Record grain company profits amid food crisis prompt call for windfall tax

Companies at the center of the global grain trade have enjoyed a record windfall amid soaring food prices around the world, sparking concerns over profit and speculation over global food markets that could put staple foods out of reach of the poorest, and prompting calls for a windfall tax.

The world's four major grain traders, who have dominated the global grain market for decades, have recorded or near-record profits or sales. They predict that demand will exceed supply at least until 2024, which should lead to even higher sales and profits over the next two years.

The Food prices have jumped more than 20% this year, according to the Food and Agriculture Organization of the United Nations. About 345 million people suffer from acute food insecurity, according to the World Food Programme, compared to 135 million before the Covid-19 pandemic.

Olivier De Schutter, co-president of the IPES-Food (the International Panel of Experts on Sustainable Food Systems) and UN Special Rapporteur on extreme poverty and human rights, said: "The fact that the world's commodity giants are realizing record profits at a time of rising hunger is clearly unfair, and a terrible indictment of our food systems. Worse still, these companies could have done more to prevent the hunger crisis in the first place. »

Four companies – Archer-Daniels-Midland Company, Bunge, Cargill and Louis Dreyfus, collectively known as ABCD, control approximately 70-90% of world trade cereals. "Global grain markets are even more concentrated than energy markets and even less transparent, so there is huge profit risk," De Schutter said.

He said this year's food prices surge came despite what are believed to be ample global grain supplies, but there was not enough transparency from companies to show how much grain they were holding and no way to force them to release stocks in a timely manner.

"We have to look at the grain giants and ask ourselves what they could have done to avoid the crisis, and what they could do now," said De Schutter.

Cargill announced a 23% increase in revenue to hit a record $165bn (£140bn) for the financial year ending May 31, while Arch er-Daniels-Midland achieved the highest profits in its history during the second quarter of the year.

Bunge's sales jumped 17% year-over-year in the second quarter, although its profits were hit by charges. Louis Dreyfus said 2021 profits were up more than 80% from a year earlier, with revenue rising nearly a quarter to $1.62 billion.

John Rogers, an analyst at credit rating service Moody's, said it was no surprise that supply constraints and the rebound in demand had driven up food prices and led to higher profits. "I don't think they're colluding for outsized profits," he said, adding that many other companies were also grabbing a growing share of global grain markets. "I don't think they're acting immorally - they're not intentionally driving up prices." -spacefinder-type="model.dotcomrendering.pageElements.ImageBlockElement" class="dcr-10khgmf">