Food supplies in a globalising economy
The role of transnational corporations
(TNCs) in food production, processing and
distribution
Learning objectives
• To understand the role of TNCs in food production,
processing and distribution.
What is a TNC? Write down the correct
definition…
A TNC is a company or
corporation with branches all
over the world. The
Headquarters can be based
anywhere in the world but
production tends to be based
in newly industrialising
countries due to the strong
work ethic.
A TNC is a company or corporation
which employs over 5000 people.
The headquarters and production
are concentrated in MEDCs where
there are more skilled workers
and better communications
available. However their products
are transported to markets all
over the world.
A TNC is a global company or corporation with branches all over the
world. The Headquarters and research and development tend to be
based in MEDCs such as the USA or Japan where there is a skilled
workforce. Production is often, but not always, based in LEDCs where
labour is cheaper and there are fewer regulations.
The role of TNCs
A TNC is a company or an enterprise that manages
production or delivers services in more than one country.
Headquarters tend to be located in the home country with
operations in several other countries, known as host
countries.
What has this got to do
with food supply?
TNCs are involved in
every stage of the food
industry!
Recognise these?
Behind the many different
brands names for foods that are
consumed worldwide, there are a
small number of invisible giants!
Key term: Agribusiness
This is a generic term that refers to the various
businesses involved in food production.
E.g. farming, seed supply, agrichemicals, farm machinery,
wholesale and distribution, processing, marketing and sales.
A small number of such
companies dominate each part of
the food chain in MEDCs.
Key term: Horizontal integration
This is when a small number of firms operate at one stage
in the supply chain (e.g. coffee growing), leading to market
power and large profits.
Look at the case study box on
page 233. What does it show?
Fact! 60% of the
McDonald’s meals
eaten worldwide
contain wheat
supplied by Cargill.
Key term: Vertical integration
This is when one company either owns or controls
(through joint ventures) multiple stages in a supply
chain.
For example, Dole owns
plantations and canning facilities,
and has the marketing power to
ship pineapples from plantations
in the Philippines to consumers
all over the world.
Corporate control of the global food chain
The role of large
agribusinesses in the
agricultural market is
increasing! This dominance
has attracted huge
criticism.
Task 1: Nestle fact sheet
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Where does it originate from?
What type of company is it?
What does it produce?
What is its annual turnover?
How many people does it employ?
How many countries does it operate in?
Where does it resource its products from?
Why is the company often criticised?
What else can you find out?
Or…
Task 2: Why is has Nestle received so much
criticism?
1. You have been given some
information on Nestle. Use this
information to write a report
to show the criticisms of
Nestle under the headings:
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Social
Political
Economic
Environmental
Write in detail! You will be using
this information to answer exam
questions.
2. Do your own
research to find
out current
criticisms of
Nestle’s practices.
Add these notes to
your table.