 39 sectors, one company controls more than half the market. This concentration gives manufacturers and retailers immense power, particularly over small farmers, who are frequently locked into contracts to supply their product to one or more of a small number of processing companies.

A telling example of this power is found in the potato industry. About 13,000 potato growers depend on four processing companies — Pepsico and Coca-Cola, which produce crisps, and McCains and Pacific Dunlop, which produce chips. Other potato products are generally by-products from the waste streams of chip and crisp production.

Fast-food chains demand chips that are long and thin, since this allows them to fill a paper cup using 25% less potato. In order to meet this demand, growers are encouraged to grow large, oval-shaped potatoes. The type of potato that meets this criterion is a slow-growing variety that requires a lot of attention from the farmer. It also requires more water and more pesticide than other varieties.

Thus the profit motive leads fast-food chains to demand a potato that has a greater impact on the environment. It puts an increased load on the grower, taking more time and more effort to grow. (Potato growers' spouses even complain that they see their partners less because of the demands of the fast-food chains.) And all this is in order to ensure that consumers get 25% less chips for their money.

Such are the workings of our economic system, which supposedly responds to consumer demand. Clearly consumers aren't demanding environmental damage and disruption to growers' lives in order to get less chips for their money.