Identifying False Economies of Scale

Identifying False Economies of Scale

UK and global food systems have come to be dominated by large corporations. In almost every sector, a few behemoths control a large proportion of the market, with numerous much smaller businesses operating alongside them and accounting for much less of the trade. Why? Economic orthodoxy teaches that scaling up is a route to reduced financial costs, improved efficiency and greater profitability. It enables businesses to benefit from ‘economies of scale’. Consequently, the big get bigger, and the small often get swallowed up in the process.

But is this inevitable? Or is scaling up a kind of conveyor belt, driven by decisions, policies, and interests throughout the food system, that carries businesses in a certain direction because there seems to be no alternative path to profitability and credibility with investors?

And another question: is scaling up compatible with sustainability? What happens if – as many now advocate – companies are required to pay for negative environmental effects, and rewarded for enhancing biodiversity, mitigating climate impacts, providing meaningful jobs, public health and close community ties? How do you account for the fact that the industrial-scale food system produces unhealthy foods that are cheap, while nutritious foods cost more? What if the evidence shows that continuing large-scale production from soils and oceans is, literally, unsustainable?

In this light, do those ‘economies of scale’ still stack up, or do they start to look like an obsolete objective for businesses in a sustainable food system? These are the questions we explore through our False Economies of Scale project. What are the mechanisms and policies that perpetuate the idea that scaling up is necessary and desirable? In what ways do small-scale food businesses outperform their giant rivals on sustainability criteria? How can this be made visible – how can we make the case that big is not necessarily better, and may on many measures be worse?

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