THE MARKET FORCES

BY STEPHEN JOHNS—PA The Tories like to portray the food industry as a competitive jungle where prices glide up and down propelled by mysterious market forces over which manufacturers have no control.

But there is no jungle and certainly no mysterious market forces. The entire industry from farm to shop is dominated by huge monopolies who have abolished price competition in favour of massive advertising campaigns and promotion gimmicks.

Supermarkets may give impression bewildering variety. But beneath the gay wrapping food 1S becoming standardized and real choice ever more restricted.

The multitude of brand names does not mean more competition-the top selling commodities are owned by a tiny handful of food giants.

Monopoly is universal. Three firms control 70 per cent of the milk product; four firms own 78 per cent of the bread market; three firms 60 per cent of cakes; two 62 per cent of biscuits; two 75 per cent of ice cream; three 72 per cent of chocolate; two 72 per cent of jam; three 100 per cent of sugar; two 100 per cent margarine; three 72 per cent of tea; three 90 per cent of all frozen foods; two 55 per cent I poultry; three 70 per cen f baked beans; one 60 per cent of soup; one 60 per cent of all pet foods-and so on.

Often the same firm monopolizes several fields. Hence Cadbury Schweppes dominates in cakes, chocolate and tea, Heinz in beans, soup and sauce and Unilever margarine, detergents and frozen foods.

In some cases the food manufacturers have extended the empires forward into the monolith owned by the Canadian Garfield Weston family, runs Fine Fare, the multiple grocery chain, an annual turnover of £147m.

In other cases the retail giants have reached backwards -the fast rising Cavenhams group, now the largest supermarket chain has the major share of the slimming breads market.

Even the farmers are caught in the monopolist net. In the cash crop sector concentration is high.

In 1969, 18.8 per cent of farmers grew 86.6 per cent of the pea crop and 3.5 per cent grew 37.7 per cent.

Over 88.4 per cent of the pea crop, 96.4 per cent of the French bean crop and 64.4 per cent of the broad bean crop went straight into the manufacturers' factories.

Two or three manufacturers dominate these fields, with Unilever, which owns Batchelor's; and Bird's Eye, far and away the largest.

The economic relationship between the manufacturer and the farmer was described in a special paper on the British vegetable market published in May 1970 by W. L. Hinton of the Land Economics Department of Cambridge University.

'The process for canning and freezing is well established,' he wrote. For peas and beans (and to an extent for carrots) the processor [manufacturer' controls the production of the crop. Contracts are made and the price is known before the planting . . . a few groups of farmers have freezing facilities, but the big three Bird's Eye, Imperial Tobacco [Ross and Smedleys the backbone of IMPs' Imperial Foods] and Findus dominate the field.

'The carrot crop is different. Over 80,000ha and the 120,000ha are under the control of grower-merchants who have contracts with the processors in advance and often informal agreements with the farmers.

It is common for the merchant to take over the carrot land from the farmer for ploughing, but wherever merchant operates he does the harvesting. The carrot merchant supplies most of the biggest market outlets, the open market as well, and most of the markets for canning.' Clearly the farmer in Britain's richest cash-crop is little more than an employee of the big firms. They supply the seed, fix the price (in the case of Unilever supply all the animal feedstuffs) and guarantee to buy his whole crop. He can, of course, choose not to co-operate, but the choice is Hobson's choice-grow our peas or go bankrupt.

The scramble for monopoly of course, is a general law of capitalist society. Firms must expand and expand to bear the weight of enormous promotion expenditures to wipe out potential competition and to secure markets and supplies.

With size comes the power of the monarch In a 1963 interview Lord Cole, then the head of Unilever listed the decisions taken at the top -'Should we expand output of this product? Should we shut this place down here? Should we build a new plant there? Should we try to buy this company? Should we move into competition with that company? Move into this market or out of that market'. With size comes the power of the absolute monarch.

It is beyond the scope of these articles to cover the whole of the food industry. But there are only minor dif ferences in character between one sector and another. One example—bread—will give a fairly accurate picture of the pattern of ownership and control that pervades the whole field of food.

The bread and baking industry is a classic case of big monopolies racing forward into the market to secure outlets for their supplies.

At the end of the war the big millers were in a comfortable and commanding position, facing thousands of bakeries— some attached to a small shop. But in the 1950s, Garfield Weston, the Canadian food millionaire, invaded and began buying up bakeries and outlets all over the country.

The British millers panicked and joined in the fight for secure markets. They merged and built up their own baking

BRUSHLESS ! PALMO

iasig (ivaw LiM5) DIGEST chun POPUL KIT-E empires. Today the once-fragmented industry is highly monopolized with the big three -Associated British Foods (Westons), Ranks Hovis McDougall and Spillers-controlling 70 per cent of all milling and baking. The result has been generally a standardization as the giants cut costs and wiped out variety.

Far from promoting competition, variety and improvement, capitalist trends in the bread industry have meant the reverse. We have dearer bread in the larder and more millions in the monopolies' bank accounts. The profit from bread is staggering, as these examples Associated British Foods (Sunblest, Tiger, Ryvita, etc.) is controlled by the Weston family through several trusts MIA MINIMUM WEIGHT 1R GI No crisperind fees frater caken BIRDS EYE 13Orz eefburgers th Cheese Were i and companies, but chiefly George Weston Holdings, which owns 74 per cent of ABF shares.

In volume ABF has 24 per cent of all British bread sales. The UK sector of the company operates 21 mills; Allied Bakeries with 52 bakeries and 2,388 shops, Weston Foods, which runs eight biscuit and crisp factories, and eight tea and coffee factories. The UK grocery sector is based on Fine Fare and its subsidiaries and runs 503 supermarkets, 577 shops, a department store and nine manufacturing units. In addition to Food Securities Group operates 56 warehouses and seven factories The trading profits (before tax and directors' fees) at £44m in 1972 are very high. Dividends to shareholders have HASI Above: who pri Porage Smedle Roses weppes Schwer Mars Cadbur British Brooke rise per bot CCS Saga f2.

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crispbread HARTLEYS FLORA MALL WHOLE eW O persil sporr MINIMUM WEIGH! 18 VANT HP BRUSHLESS SH OFF JAILSIN Make it you dailybit (SWEET AFA!) DIGESTIVE M:UITY LAY RYVITA chun naman BIRDS EYE 1 Spr POPULAR KIT-E-S colbers Фабьичу eefburgers th Cheese smash:

PALMOLIVE staed mashed pot 2to3 Above: A selection from the shopping basket; who produced it and what it all costs. Scott's Porage Oats. Ranks Hovis McDougall; Smedley's Tinned Carrots, Imperial Tobacco; Roses Lime Juice Cordial, Cadbury Schweppes; Hartley's Cherry Jam, Cadbury Schweppes; Persil, Unilever; Kit e Kat, Mars (US firm): Smash Instant Potatoes, Cadbury Schweppes; Ryvita, Associated British Foods; Pedigree Chum,_! Mars; Brooke Bond Tea, J. Lyons; Ajax, Proctor brage INTANS BIE ATLE T METR TLET Dividend and Gamble; HP Tomato Ketchup, Imperial Tobacco; Hovis, Ranks Hovis McDougall; Walls. Pork Sausages, Unilever; Flora Margarine, Unilever; Stork Margarine, Unilever; Birds_Eye Frozen Sprouts, Unilever; Birds Eye Beefburgers, Unilever; McVities Digestive Biscuits, United Biscuits; Palmolive Soap, Unilever; Palmolive Brushless Shaving Cream, Unilever; Total Cost February 12, 1973 £2.20}. Bought at Fine Fare Supermarket (Associated British Foods).

Above: A selection from the shopping basket; and Gamble; HP Tomato Ketchup, Imperial who produced it and what it all costs. Scott's Tobacco; Hovis, Ranks Hovis McDougall; Porage Oats. Ranks Hovis McDougall; Walls . Pork Sausages, Unilever; Flora Smedley's Tinned Carrots, Imperial Tobacco; Margarine, Unilever; Stork Margarine, UniRoses Lime Juice Cordial, Cadbury Sch- lever; Birds_Eye Frozen Sprouts, Unilever; weppes; Hartley's Cherry Jam, Cadbury Birds Eye Beefburgers, Unilever; McVities Schweppes; Persil, Unilever; Kit e Kat, Digestive Biscuits, United Biscuits; PalmMars (US_ firm): Smash Instant Potatoes, olive Soap, Unilever; Palmolive Brushless Cadbury Schweppes; Ryvita, Associated Shaving Cream, Unilever; Total Cost FebruBritish Foods; Pedigree Chum, _I Mars; ary 12, 1973 £2.20%. Bought at Fine Fare Brooke Bond T-- J. Lyons; Ajax, Proctor Supermarket (Associated British Foods)

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instant mashed potato.

2103 servin risen from 25 per cent to 39 per cent in the nine years to 1972. One thousand shares bought in 1962 would have cost £575, last year they were worth £805, a capital gain of 40 per cent and a good hedge against inflation.

£25,000 pay as chairman is just pocket money The directors of the group are well rewarded. In 197l1972 they got £81,000 between them and the chairman, Garry H. Weston, got £25,000.

But the main benefactors of the bonanza have been the Weston family which raked in the bulk of the £6.25m dividends. Garry's £25,000 pay as chairman will just be his pocket money—next time you Make it you daily butt CARROTS Dividend.

STAMPS OR GIF T eat a slice of Sunblest, think of him.

Recently Ranks Hovis McDougall complained about the high price of wheat. The firm asked the Tories to allow a 1.5p increase on the loaf. If not, it said, profits would suffer. Well RHM's returns could certainly stand quite a battering. In 1971 there was a trading profit of £32m and last year's was the largest ever.

RHM (Mother's Pride, Nimble, Scotts Porage Oats, Bisto, McDougall's flour, Hovis, Cerebos salt, etc. is the largest milling and baking combine in the land, with 25 per cent of all bread sales.

Apart from giving thousands of pounds to right-wing outfits like Aims of Industry and the red-hunters in the Economic League, RHM paid chairINTLEYS CRYERS-MARTLEY ITE. MISTE CHERRY Igna man Joseph Rank £41,000 in 1970-1971. During the same year the 61,000 employees got an average of £1,105.

A hundred shares were worth £155 ten years ago. Last year they were valued at £185, a capital gain of 32 per cent.

Spillers (Wonderloaf, Dinkum toasting bread, TyneBrand canned meats, etc. is the third big group, with 20 per cent of the market.

It recently merged its milling and baking interests with ). Lyons and the Co-operative Wholesale Society but owns 75 per cent of the merged combine.

In 1971-1972, trading rose 30 per cent to £1 5.2m. The chairman, W. M. V ernon gets £27,500 a year, but dividends from his 370,000 ordinary shares bumped his total income to around £40,000— more than the average Spiller worker earns in 30 years.

Shareholders have found Spillers a very profitable investment. One hundred share ave cost fears but are now ought ten ago would worth £73. Dividends over the eriod would have been £39 (i 64 per cent profit plus a 1' per cent capital gain).

These profits are not excep tional in the food industry. In other sectors of manufacturing, monopoly is even more concentrated and returns are greater. All the major companies have increased sales and profits over the last two These are facts the Tories never reveal. This is deliberate. If information like this was widely published the public outcry over price rises safeguard profit margins would clearly be enormous.

In the retail and wholesale sectors the trend has also been towards a greater concentration of power in few hands. Here, too, record profits are made.

The rise of the supermarket has dealt a death-blow to the corner grocer. Now he is faced with the prospect. of joining one of the main symbol group which dominate the smaller shop sector-MACE o Spar-Vivo. Membership is slightly self-defeating, since the truly independent grocer must relinquish his powers over ordering and sales inside a group.

The supermarket also had a dramatic effect on wholesaling. The smaller wholesalers were forced to to protect themselves on the one hand against the agod giantse netail other chains which could buy direct from the supplier.

As a result, wholesaling has also become monopolistic. One survey in 1970 found that 300 wholesaling points controlled trade. per the five largest 60 cent the tiples controlled another 25 per cent and the symbol groups another 10 per cent.

Monopoly in wholesaling has a strong geographical element. If those 300 outlets are spread across the country, the small retailer in annave very limited one area would choice as to where to obtain his supplies.

The decline of the small grocer can be seen from figures which show that in 1950 he traded 40 per cent of all gro. cery turnover whereas his total in 1971 has slumped to 20 per cent. In that year the symbols dealt per cent and the Co-oes 15 per cent and the per cente large myth about the supermarket is that it slashes prices. But this is only partially true.

Supermarket bills are smaller than from corner shops. But the price are not nearly as great as could be if the chains passed of large-scale retailing te the the full economic benefits consumer. There are lost leaders'-items cut specially lure the housewife into the suced retailing costs is raked back in higher profits.

Now a new trend is emerging. The first flush of theretail revolution is over. Supermarkets are setling doiwe and more comfortable life and there is less pressure to re duce prices. Some manufacturers report they are being asked by supermarket chains to increase the recommended Excluding the Co-op, the re tail empires can be judged by these turnover figures for 1971. Allied Suppliers (Maypoles, Home and Colonial, Liptons, sold last year by Unilever to Cavenhams, controlled by the financier Jimmy Gold smith) £269m; Tesco £259m; Sainsbury £221m; Spar £175m;

Mace £150m; Fine FaTea €147m; International Tuesday February £109m; Moores (Cavenhams (Unilever) 340m. Mac Fisheries The housewives have less and less choice. The groups get a greater and greater grip of the High street and the shops (pork shops, butchers, bakers small the specialist in 1971, 69 percent of house wall wives shopped at stores owned by only five biggest chains." on The proportion now is almost certain be even higher.

Profits, again, are very sub stantial. Return on capital in the retail trade is even greater made profits of £11.6m in the 32 weeks to November last year. This double returns for the whole more than of 1971. The extra money came from the vast retail empire built up at break-neck speed by Jimmy Goldsmith, financier from the Slated Paris-based finance company Walker who owns called Finance Occidental. Allied suppliers, the biggest fish of all Finance Occidental bought Cavenhams—an/ ailing Mid lands grocery group -and used it as a shell for future operations. Goldsmith added Moores Stores in a £lm cash and shares deal, but sold Moore's biscuit interests to the monopoly United Biscuits for £4m Then Goldsmith swallowed the biggest fish of all—Allied Sup pliers, the Unilever retail empire bought in January 1971.

Goldsmith did a revaluation to bolster the balance-sheet by millions and went into partnership with the Southland Corporation, the biggest Ame rican store group, which got share of his newsagents, tobacconists and Moores stores (millions more in the kitty).

The breathless pace of Goldsmith's operations exudes from the latest Cavenhams report. Goldsmith said the company's tasks fell into four categories.

*(1) Integrate recentlyacquired companies so as to organize benefits. (2) Las down the foundations for maintaining substantial organic growth throughout the group as a whole. (3) Dispose of all assets and activities that are incompatible with these objectives. (4) Re-invest the total cash funds that we will receive in the course of the current year in a way that will contri bute to a major phase of deve lopment.' The mare profit The fact always more profit. country's major outlet for food that Cavenhams provides the by which people live is sec. ondary.

The aim of this article has been to show the highly-monopolistic nature of the food in dustry. A conclusion that can almost immediately be drawn is that a relatively small num ber of individuals who lead the major food combines do have the power to control prices. We repeat, there are hidden, unstoppable mar ket forces that guide the pric of food Another obvious conclusion is that monopoly in food has unlocked the door vast wealth for a food companies about pressure on margins is a charade. Profit in food is very substantial and keeps on going "There is, however of much more serious aspect poly. The development in food of mammoth combines has led to the elimination competition and a freak deve lopment of promotion and advertising Expenditures in these fields are almost entirely parasitic, adding little value to the commodity in question. We exam ine the human waste cause b! monopoly in food in tomorrow's article.

CONTINUED

But in July 171, when the weekly 'El Rad cal' attempted to publish the names of the military chiefs behind the smuggling of heroin from Paraguay to the United States, the edition was seized by the police and Chief of Police General Britez threatened editor Juan Carlos Zaldiver with death if he tried such a thing again.

But in June last year Washington columnist Jack Anderson revealed the contents of a CIA report which proved that Stroessner granted 'concessions' on heroin smuggling to military leaders.

Left: Stroessner of Paraguay with Lanusse (left) of Argentina. Above: Jack Anderson, Washington columnist.

The men named were General Andres Rodriguez, General Patricio Colman, General German Martinez Jara and RearAdmiral Hugo Gonzalez.

All the foreign Press agencies in Paraguay are controlled by men who are either high-ranking Colorados or personal friends of President Stroessner. Reuter has N. Rojas, EFE has Atilio Fernandez, France Press has Caceres Almada.

When information prejudicial to the government is sent by telex, the state communications organization (ANTELCO) refuses to transmit it.

The legal system is also controlled by Colorados. The head of the Supreme Court, Dr Morales, and three of its six members are active leaders of the Colorado Party.

Only two political prisoners in Paraguay have ever been tried. But even in these cases the veneer of justice was thin.