Food & Power: The Month In Review
from the Food & Power newsletter
Amazon to Buy Whole Foods
Amazon shocked many in the food world with news two weeks ago that it plans to buy the grocery retailer Whole Foods for $13.7 billion. The news amplified concerns about Amazon’s size and growth, leading many to call for antitrust scrutiny of the deal. The deal will likely be reviewed by the Federal Trade Commission.
Whole Foods has been struggling to address falling sales and consumers’ continued complaints that the retailer’s prices are too high. Earlier this year, as we reported, the company quietly moved away from its distinctive decentralized purchasing model, which allowed its stores to offer smaller regional brands, to a more typical centralized model. Then in April, Jana Partners, an activist investor, took a nearly 9% stake in the company, and began to push for more big changes or even a sale.
Amazon has for some time made clear that it wanted to invest in food retail. Apart from launching its online food shopping and delivery service, Amazon Fresh, the company had already begun moving into brick-and-mortar grocery with its own stores in Seattle. And as we reported, they also sought licenses for liquor stores in Columbus and Cincinnati, Ohio.
Critics of the deal expressed concern that the purchase will further solidify Amazon’s already enormous market power. And Amazon’s move into online and brick-and-mortar grocery retail could edge out supermarket chains and local retailers, leaving consumers with fewer grocery options.
USDA Halts Brazilian Beef Imports
The US Department of Agriculture last week announced it would halt imports of fresh beef from Brazil. The announcement comes after ranchers, members of Congress, and advocacy groups had called for halting Brazilian beef imports. The meatpacking industry in Brazil is implicated in a massive corruption scandal, part of which involves contamination in the country’s beef supply. The Brazilian company JBS, the largest meat company in the world, is at the center of the scandal.
In the spring, several countries temporarily halted Brazilian beef imports due to concerns about contamination. Several Brazilian beef processing plants were temporarily closed in March as the extent of the contamination scandal was investigated. As we reported at the time, the USDA did not initially heed consumers’, producers’, and Congress’s concerns about continuing to import Brazilian beef. Indeed, in March JBS acquired a U.S. ham and bacon producer, Plumrose USA.
Since March, the USDA reported that it rejected 11% of Brazilian beef imports due to food safety concerns. The USDA rejects on average about 1% of food imports.
Earlier this month, amid months of turmoil, JBS announced it would sell $1.8 billion of its assets, including Ireland’s poultry company Moy Park and North America’s Five Rivers Cattle Feeding. Five Rivers mostly operates in the U.S., and feeds 980,000 cattle per year. The company bought Moy Park just two years ago from another Brazilian company, Marfrig Global Foods SA.
Dow and DuPont Receive U.S. Approval to Merge
The Department of Justice’s Antitrust Division approved the merger of Dow Chemical and DuPont, two of the largest agrochemical companies in the world, in a $130 billion deal.
The merger is one of three major proposed deals in the global agrochemical and seed sector. Germany’s Bayer has bid to acquire Monsanto for $66 billion, and the Chinese company ChemChina in April received approval from the Federal Trade Commission to acquire the Swiss giant Syngenta for $43 billion. Many prominent agricultural leaders have voiced opposition to these mergers, concerned that continued consolidation in the seed and agrochemical market would reduce options and raise prices for farmers.
Both Dow and Dupont must make some divestitures, which was a condition of the European Union’s approval of the merger in March approval. DuPont’s divestitures include part of its pesticide portfolio, and Dow’s include two plants that produce acid co-polymers, which are used to make food packaging.
What We’re Writing
Leah Douglas wrote a feature for The Nation, in collaboration with the Food and Environment Reporting Network, tracking the causes of dramatic land loss among black landowners in the Southeast. The story follows one family in Hilton Head, South Carolina as they fight to preserve their land and their family legacy.