Wednesday, December 29, 2004

Supermarkets and Globalization

The New York Times publishes a detailed article on December 28 titled Survival of the Biggest: Supermarket Giants Crush Central American Farmers. The story details another aspect of globalization and its impact on the developing economies in Central America.

The article reports on the arrival and dramatic growth in Central America of large supermarkets run by Wal-Mart and other multi-nationals. The very large multi-national supermarket chains "crush" small, local growers. The modern supermarkets begin to squeeze out the traditional markets where local farmers would sell their produce. But selling to these supermarket chains is a great challenge for the small local farmer. The chains have the clout and purchasing network to buy produce and foodstuffs from all across the world. They thus force the local farmer to compete with producers on a global basis.

The destruction of the small local farm has severe social consequences for the affected countries. When local farmers cannot earn enough income selling their crops to survive, they may leave their farms and move to the cities looking for work, increasing levels of urban poverty. Others may join the flow of illegal immigration north towards the United States. Agriculture then becomes the province of those businesses and farmers with sufficient financial resources. Their capital is needed to invest in machinery and fertilizers necessary to produce at the quality and price demanded by the multinational supermarket chains. The disparity between rich and poor becomes exacerbated.

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