Profiting from the crisis while food prices rise


It is widely known that energy companies have been making enormous profits since the start of the Russian war of aggression in Ukraine. Over recent months, however, there has also been much evidence of crisis profiteers in the agri-food sector, as food prices in many countries are still rising steeply. High food prices are directly contributing to a rise in poverty and food insecurity.

Auf Deutsch.


In June 2023, the non-governmental organisations IATP and GRAIN published an analysis of company reports, showing that the profits of the world's nine largest fertiliser companies increased from 28 to 49 billion US dollars in 2022, nearly doubling in comparison with the previous year. Their average profit margin was 36 percent. This means that a third of their annual turnovers remained in the companies as profit or was distributed among their shareholders. The company reports of the four largest pesticide companies show a similar picture: Bayer's agricultural division, which rumours say may be sold off, increased its earnings by 82 percent compared to the previous year; in 2022, the profit margin of Bayer CropScience climbed to 27.3 percent. This spring, 2.3 billion euros were paid out to Bayer shareholders. The earnings for the “Agricultural Solutions” division of BASF in 2022 were up 71 percent compared to the previous year and the company as a whole distributed three billion euros to its shareholders. The net income of the Chinese Syngenta group increased by 32 percent and Corteva Agriscience, the world number four in the pesticide sector, saw a 25 percent increase, with a profit margin of 18.5 percent in 2022.

How have these enormous profit increases come about, when the European chemical industry in particular has been severely affected by oil and gas price increases? Even though there were steep increases in (fossil) fuel prices in the first half of 2022, the high prices for fertiliser and pesticides on the global market more than compensated for increased production costs. Nitrogen fertilisers in particular, which are especially energy-intensive to produce, became steadily more expensive from the start of 2021, and reached a record high in April 2022. Herbicide prices rose by 25 percent in Germany in the course of 2022, benefiting Bayer and BASF, who market two best-selling hazardous substances: glyphosate and glufosinate.

Profits for the fertiliser and pesticide industry are no exception. In recent months, there has been strong evidence that in the German and European agri-food sector, not just the chemical industry and the grain trade, but also retailers and food manufacturers have profited enormously from the crisis and exploited general price increases to further increase their earnings. A study by two competition economists comes to the conclusion that in Germany about a third of the food price increases in recent years could be traced back to the market concentration in retail. This is because four supermarket chains still control 85 percent of the German market, giving them a strong influence on pricing. At the same time, analysis from Allianz Trade from April this year shows that recently, food manufacturers in Europe have increased their prices much more than retail, so ten percent of the food price increases in Europe (or as much as a third in Germany) since the middle of last year cannot be explained by increased producer and energy prices, the classic drivers of inflation.

There is increasing support for the explanation that (food) inflation in Europe is due to the structures and behaviour of the leading actors in the market. At liberal economic institutions, like the International Monetary Fund (IMF) and the European Central Bank there are also more voices attributing a central role in price rises to company profits – in the agri-food sector, among others. An IMF analysis published in June comes to the conclusion that company profits were ultimately responsible for 45 percent of inflation in the Euro Zone, compared to 25 percent that could be attributed to wage increases. ECB board member Fabio Panetta also recently spoke about a profit-price spiral and ECB President Christine Lagarde said that company profits were responsible for as much as two thirds of inflation in Europe in 2022. According to the IMF, there were particularly high earnings in the mining sector, among utilities, and in agriculture and construction.

Persistently high food prices in Germany and across Europe are not a naturally occurring phenomenon, but could rather be stabilised through appropriate political regulation to limit the power of the market and windfall profits. This is urgently needed, as the current price rises are having devastating consequences for millions of people affected by poverty and social exclusion. In the EU, there were over 95 million people in this situation in 2022, representing 21.6 per cent of the EU population. Many people are trying to “optimise” the food they buy with their available income. This is often at the expense of balance and (micro)nutrients – particularly where no high-quality communal catering is provided, e.g. in canteens. This has a drastic effect: It has been observed that infants from households affected by poverty are not getting enough important micronutrients, such as iron, zinc and iodine, and this has a proven link to growth disorders.

Looking beyond Europe, the price changes on the markets and the profits of agribusinesses, mostly with headquarters in the Global North, are having dramatic consequences. Small-scale farmers with little capital, who may have become dependent on state subsidy programmes in various African countries for purchasing of seed, pesticides, and fertilisers, are particularly severely affected by the price increases for these inputs. With reference to global food price rises, in June, the World Bank said that food prices remained high in many countries although grain and oilseed prices had dropped on the world market. The countries with the highest food inflation this year are Lebanon (81 percent), Venezuela (35 percent), Zimbabwe (30.5 percent), Egypt (27 percent) and Iran (23 percent). In addition to further destabilising economic factors, dependency on food imports was a key factor for these countries.

These figures clearly show that a loss in purchasing power for some (producers, workers, and end consumers) means profits for others, namely the companies that dominate the market in the agri-food sector. The demand for good food for all can only be met if, firstly, dependency on pesticides, fertilisers, and food imports is eliminated; secondly, prices for these inputs and for agricultural raw materials are stabilised; and thirdly, profits are redistributed systematically throughout the agricultural supply chain. Political responses to the global food crisis should focus on these three points.


This article was first published in German on