As people across the UK are struggling to make ends meet, it isn’t only energy companies that are raking in astronomical profits. The top four grain producers, too, have been earning record profits among growing concerns about price speculation and profiteering. This has prompted calls for a windfall tax. With food prices on the rise and rise, millions of people across the UK are facing a winter of escalating energy and food prices. Thinktank, The Resolution Foundation, has warned that millions are facing dire poverty far beyond this coming winter. In its report, the organisation estimates that the number of people living in absolute poverty across Britain will rise from 11 to 14 million.
The global grain supply shortage is set to continue, leading to record profits for the four main grain producers. Over the past four decades, four grain-trading companies have dominated the global market.
This year, food prices have increased by 20 per cent leading to a sharp increase in the number of people living with food insecurity. According to UN Food and Agriculture Organisation statistics, pre-pandemic, 135 million people faced food poverty. As of today, this figure lies at 345 million.
IPES-Food (the International Panel of Experts on Sustainable Food Systems), Olivier De Schutter, said:
“The fact that global commodity giants are making record profits at a time when hunger is rising is clearly unjust, and is a terrible indictment of our food systems. What’s even worse, these companies could have done more to prevent the hunger crisis in the first place.”
“Global grain markets are even more concentrated than energy markets and even less transparent, so there is a huge risk of profiteering.”
Known as ABCD, the four grain traders, the Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus, control between 70 and 90 per cent of the grain trade across the world.
Schutter believes that there are plenty of grain stocks available across the globe to feed everyone but no way to compel the traders to reveal stock levels, indicate how much stock they are holding or force them to release additional supplies.
Archer-Daniels-Midlands recorded its highest ever profits for the second quarter of this year, while Cargill saw a 23 per cent surge, recording profits of £140 billion for the first five months of this year. Year-on-year second-quarter profits at Bunge profits rose by 17 per cent within the year. And Louis Dreyfus increased its profits by 80 cents in 2021 in comparison to the previous year.
While some experts do not believe that the companies are increasing prices, unpublished NGO reports seen by the Guardian suggest otherwise. The NGO analysis indicates a 0.81 per cent profit margin increase by Archers-Daniels-Midland and a 0.7 per cent increase in Cargill’s profit margin.
Charities including Oxfam are calling on the government to impose a windfall tax. Senior adviser, Alex Maitland, told the Guardian:
“There are fears that speculation could be a driver in food price rises. Anything that causes hunger and starvation is immoral.”
Think tank, Resolution Foundation warns that millions will plunge into poverty
The Resolution Foundation has called on the new Prime Minister to take swift action, estimating that a further three million Britains will face absolute poverty. In its report, the think tank predicts a 10 per cent fall in household incomes between this year and next. This means that unless economic forecasts or government policies change drastically, 14 million people across the UK will experience absolute poverty in 2023-2024.
In the face of a “highly uncertain” economic outlook, the think tank fears that the “living standards catastrophe”, millions of people will come to experience, will demand significant intervention and support from the incoming PM.
Additional help with energy bills, benefit and Universal Credit increases could serve to mitigate the situation. However, the Resolution Foundation believes that a new economic strategy is required to improve the economic outlook.
Speaking on behalf of the organisation, researcher Lalitha Try, said:
“Typical households are on course to see their real incomes fall by £3,000 over the next two years – the biggest squeeze in at least a century – while three million extra people could fall into absolute poverty.
“No responsible government could accept such an outlook, so radical policy action is required to address it. We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October’s inflation rate.
“The new Prime Minister also needs to improve Britain’s longer-term outlook, which can only be achieved by a new economic strategy that delivers higher productivity and strong growth.”
With the Tory leadership race set to come to an end next week, a government spokesperson said:
“We are making necessary preparations to ensure a new government will have options to deliver additional support as quickly as possible.”