The tangible and intangible spaces of agro-food capital

8/13/2019 The tangible and intangible spaces of agro-food capital

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The tangible and intangible spaces of agro-food capital

Paper presented at the International Rural Sociology Association World

Congress X, Rio de Janeiro, Brazil, July 2000

Bill Pritchard

Division of Geography

School of Geosciences

University of Sydney

[email protected]

Introduction

How do you invest in a world thats always changing?By buying the companies that are changing the world

Front cover message on BT Funds Management Prospectus, 10 March, 2000

The dawning of the new millennium has encouraged the construction of a newdualism in global economic discourse. There is a so-called new economy and a so-called old economy. Consistent with the hyper-volatility of contemporary financialmarkets, the new and old economies swung wildly in and out of favour during thefirst year of the new millennium, as if the global economy was unsure to whichdiscursive century it belonged.

According to this dualism, old economy companies are place-rooted, involved withthe production of physical commodities, and inhabited by businessmen and womenwearing suits. New economy companies are nimble, concerned with the productionof knowledge, and inhabited by (what are affectionately termed) geeks. Of coursethe concept of a clean break between old and new economic systems, comingconveniently at the juncture of a new century, is a massive simplification ofcontemporary political economy. To some extent, economics is being confused withculture and business attire, for the sake of a neat label. Yet there is no denying thehuge amounts of wealth being sucked into the new economy, even if much of it hasan ephemeral life for individual investors. This is a real economic phenomenon, as

anyone would observe who has recently traveled to Silicon Valley, Hyderabad, thenorth shore of Sydney, or any of the other hubs of this economy.

Moreover, and this is the central point of this paper, these developments are central tothe contemporary analysis of transnational agro-food corporations. The current era,defined here as being the period since the collapse of Soviet Communism, has beenwitness to waves of crisis for these entities. Sets of changes emanating from bothinside and outside the global agro-food system have imperiled the futures ofcompanies that, only a few years previous, were considered blue chip. The case ofKellogg illustrates the point. In the early 1990s Kellogg accounted for almost half ofthe worlds breakfast cereal production. It was undisputed market leader, was able tolevy a hefty profit margin on its products, and for the previous fifty years hadexperienced steady annual growth in demand. Yet in the 1990s these conditionschanged radically. Demand for breakfast cereals fell in the companys core North


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American markets, and to add further consternation, private label producers attackedthe companys market share. Kellogg was forced to cut prices over 1996 and 1997,reducing operating margins by 50%. To salvage a lagging stock price, KelloggsBoard of Directors ordered the repurchase of US$815 million of equity in 1997-98,and the closure of four factories and the loss of over 1,200 jobs (Pritchard, 2000a). In

the space of a few years, Kelloggs had been transformed from a dependable blue chipcompany, to a company perceived to be part of the slow-growth, crisis-ridden oldeconomy.

By and large I would argue that the developments illustrated by the case of Kellogghave failed to arouse the interest of critical agro-food researchers. Despite recentattention, including a special issue of theInternational Journal of Sociology of Foodand Agriculture(1999, 8), there is no clear consensus on how to account theoreticallyfor the current strategies and structures of these entities in the global agro-foodeconomy. Two perspectives compete for focus in current debates. On the one handare accounts that are informed by the new political economy of agriculture approach

that entered agro-food studies in the 1980s. This approach was idealised famously byFriedland et al.s assertion: we will undertake an analysis of the social organizationof lettuce production in identical fashion as, for example, the making of automobiles(1981: 6). Friedlands commodity systems analysis (CSA) subsequently became a

pivotal organising framework for critical agro-food research. In a similar vein, thework of Fine (Fine and Leopold, 1993; Fine, 1994; Fine et al., 1996) adopts the

position that agro-food studies should be informed by the analysis of systems ofprovision (SOP); frameworks that link the political economies of production andconsumption. Studies using CSA and SOP approaches undeniably have generatedimportant insights into the nature of the capitalist agro-food economy, but at the sametime these approaches fail to generate explicit theorisation of the structures andstrategies of transnational agro-food capital. Rather, they serve primarily to buildunderstandings of the commodity/sectoral contexts in which transnational agro-foodcorporations operate. On the other hand is a body of literature defined by its attemptto conceptualise the world agro-food system as being constituted by sets of actornetworks. The new agenda for research charted by Arce and Marsden (1993)emphasises both the spatial connections and discontinuities that shape the socialconstruction of food, as well as the processes by which social actions are embedded inspecific places. Again, this approach has contributed greatly to our knowledges ofglobal agro-food systems but does not encourage the development of theoryconcerning transnational agro-food corporations: it serves primarily to position these

entities within their socio-spatial landscapes. Consequently, key research frameworksin contemporary agro-food studies do not provide theoretical frameworks that enablethe construction of models to account for the dynamics of strategy and structurewithin transnational agro-food corporations.

Yet the challenge of developing general theoretical insights on transnational agro-food corporations strategies and structures is an important task for contemporaryresearch. I would argue that an understanding of agro-food globalisation andemerging systems of global food regulation is incomplete without robust theorisationof how and why transnational agro-food corporations develop and deploy particularstrategies. Transnational agro-food corporations do not simply respond to market

forces that exist in a passive economic topography; they actively shape global agro-food relations. But at the same time, they cannot construct their own spatial worldsregardless of the spaces and territories in which they operate. Transnational agro-


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food corporations are simultaneously shaped by and are the shapers of, the globalagro-food system. They need to be understood in a way that is sensitive to theiragency and the uniqueness of their operating environments, yet which does notencourage genuflection to the notions of diversity and difference, and anabandonment of structural explanation. If agency matters, so does structure.

This paper develops an argument about these matters. The centrepiece of thisargument is the notion that at the present time, a particular model of transnationalcorporate activity is emerging in the global agro-food sector. This model combinesgeographically contingent production arrangements alongside an elevated, globalised,attention to the management of intangible assets and finance capital. As such,contemporary restructuring processes are simultaneously locally embedded andglobally mobile: this is a spatial dialectic central to profit strategies. Moreover, it isthis geographical simultaneity of flexibility and fixity that encourages cleavageswithin contemporary debates on the nature of transnational agro-food corporations.Different researchers identify oppositional tendencies in the strategies and structures

of these entities precisely because these oppositions are mutual components of thewhole.

The basic reason for the development of these tendencies lies with the role of financecapital. This is the primary engine of restructuring in the current phase of the globaleconomy. As McMichael observes, the contemporary era of global food restructuringis inseparable from the financial organisation of the post-Bretton Woods worldeconomic system. Releasing finance from its nationally regulated institutional formsmeans late-twentieth century capitalism is concerned less with the reproduction ofwage labour, and more with the reproduction of money (McMichael, 1999: 7). Thereis a profound disjunction between the mobility of finance capital, and the relativelymore geographically-rooted embodiments of productive capital. Although thisdisjunction is endemic within capitalism this is a pivotal argument in Harveys1982 treatise The Limits to Capital it has particular relevance to agro-foodrestructuring at the current time.

For transnational agro-food corporations, heightened global mobility of financeencourages rifts to emerge in their spatial worlds. By definition, production activitiesneed to be embedded spatially in all sorts of ways. But the financial capital generatedfrom production (i.e., profits, royalties etc) is able to transcend these spatialities.Consequently, a pre-eminent theme of contemporary global agro-food restructuring

has been the capture, management and exploitation of intangible assets brands andother trademarks, patents and corporate know-how that expedite the transformationof production capital into mobile financial capital. These assets are increasinglyorganised and managed in ways that exploit their potential geographicalfootlooseness. To put it simply, for a transnational agro-food corporation to uprootexisting production arrangements risks a loss of sunk costs, and the generalcommercial hazard associated with the development of new production arrangements.Yet the global shift (Dicken, 1998) of intangible assets is relatively cost and riskfree. Companies can internationally relocate the ownership of trademarks or patentsat the virtual stroke of a pen (or more likely keyboard terminal), actions which

potentially can affect the geographical flows of millions of dollars in royalty and

related payments, and the international payment of taxation. Accordingly, theinternational extension and mobility of brands, patents and other forms of intellectual


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property increasingly is central to the trajectories of agro-food globalisation, and theprofit strategies of transnational agro-food corporations.

The importance of intangible assets has gained little attention within the agro-foodliterature. Only recently have these issues gained the attention of scholars working in

the broad field of agro-food studies (Yenal, 1999; Pritchard, 1999; Pritchard, 2000b;Pritchard, forthcoming). This neglect perhaps reflects a tendency for researchers toconcentrate on what goes on outside the corporation (i.e., the relationships thatconnect and embed companies socio-spatially), rather than corporations internalmechanics (i.e., the arrangements that enable them to develop and exploit competitiveadvantage). Notwithstanding this neglect, it is apparent that these developmentshighlight an important new phase of the global food economy. The global expansionand mobility of intellectual property and intangible assets is helping to redefine thestructural agro-food relationships between North and South. One example sufficeshere. In 1997 the US agribusiness company Rice Tec successfully patented Indian

basmati rice. This process, which the Indian Government and Indian rice farmers

found morally objectionable, was given legitimacy by the World TradeOrganizations rules on intellectual property (Greenfield, 1998). Hence, in the worldof the early twenty first century regulatory frameworks for patents and trademarks areas powerful as trade laws or food aid in shaping structural relations in the global agro-food economy. When Indian farmers protest against the patenting of basmati rice, orwhen third world consumers take aim at McDonalds or KFC as symbols of Northernagro-food hegemony, they are targeting the private (Northern) ownership andmanipulation of intangible assets.

These developments pose important questions for transnational agro-foodcorporations. In the supposed old economy, these companies generate profitsthrough sourcing agricultural inputs and processing them in mills, canneries, freezing

plants and the like. In the new economy, agro-food corporate profits are made fromthe control and manipulation of brands, trademarks, recipes, and patents, includingnotably, the patenting of life via seed hybridisation and genetic modification. Whatwe are seeing at the moment is a series of corporate experiments in whichtransnational agro-food corporations attempt to reposition themselves in light of thesetransformations.

The paper elaborates this argument in the following way. First, it presents aframework for examining the position of intangible and tangible assets within the

organisational structures of transnational corporations (TNCs). The frameworksuggests that transnational corporate strategies are best understood as expressing aninteractive concurrence of accumulation processes, expressed through circuits of

production, realisation and reproduction. This provides an essential starting point forthe paper because it highlights the multitude of internationalisation processes that canlie at the heart of corporate strategy and structure and, as such, problematisesglobalisation discourse. Following this, the paper critically evaluates new economyclaims of the construction of so-called complex integrated corporate structures. Thisdiscussion emphasises the processes by which the ownership and management ofintangible assets generally are a key component of global economic restructuring inthe current era. This discussion sets the scene for the substantive analysis in this

paper of contemporary strategies and structures of transnational agro-foodcorporations. The spatial disjunction of production from financial capital is expressedin several dominant ways within the global agro-food system. First, it is encouraging


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the reorganisation of agro-food production at a global scale as companies seek todevelop alternatives to traditionally dominant multi-domestic productionarrangements. These processes are generating profound transformations within theglobal agro-food sector, as a case study of H.J. Heinz & Co.s Project Millenniademonstrates. However caution must be exercised in extrapolating these

developments, because of the ongoing importance of foods biophysical properties asa key agent in determining geographies of agro-food production. Second, these

processes are encouraging elevated attention by transnational agro-food corporationsto brands and marketing. Through associated restructuring of food retailing, thesefactors have become more pointed components of recent corporate strategy.Globalisation of finance, moreover, increases their potential importance to companiesas sources of profit. This discussion is grounded through reference to Nestl, whicharguably possesses the most sophisticated brand management strategy of anytransnational agro-food corporation, and Sara Lee, which since 1997 has pursued acorporate strategy centrally concerned with the management of brands and marketing.Third, a necessary accompaniment to corporate strategies relating to the ownership of

brands and the outsourcing of production is the development of non-branded foodcompanies: companies wholly or heavily reliant on contract or co-packing agreementsfor other companies. These companies construct competitive advantage from theability to generate economies of scale through volume production. Two cases fromthe processing tomato industry, the Morning Star Packing Company (California) andCedenco (Australia), exemplify these processes. Finally, these processes giveheightened importance to the capture of intellectual property relevant to theindustrialisation of agriculture. As these developments strengthen the economic roleof off-farm agribusiness inputs, there is an intensification of the importance of controlover seeds and other inputs rich in intellectual property. These points are illustratedthrough the case of Heinz Seeds, the worlds largest processing tomato seed supplier.

Developing a model to explain transnational corporate behaviour in the new

economy

The first step in developing the arguments of this paper is to articulate a frameworkthat allows us to think about what constitutes the strategies and structures oftransnational corporations. To this end I draw heavily on my recent research withBob Fagan concerning the operations of Nestl in South East Asia (Pritchard andFagan, 1999). That research was inspired by a desire to problematise the use ofglobalisation discourse in the discussion of transnational corporations. In its quest,

the research contributed to a much wider field of inquiry in social science ( inter alia,Allen and Massey, 1995; Ruigrok and Van Tulder, 1995; Hirst and Thompson, 1996;Whatmore and Thorne, 1997). Although these and other researchers problematiseglobalisation from different perspectives, their research agendas intersect broadly withthe actor-network theoretic, particularly its emphasis on the overlapping networks ofsocial action and the socio-cultural embeddedness of economic agency. As such, theycomplement other work on transnational corporations by Yeung (1994, 1998).Utilising an actor network perspective, Yeung (1994) proposes that three dimensionsof network relations exist within corporate organisations: (1) intrafirm relations; (2)interfirm relations, and (3) extrafirm relations, defined as any relationship betweenthe firm and other institutions embedded in society and space (Yeung 1994: 482).

This reinforces the point that corporate spatial strategy cannot be rendered as amonolithic whole the entry point for my earlier co-authored work (Pritchard andFagan, 1999). Alternately, transnational corporations need to be understood as being


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the constructions of an amalgam of processes operating at different scales andarticulating with different actor-networks (Yeung, 1998).

Related to these general ideas, Goodman (1997) defines corporate strategies andstructures as emanating from an interactive concurrence of accumulation processes,

each with its own spatial logics. The idea that accumulation strategies interactconcurrently explicitly rejects the privileging of globalisation as a catch-alldescription of corporate strategy and structure. It embodies a perspective oncorporate spatial behaviour that is sensitive to the nuances of territorial differentiation,while still recognising the vital significance of capitals globalising tendencies.Corporate spatial behaviour is cast in terms of a dynamic interplay of corporateorganisational agendas and profit strategies operating at different scales. Goodmanasserts that: [A]t a given spatial scale, the relative intensity or weight of theseconcurrent processes will vary, and hence the nature of territorial responses,mediation and adjustment (Goodman, 1997: 665).

Goodman explores these arguments by developing a taxonomy of four identifiableaccumulation processes, each with its own distinctive spatial dynamic:

! Internationalisation refers to processes whereby economies are integratedprimarily through the exchange of commodities (trade) and money (financialsecuritisation). It is exemplified in commodity complexes where arms lengthtrade and finance relations are the dominant agents of international interaction;

! Multinationalisation refers to processes of economic integration driven primarilyby foreign direct investment by TNCs. These processes are associated typicallywith multi-domestic corporate strategies and relatively autonomous branch plantsselling primarily to their local markets;

! Transnationalisation refers to processes involving intensive international intra-firm divisions of labour, such as that exercised by Nike and Bennetton, and;

! Globalisation refers to processes of global economic integration dominated byexchange and collaboration between industrial districts, as typified in regions suchas Californias Silicon Valley and Raleigh, North Carolina. According toGoodman: globalization is conceptualized as the ensemble of processescollectively constitutive of the new global phenomena observable, for example, infinancial and equity markets, science and R&D networks, market structures,corporate organization, lifestyles, consumption patterns and culture, andregulatory capacities and governance (Goodman, 1997: 667).

This approach provides an important advance for debates on transnational agro-foodcorporations, because it defines world-scale integration as taking a number of readilyidentifiable and diverse forms. As Buttel (1996: 30) observes, commenting on anearlier version of Goodmans framework: In the absence of such a conceptualscheme for disaggregating processes of world-scale integration, globalization theoriescan become tautological because there are no conceptual or empirical standards forfalsifying an hypothesis that progressive global-scale integration of food chains isoccurring, or will occur indefinitely. However as an ideal-typical model of corporateinternationalisation, Goodmans taxonomy suffers from difficulties of application. In

practice there would be few TNCs that could be pigeon-holed unproblematicallywithin Goodmans ideal-typical matrix. Consequently more detail is required ifGoodmans theoretical work is to form the basis for applied research.


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This was the purpose behind Fagans and my model linking Goodmans framework tothe concept of circuits of capital (Pritchard and Fagan, 1999). Although this concepthas its origins in Marxist theoretical work on the internationalisation of capital, asDicken observes non-Marxists can readily accept the broad framework it provides

even if they do not necessarily subscribe to the entire explanatory package (1998:181). The circuits of capital model explains corporate activity in terms of the need forcapital to circulate in three different forms: money, production and commodities. Ascapital circulates through these forms, value is created. The circuit of productionexpresses the transformation of commodities through the production process; thecircuit of realisation expresses the transformation of commodities to money, throughexchange (sales), and the circuit of reproduction expresses the allocation of salesrevenues in order to support ongoing production. Harvey (1982: 87-97) notes that this

process is explicitly geographical. Each moment in the circulation of capital createsparticular spatial-temporal crises that owners of capital must seek to resolve.

Table 1 illustrates this model. Deploying the circuits of capital model in this waysignificantly extends Goodmans theoretical architecture. It exemplifies how each ofGoodmans ideal-types in fact comprises diverse socio-spatial processes. Thisunderscores the potential variability of corporate strategy and structure. It is apparentthat different accumulation processes may operate concurrentlywithin an individualcorporation. Evidently, the spatial strategies of production within a company maydiffer from sales strategies, or finance strategies. Similarly, in a multi-product firm

production activity in one area may operate according to different spatial processesthan it does in another.


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Table 1: Circuits of capital and ideal-typical models of accumulation strategies

Circuits of capital

Production Realisation Reproduction

Internationalisation local sourcing ofinputs through armslength transactions

sales to internationalcustomers througharms lengthtransactions

profits repatriatedand reinvestedlocally

Multinationalisation intra-corporatesourcing of inputsfrom local or globalsources

sales to internationalcustomers through acombination of armslength and intra-corporatetransactions

profits returned toforeign owners ofcapital with someretained for localinvestment strategies

Transnationalisation intra-corporatesourcing of inputsgoverned by an intra-firm internationaldivision of labor

an increasingfragmentation ofproduction processesleads to increasinginternational intra-corporate sales of

partly finishedcommodities and thesale of commoditiesmanufactured underlicence by third

parties

profit distributionsdominatedincreasingly by intra-corporatetransactions androyalty payments thatmay be related toglobal tax strategies

Globalisation highly complex andfluid sourcing ofinputs (includinghuman capital)

sales increasinglytake the form ofintellectual propertytransactions

profits take the formof royalty andtechnical paymentsthat can be linked toindividual salaries/

bonuses

Source: own work, originally published in Pritchard and Fagan (1999).

The model illustrated in Table 1 is specifically relevant for the current paper becauseit specifies the linkages between corporate structures and the ownership and

mobilisation of intangible assets. In terms of the debate between old and neweconomies, it would appear that internationalisation and multinationalisationstrategies are representative of old economy practices, whereas the new economyis typified by transnationalisation and globalisation strategies. Thus theemergence of the new economy presages a shift away from the types of structuressignified in the first two rows of the Table, and towards those on the lower two rows.

From multinationalisation to transnationalisation and globalisation: production

arrangements in the new economy

Since the early 1990s researchers from varied disciplines have argued that the shift

from multinationalised to transnationalised corporate structures is a predominanttheme of contemporary TNC strategy and organisation. According to UNCTADsterminology, these developments involve the construction of so-called complex


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integrated corporate structures that have emerged to replace traditionally dominantstand alone strategies (UNCTAD, 1994: 139), involving hierarchical managementsystems based around head office-branch plant structures. Complex integrationstrategies make wider use of contractual and alliance modes of corporatemanagement. To support claims of the significance of these developments, UNCTAD

cites evidence of cross-border commercial agreements of different sorts (jointventures; franchise agreements; licensing; sub-contracting etc) having doubled

between 1990 and 1996. This growth suggests that TNCs have increasingly usedsuch arrangements instead of, as well as in addition to, foreign direct investment toundertake international production (UNCTAD-DTCI, 1997, 12). During this same

period, a number of prominent TNCs have expressly defined their activities in termsof their capacity to act as coordinating agents for vast constellations of subsidiaries,associates, partners, joint-venturers and sub-contractors. Consequently, increasingdiversity and complexity has been generated in TNCs internal arrangements.

The athletic shoes company Nike Inc. has been identified as an exemplar for this type

of complex integrated global strategy (Donaghu and Barff, 1990; UNCTAD-DTCI,1994, p 193; Lowder, 1999). In 1990, as Nikes industrial model garnered globalscope, it was observed:

Nike is an American corporation yet none of the 40 million of pairs of athleticshoes sold in the US market were produced there the extent to which Nikemakes use of offshore plants suggests that the company represents, parexcellence, a modern production system within the new international economy(Donaghu and Barff, 1990: 538).

Moreover, as senior executive of Nike has explained bluntly:

There is no value in making things any more. The value is added by carefulresearch, by innovation and by marketing (Katz, 1994. Cited in Waitt et. al.2000: 367)

Nikes significance for the substantive concerns of this paper lies in its capacity toorchestrate production globally without the use of equity investment. The companycoordinates its vast empire through contractual arrangements with a variety ofmanufacturers. Key design and corporate decision-making functions are internalised,and are located in the companys headquarters at Beaverton, Oregon. This

international division of labour represents a geographical separation based on tangibleand intangible assets. In effect, Nike is not an athletic footwear company but acompany that owns and manages intangible assets (designs, marketing expertise etc)relating to the manufacture of athletic footwear.

Economic geographers subsequently discovered similar corporate strategic principlesin other industries. In the entertainment sector for example, the globalisation ofmedia and content has encouraged the formation of vast galaxies of networks andalliances. News Corporation, the (nominally) Australian headquartered media empireof the Murdoch family, is constructed upon a highly complicated web of corporatesubsidiaries and non-equity partners. In 1999, News Corporation operated 789

business units incorporated in 52 countries. This scope created great freedoms for thecompany to shunt finance capital across space in response to corporate objectives.One example of this is that the non-US profits from movies made by News


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Corporations film company 20th Century Fox flow into a News Corporation-controlled company in the Cayman Islands, a Caribbean tax haven (Farhi, 1997: 33).Below this web of corporate finance, however, exists an even wider array of firmslinked to News Corporation through contractual arrangements. Economic geographyresearch on Hollywood, for example, reveals the film industry to be organised through

a dense agglomeration of specialist firms connected contractually to a smaller numberof globally dominant media and entertainment companies (Hozic, 1999; Storper andChristopherson, 1987). Again, these divisions of labour can be seen to representseparations of business organisation based on tangible and intangible assets. Largemedia and entertainment companies such as News Corporation-Fox and TimeWarner-AOL tend to build their competitive advantage through the ownership andmanagement of intellectual property such as copyrights and product management,while smaller companies undertake physical production activities. These principlesare mirrored in the music industry component of the entertainment complex (Gibson,2000).

The electronics and information technology and telecommunications (IT&T) sectorsprovide another key example of industrial fragmentation, contractual relations andalliance formation. Technological advances in the mid-1980s relating to thedigitization of switches provided the basis for subsequent integration of thetelecommunications and information technology sectors. As UNCTAD (2000: 31-34)observes, this has unsteadied traditional competitive rivalries. In the rapidly changingworlds of IT&T, competition can emerge from many sources. Major companies haveresponded to this environment by establishing strategic partnerships and whatUNCTAD labels knowledge-based networked oligopolies.

Two important debates are stimulated by these examples of corporate practices andindustry structures. First, it has been proposed that such cases are emblematic of post-fordist economies. This notion was extremely popular within the social sciencesduring the first half of the 1990s, but more recently has been criticised for its tendencyto produce grand narrative explanations lumping together a collection of otherwisedisparate technological, labour and governmental processes (Tickell and Peck, 1992;Brenner and Glick, 1991). Influentially, Peck and Tickell (1994) see thesedevelopments as representing an unstable, neoliberal jungle law rather than

possessing a common theme of societal economic-political regulation.

Second, the expansion of corporate networks raises important questions concerning

the global convergence of national business systems. Some researchers suggest thatas industrial sectors are linked more tightly through the construction of internationalproductive networks, nationally distinctive economic systems converge towards aglobal norm. The apotheosis of this argument is the notion of global corporations,supposedly that transcend their national origins (Bartlett and Ghoshal, 1989; Ohmae,1995). Such entities are said to possess multiple layers of deep integration betweensubsidiaries and affiliates, alongside equally dense networks with sub-contractors andalliance partners. Each function performed by these corporations: production,finance, procurement, research and development, training, accounting, marketing,distribution, and management, has its own complex multi-locational geography basedon the companys internal economics of location, specialisation and expertise. As

Fagan and I argue, the global corporations model is an ideal type representation thatresearchers have found elusive to identify (Pritchard and Fagan, 1999; see alsoDicken, 1998: 193-97). While internationalisation processes have far reaching


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implications for the organisation and conduct of business systems, the concepts ofglobal convergence and global corporations understate the ongoing degree of nationaland sub-national differentiation that continues to shape economic processes. To usethe terminology of Whitley (1992), nation states continue to act as powerful socialand institutional containers that influence business systems. These arguments have

been iterated in Whitleys more recent research on national varieties of capitalism(Whitley, 1998).

Prompted by debates over post-fordism and the alleged global convergence ofbusiness systems, Dunning (1997a, 1997b) typecasts the current era as alliancecapitalism. Dunnings contribution engages with these ideas at a macro-organisational scale and attempts to periodicize capitalist systems. The current eraemerged circa 1980 according to Dunning, and is characterised by TNC profitstrategies being determined by four factors:

1. the increasing mobility of firm-specific resources and capabilities especially

knowledge-based intangible assets across national boundaries;2. the growing significance of cross-border transactions which are either within the

same firm of between firms with ongoing cooperative agreements;3. the dramatic reduction in long-distance transportation and communication costs,

and of the psychic and cultural barriers between countries;4. the growing importance of location-bound assets, notably and educated labor

force and a sophisticated physical infrastructure, in influencing the siting of thevalue added activities by [TNCs] (Dunning, 1997b, 69-70).

As necessarily is the case with attempts to construct macro-organisational models ofthe global economy, Dunnings framework is highly generalised. The model isimportant however, because it elucidates two critical linkages that are said to bequintessential elements of the new economy. First, it stresses the relationships

between corporate mobility, strategic advantage and intangible assets. In manytraditional accounts of the global geography of corporate behaviour, the spatialdeterminants of competitive advantage are seen to rest with companies abilities toexploit relatively immobile factors of production such as labour, raw materials or key

production sites (such as factories located within important transport corridors). Yetas Dunning makes clear, the sources of competitive advantage for many TNCs nowrest increasingly in their capacity to own and manage geographically mobile resourcessuch as specific technologies, patents, trademarks and organisational systems.

Second, Dunnings work highlights the fact that non-arms length trade increasinglyshapes international trading relations. With the international expansion of productionnetworks, arms length trade is giving way to trading relations constructed throughrelated party transactions between corporate affiliates. Accurate estimates of theextent of non-arms length trade in the global economy are difficult to establish,however a number of authors have suggested that it comprises one-third of worldtrade (Waitt et. al., 2000: 344). Various studies corroborate these estimates. Wattsand Goodman (1997: 15) cite UNCTAD data suggesting that perhaps one-third ofglobal trade potentially is organised within the integrated production systems oftransnational corporate networks. More recent research by the US Department of

Commerce indicates that in 1997, 26% of total US exports and 17% of US importscomprised transactions between US TNCs and their offshore affiliates (Mataloni,1999). Evidently this understates the incidence of related party transactions in the US


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economy, because it does not include the operations of non-US TNCs. In Australia, arelatively small and open economy highly reliant on agro-food exports, related partyinternational transactions amounted to AUD$76 billion in 1997-98 (Killaly, 2000), theequivalent of 42.6% of Australian merchandise trade.

The fact that possibly one-third of global trade takes the form of the related partytransactions of TNCs impacts both upon resource allocation in the global economyand the economic relations between large corporations and nation-states. Replacingarms length with related party transactions can shift the commercial basis underwhich production and trade occurs. Although neo-liberal economists tend to arguethat the directions and magnitudes of the related party trade flows of TNCs follow inthe same logic as arms length trade (Gray, 1996: 257), these conclusions are usuallydrawn from abstract modeling rather than detailed empirical research. The internaleconomies that serve to dictate production and trade decisions within TNCs dependon a range of factors including taxation liabilities, the management of productioncapacity and the agency of management that are not in play in arms length

markets. My recent research on the breakfast cereals industry in Asia demonstratesthe importance of intra-corporate networks and decision-making processes to thegeographical constellation of production capacity in the region (Pritchard, 2000a).

More specifically, it is apparent that taxation issues and the possibilities for transferpricing play a particularly prominent role in determining the shape of related partytrade, casting long shadows over the ways TNCs construct their geographies of

production. The importance of these issues, especially as they concern North-Southeconomic linkages, was identified in 1970s (Lall, 1973; Vaitsos, 1974) and debatedwidely in the early 1980s (Murray, 1981). In the late 1980s and 1990s, national taxauthorities in the developed world have given extensive consideration to these issues.Led by the US Internal Revenue Service, national tax authorities have sought todevelop new and innovative strategies to combat the increased risk of revenue lossfrom these activities. Influential OECD research on these issues in the early 1990sexamined the appropriateness of various tax estimation and collection methodologies,

based on the concept of global profit allocation. These advances have provided somesignificant improvements in the states abilities to rake back taxation revenue,however they have been set against a backdrop in which most TNCs have dedicatedgreater resources to the development of international taxation strategies. Theincreased complexity of TNC structures, discussed above, provides greateropportunities for the development of inventive global tax strategies. It comes as no

surprise that News Corporation, a company with one of the most labyrinthineinternational corporate structures in the world today, possesses an especiallysophisticated global taxation strategy and has been reported to pay just two per centglobal tax annually since the mid-1980s (Farhi, 1997).

The strategies of transnational agro-food corporations and the new economy

The general argument advanced in this paper is that the contemporary strategies andstructures of transnational agro-food corporations are being shaped by discordant

processes in the circuits of productive capital on the one hand, and the circuits ofrealisation and reproduction on the other. As a result intangible assets such as

trademarks, patents and know-how, which have their value expressed in highlymobile finance capital, are playing an increasingly pivotal role in transnational agro-food company strategy and structure. These transformations represent a parallel


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process to wider shifts in the global economy that are suggested through the conceptsof the old and new economies.

Corporate agency and historical-geographical specificity means that these processeswill find numerous expressions in transnational agro-food corporations. However it is

possible to identify four major themes that are currently visible. These themes arenow considered.

Theme 1: An uneven restructuring of multi-domestic production arrangements

The supposed shift from multinationalised to transnationalised and globalisedcorporate structures, seen in athletic footwear, entertainment and IT&T as involvingthe development of increasingly complex TNC structures and international productionnetworks in the global economy, raises a central question for this paper. Are these

processes similarly influencing production arrangements in the agro-food sector?

As noted at the outset of this paper, the introduction of the new political economy ofagriculture school of agro-food studies in the 1980s focused attention on theinterconnectedness of economic actors and the sources of profit within agro-foodcommodity chains (Friedland et. al., 1991). Subsequently there has been intensedebate concerning the extent to which models of industrial capitalist restructuringshould be applied in order to account for patterns of change in agro-food systems.

By the end of the 1990s, a strong view had taken hold in the field of agro-food studiesthat extreme care needed to be taken in extrapolating industrial models fromeconomic geography to the agro-food sector. Evidently, the profit strategies and

behaviour of transnational agro-food corporations possessed sectoral distinctiveness.Most transnational agro-food companies did not seem to employ the kinds of complexintegration strategies observable in supposedly leading edge new economy sectors.Summarising this debate, Watts and Goodman (1997: 14-16) argue that the keyeconomic logics encouraging complex integration do not translate readily to the agro-food sector. They suggest it is clear that the industry is not characterised byvertically integrated transnational production systems (1997: 14). Furthermore, thelabel globalisation, with its allusions to outsourced international production andintra-firm integration [represents] debased usage [resulting from] an uncriticalextension of concepts from industrial economics and economic geography (1997:15). In making these arguments, Watts and Goodman recall and reiterate the earlier

argument of Goodman and Redclift (1991: 88) that: the dual biological constraintsrepresented by the agricultural production process, together with the physiologicalrequirements of human consumption, have determined sui generis patterns ofaccumulation in agri-food sectors. In other words, agro-food systems have adistinctiveness that radically shapes the structures and strategies of capital (see also,Goodman and Watts, 1994).

This argument echoes and confirms further earlier findings made by Rama (1992) thattransnational agro-food corporations exemplify multi-domestic structures. Theconcept of a multi-domestic strategy implies the construction of branch plantoperations that cater for individually specific national markets. The US breakfast

cereal company Kellogg provides an exemplary case of international expansion via amulti-domestic strategy (Pritchard, 2000a). For many agro-food TNCs, especiallythose associated with consumer products: Protectionism, high freight costs and the


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importance of local tastes reduce possibilities for foreign trade (Rama, 1998: 34).Watts and Goodman suggest that although there exist some influential case studies ofagro-food industries apparently developing globalised production arrangements,notably in the fresh fruit and vegetables sector (c.f. Bonanno, 1994; Friedland, 1994),these have limited relevance for wider themes within the sector. Companies such as

Cargill and ConAgra, according to Watts and Goodman, are best understood asmercantilist traders with international operations that are only partially integrated intotheir core markets. Even companies with global consumer brands, such as Nestl,Unilever and Campbell Soup, are said to rely on multi-domestic rather thantransnationalised or globalised accumulation strategies. These arguments debunk thesignificance of the alleged emergence of a world steer (Sanderson, 1986) as a

pivotal episode in the emergence of a global agro-food economy. They also bringinto question some of the arguments of New Zealand researchers relating thedevelopment of new horticultural exporting sectors to an incipient third food regime

based around the globalised articulation of profit accumulation strategies (Le Heron,1993; Le Heron and Roche, 1995; c.f. Campbell and Coombes, 1999). Overall, these

approaches represent a clarion call for a more nuanced and contingent reading ofglobal agro-food restructuring: the uniting theme of contributions to Goodman andWatts (1997) edited collection.

Watts and Goodman are correct in calling to account over-zealous claims ofglobalised flexibility within the strategies and structures of transnational agro-foodcorporations. It is clear that agro-food production is quite dissimilar from IT&T orathletic footwear, and this dissimilarity relates to foods biophysical properties. Attheir same time however the industry is not in statis. Watts and Goodman expose thelack of evidence for complex integration strategies and productive networks in theglobal agro-food system, but shed few insights on current tendencies within therestructuring agendas of major transnational agro-food corporations. Although multi-domestic strategies may be widespread within the global agro-food system, there isneed to move beyond the simple retelling of this fact, and examine the sectorschanging strategies and structures.

Unfortunately there is no comprehensive research currently available that documentsthe shifting strategies and structures of transnational agro-food corporations.However, circumstantial evidence and studies of individual corporations reveal visibletensions in the maintenance of many multi-domestic strategies. For the past decadetrade economists have recognised and commented upon the growing incidence of

international trade in intermediate agro-food commodities (Hartman et al., 1992;Wyckoff, 1993). The diminution of multi-domestic corporate strategies can behypothesised as a key contributory agent to the rapid growth of agro-foodintermediate products trade. As TNCs increasingly source their inputs from a globalstage the volume of intermediate goods circulating internationally increases. Theexamples of Kellogg and Nestl in South East Asia (Pritchard, 2000b; Pritchard andFagan, 1999, respectively) highlight the transitions currently taking place in thestrategies of major transnational agro-food corporations. In Kelloggs case, Asian

production facilities were established according to a clear corporate agenda to departfrom the companys traditional multi-domestic production strategy. Kellogg breakfastcereal factories in Thailand, India and China are positioned as flexible reprocessing

plants within the companys global operating environment. In the case of Nestl, thecompany has taken uneven and unsteady steps towards reorienting its South EastAsian operations in favour of transnationalised models of integration. These steps are


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taking place against a backdrop of regional trade agreements and general tradeliberalisation. These cases demonstrate the point that although many transnationalagro-food corporations remain wedded to multi-domestic strategies and structures,sets of changes are taking place that challenge the authority of this model.

Possibly the best example of these transformations exists in the case of H.J. Heinz &Co. For several reasons, Heinz embarked on a massive restructuring program in thelate 1990s. Many of the companys core products were in relatively low growthsegments of the food economy. Products such as Heinz baby foods, ketchup andsoups were classically fordist foods that were developed in the late nineteenth centuryor mid-twentieth century. By the late twentieth century markets for these productswere saturated, with growth occurring incrementally in line with population.1 Aseries of diversification strategies in the 1970s and early 1980s had spread Heinzsinterests across a wider breadth of food activities, but the company gained fewsynergies from this market scope. Consequently by the mid-1990s Heinz was poorly

positioned for future profitability in the global agro-food system. It had little

exposure to fast growing areas of food consumption, had extensive sunk capital indiverse production activities, and did not have the global size and market influence tocompete with companies such as Nestl or Unilever.

In January 1997 Heinzs Chief Executive Officer, Tony OReilly, announced a farreaching restructuring program for the company. This program, called ProjectMillennia attempted to transform the companys strategies and structure in two keyways. First, the company would narrow its product range and thus gain theadvantages of volume production. In 1997 Heinz announced it would sell US$850million of assets. This has facilitated a qualitative shift in the nature of the companys

business, from being a diversified consumer food service company in the early 1990s,to being a company with four main product areas (canned goods, pet food, tuna, babyfood) that each have global scope and strong market positions. As part of thisrestructuring, the company has also reoriented its product mix thereby tapping intofast growing elements of consumer demand. This helps explain the considerableattention given by Heinz to the expansion of fresh and organic production from NewZealand (McKenna, Roche and Le Heron, 1999).

Heinzs strategy can be understood as an attempt to move beyond multi-domesticproduction arrangements, thus generating economies of scale and greater internationalproduction flexibility. In tuna for example, the company has closed a substantial

number of canneries worldwide in order to concentrate production in three sites:American Samoa, Ghana and the Seychelles. What this indicates is that although thedominant production arrangements in the global agro-food sector remains a far cryfrom those found in leading edge, new economy sectors, the pace and significanceof contemporary restructuring should not be underestimated.

Theme 2: the strategic importance of marketing and branding

As illustrated in Table 1, TNC strategies and structures are the sum total of corporatebehaviour in each of the three circuits of capital; production, realisation andreproduction. Accordingly, analysis of transnational agro-food corporations

necessitates the examination not only of production arrangements, but of the

1And in the case of baby foods, declining because of lower birth rates.


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processes by which finished goods are sold, transforming their value into moneycapital, and the ways this money capital is reinvested for further profit accumulation.These processes accord to the circuits of capital realisation and reproduction.

Realisation and reproduction are especially important in the current phase of the

global agro-food economy. In the developed world, market concentration andsaturation, along with relatively slow growth in demand, has created the situationwhere marketing and branding is increasingly important for consumer foodcompanies. In the United States, food companies doubled their advertising spendingin the 1990s, from US$450 million in 1991 to US$950 million in 1998 (Anon., 2000:38). In same period the value of production in the US food and kindred productssector rose by just 18%, from US$103 billion to US$123 billion (Bureau of EconomicAnalysis, 2000), suggesting a sharply increasing incidence of advertising per dollar ofUS food manufacturing.

One reason for the heightened strategic importance of marketing and branding lies

with the restructuring of food retailing and consumption. Since the early 1990s therehave been tremendous shifts to the structure of retail sectors globally. The early1990s witnessed the dramatic growth of warehouse discounters in the US (notably,Wal-Mart). Across the developed world, the industrial concentration of retailingincreased substantially (Pritchard, 2000c). Burch and Goss (1999) highlight the waysthese processes transform bargaining relations between food manufacturers andretailers. As Buttel (1996: 31) points out, these structural relationships create theinverse to the much vaunted process of agro-food value adding: the economic clout oflarge retailers places intense downward pressures on prices. This is of majorconsequence for food manufacturers. In an environment of price discounting, theability to retain margins and profitability rests increasingly on consumer loyalty.Food manufacturers are forced to devote increased resources to the task of protecting

brands. These processes are especially savage for companies without leading brandassets. In recent years the concept of being number one or number two in a productsegment has been a prominent theme of food industry management discourse. Theway this argument goes, advertising and market resources should be placed on leading

brands, as there is supposedly only room for two or three competing products incontemporary consumer foods marketplaces.

Nestls branding strategies over the past decade illustrate these agendas withincorporate management. The company utilises sophisticated marketing and branding

strategies to attach value to its products beyond the factory gate. Management of thecompanys 700 brand names registered in 67 countries is undertaken with a diligencethat is akin to the management of the companys key production facilities. Brandnames are managed according to strictly defined geographical criteria. Twenty brandsare designated for global usage, and the remainder is managed according to regional,national and local strategies (Pritchard, 1999). One commentator in the business presshas described the operation of these multi-scaled tiers as representing a think global,strategies regional, act local articulation of geographical strategy (James, 1997, inWaitt et al., 2000: 350).

Aside from marketing purposes, the ownership and management of brands plays an

important role in transnational agro-food corporations financial strategies. Astransnational agro-corporations expand over space, they take with them their brands,

patents and corporate know-how. As they establish relational networks with actors in


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other countries (local partners, joint venturers etc), financial conditions are establishedfor the rights to use and benefit from these assets. These conditions presageinternational flows of royalties and affiliated payment types. Hence the more effortthese entities place on developing the intangible worth of their brands, the greaterscope they have for repatriating monies to head office in the form of related party

royalties, opening the possibility for minimising their international tax obligations.

Again, Nestl represents a leading edge example of these processes at work. In aseries of published research I have documented the corporate financial implications of

Nestls branding strategies in Australia and Thailand (Pritchard, 1999; Pritchard,2000b; Pritchard, forthcoming). The case of Peters ice cream in Australia illustratesthe process adopted by Nestl. In 1995 Nestl acquired this company in an a majoracquisition valued at AUD$570 million. With this acquisition Nestl gained controlover a large stable of well-known brand names registered as trademarks in Australia.One year after the acquisition of Peters, Nestl systematically transferred ownershipof these trademarks to the ultimate corporate parent, Societe des Produits Nestl SA,

of Switzerland. The purpose of transferring these trademarks outside the realm of theAustralian nation-state was so that Nestl could coordinate its intellectual property inSwitzerland, thus being in a position to charge its local subsidiaries for the use ofthese trademarks. Hence, through the global mobility of finance capital andintangible assets, Nestl has been to construct a set of financial transactions wherebyits Australian operations are charged for the use of trademarks that were developedinitially in Australia.

In a forthcoming paper I document the financial magnitude of these intra-firm royaltypayments. Between 1993 and 1998, the amount of intra-firm royalty payments paidby Nestl Australia Ltd increased from AUD$37 million to AUD$50 million annually(Pritchard, forthcoming). Since 1996, intra-firm royalty payments have faroutstripped dividends as the major form that monies are repatriated from NestlsAustralian operations to the Swiss parent. Financial data from Nestls operations inThailand support the Australian finding of significant payments of intra-firmroyalties. In 1997 and 1998, during the midst of the Asian financial crisis, NestlsThai operations repatriated BAHT 681 million and BAHT 848 million in intra-firmroyalty payments to Switzerland. This represented approximately six percent of salesin each of these two years (Pritchard, 2000b). The point is, ownership of valuable

brand assets can provide the basis for transnational companies to construct convolutedintra-firm royalty streams that may provide avenues for the repatriation of monies to

head offices.

The most extreme example to date of a transnational agro-food company pursuingprofits through branding and marketing is provided by Sara Lee. In September 1997the company announced its intention to sell the vast bulk of its manufacturingfacilities. Henceforth the company would be an owner and manager of brands, andwould contract out the responsibilities to manufacture the physical products attachedto those brands. This announcement was greeted by intense debate within businessand investor circles. Although the practice of contracting out production has becomecommonplace within food and consumer goods industries, never before had acompany the size of Sara Lee (annual revenues of approximately US$20 billion)

embarked on a project of such size and scope. Effectively, the company hasattempted to apply Nikes contracting strategy to the consumer foods business. Theguiding principle of the strategy is Sara Lees notion that its competitive advantage


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lies in branded product marketing, rather than supply chain coordination involvingfactory production.

Although Sara Lees brazen desire to outsource its entire production is unique withinthe global agro-food economy, it has parallels with the corporate strategy of Coca-

Cola. As a product, Coca-Cola is the quintessential symbol of agro-foodglobalisation. It is deeply associated with Western (and American) culture, and is ahighly processed agro-food commodity with little relatively nutritional value that has

progressively replaced traditional beverages in many societies. Coca-Cola is one ofthe worlds most advertised products; there are few places in the world where one canescape its pervasive red and white logo. The term coca-colonization has entered thesocial science lexicon to describe diminished national sovereignty in the face ofglobalisation. Yet the Coca-Cola Company, headquartered in Atlanta, Georgia, standsaloof from the actual production of Coca-Cola worldwide. Stemming from anagreement in the 1920s, the Coca-Cola Company outsources its bottling operations toseparately owned companies worldwide. Effectively, the Coca-Cola Company has

just three functions in the global Coca-Cola system: it manufactures the syrup used inthe production of Coca-Cola and on-sells this to bottling companies; it owns therecipe for Coca-Cola, and; it owns the brands and coordinates the global marketingthat underpins the Coca-Cola system. Hence, the Coca-Cola Company largely is amanagement company rather than a food company, with an intangible rather thantangible asset base.

Without doubt the Coca-Cola Company is adept at the task of owning and managingthe intangible assets associated with the global consumption of Coca-Cola. Since the1980s the company has expressed its core business strictly in terms of thiscommercial task. In 1998 the Coca-Cola Company generated revenues of US$18.8

billion and profits of US$3.5 billion. From a corporate perspective, this strategyenables the company to take advantage of contemporary globalising processes inagro-food consumption, without having to commit assets to the somewhat more riskyactivities of physical manufacturing. Indeed, the most dramatic hiccup to thecompanys century-long growth history occurred when in 1985 it tempered with theseintangible assets, introducing the flawed New Coke (Pendergrast, 1993).

To date Sara Lee has not emulated the commercial successes of Coca-Cola. Indeed,the strategy has proved disastrous so far for the company. In 1997 the value of SaraLees fixed assets and working capital was equivalent to 31 per cent of sales. In 1999,

after two difficult years of corporate restructuring, the company had managed toreduce this ratio by just seven percentage points, to 24 per cent. Whereas Sara Leehad hoped to offload virtually its entire portfolio of fixed assets by the year 2000, itcontinues to own extensive manufacturing facilities. These difficulties led to lowerthan expected profits, an evaporation of investor confidence, and a deteriorating

performance on Wall Street. Sara Lee stock fell from US$62 in October 1997, toUS$14 in April 2000.

In spite of these travails however, Sara Lees desire to transform itself into merely anowner of brands effectively, a management company with paper assets only has

been highly influential within food sector corporate management. In the eyes of some

financial analysts, initiatives such as Sara Lees de-verticalization program representa watershed in corporate practice a supposed shift into the knowledge age (The

Economist, 2000, 73). Of course Wall Street analysts are prone to hyperbole, and the


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has involved branded food companies investing upstream in processing facilities inorder to secure their supplies.

As a further sign of its influence, the New Zealand food processing company Cedencoemulated the Morning Star model when it established its Australian tomato paste

operations in 1995. In that year, Cedenco built Australias largest tomato processingfactory. This factory, however, operates 100% on contract production to brandedfood companies. Cedenco depends on a series of contractual relationships with thesecompanies in order to secure its sales.

As noted above, these examples are the inverse, and symbiotic twin, of the Sara Leemodel. The expansion of non-branded food companies, dependent upon contractualrelations and economies of scale through volume production, provides anotherexpression of the tangible-intangible nexus in the global agro-food system.

Theme 4: the exploitation of intangible assets associated with the

industrialisation of agriculture

The final key theme of contemporary strategies and structures of transnational agro-food corporations concerns the ways that intangible assets associated with theindustrialisation of agriculture are playing an increasingly strategic role in shaping

patterns of transnational agro-food corporation profitability. As the industrialisationof agriculture heightens the economic role of off-farm agribusiness inputs, theimportance of control over key agro-technologies and knowledge intensifies. Inrecent years a number of transnational agro-food corporations have executedrestructuring programs aiming to strengthen their positions as agribusiness inputsuppliers. The area of seeds, in particular, has seen intense jockeying for positions bymajor agro-food corporations.

Exhaustive hybridisation programs through the twentieth century have made thecontrol of seeds a pivotal factor for agro-food developmental trajectories. Asdiscussed extensively by Goodman and Redclift (1991) seeds became the catalyticelement in the convergence of chemical and mechanical technologies after 1930(1991: 169). Over the course of the twentieth century the abilities of agribusiness toassert proprietary control over hybrid seeds increased gradually, culminating in the

passage of plant breeders legislation.

Writing in the early 1990s, Goodman and Redclift observed the intense merger andtakeover activity associated with the control of the commercial seed industry. Thisindustrial activity was a prelude to corporate expectations of the incipient

biotechnological revolution. Seeds are crucial ingredients for agriculturalbiotechnology, because genetic manipulations of plant structures are marketed togrowers through new seed varieties. In the immediate years before the 1990s, TNCsincluding ICI and Unilever moved aggressively into the seeds industry. The forces ofcompetitive restructuring gathered pace through the 1990s. As Buttel has commentedrecently, they have encouraged the integration of different sub-sectors of the agro-supply business and promoted widespread strategic alliances of seeds, agro-input and

biotechnological companies (Buttel, 1999).

Agricultural biotechnologies radically extend the commercial possibilities of seedhybridisation. Of course these developments have attracted considerable attention


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from agro-food researchers. Usually they have been discussed within the frameworksof debate over agricultural subsumption, the industrialisation of agriculture, and thechanging social practice of family farming (Goodman and Redclift, 1991; Lawrenceand Gray, 2000). Intensified corporate control over seeds and other (oftencomplementary) agro-inputs exemplify the widening capacities of off-farm capital to

dictate social practices within farms. Yet these developments also point to anincreased role being played by intangible assets, in the form of patents and know-how, in shaping the global agro-food system. Corporate ownership and control ofsuch assets, thus, is becoming a heightened strategic arena for profit.

The case of Heinz Seeds, a subsidiary of Heinz in the tomato seeds business, providesan example of these strategies in action. In the case of seeds, the creation ofeconomic value is predicated on the capacity to translate plant breeding processes intocommercial patents. Heinzs stock of seed patents is a critically important intangibleasset for the company. By developing and asserting proprietary rights over seedvarieties suited to particular growing and production conditions, the company

possesses unique intangible assets. In the space of a few years in the 1990s H.J.Heinz & Co. strengthened its corporate commitment to its tomato seeds business.Although Heinz has operated tomato breeding programs since 1936, it was only in1992 that the company formally established a discrete tomato seeds business.Through the establishment of globally integrated seed research and development

programs, coordinated via the companys seed technology headquarters at Stockton,California, Heinz was able to quickly produce a number of leading seeds. Thisenabled the company to dramatically increase its market share of the tomato seedindustry during the decade. In Australia, for example, Heinz increased its share of the

processing tomato seed market from approximately 30% in the early 1990s, to over70% by 1997-98. Heinzs commitment to Heinz Seeds provides one illustration of thegenerally increased attention being given to intangible assets and intellectual propertyin the global agro-food system.

Conclusion: The emerging shapes of transnational agro-food capital and new

arenas of global-scale regulation

The onset of the new century provides a neat historical juncture from which toobserve and comment upon global agro-food restructuring. The central point of this

paper has been to argue that current strategies and structures of transnational agro-food corporations can be identified as representing diverse responses to underlying

restructuring processes linked to the global mobility of finance capital. There is adisjunction and tension between the spatialities of production capital, and thespatialities of finance capital. The tendencies so often associated with the so-callednew economy placelessness, the production and exploitation of knowledge, andthe manipulation of finance are finding expression in the contemporaryrestructuring of transnational agro-food corporations.

By necessity, the the playing out of these processes varies considerably amongdifferent companies. However, the paper has identified and examined four keyexpressions of these tendencies in the contemporary agro-food system. First, there isan the uneven restructuring of multi-domestic production arrangements. Second,

there is a heightened importance of brands and marketing. Third, there is arestructuring of agro-input industries and the development of non-branded food


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companies. Finally, there is a greater strategic role for assets rich in intellectualproperty, associated with the industrialisation of agriculture.

In conclusion, the subject matter of this paper deserves comment. There areimportant reasons to address the relative neglect of transnational agro-food

corporations. Forthright attention needs to be given to the relationships betweencompanies internal organisational structures and their profit strategies because, ifnothing else, globalisation increases the potential for more varied and internallycomplex corporate organisational forms. In this context, the capacities of researchersto provide relevant and informed critiques of global agro-food systems dependcritically on the ability to understand what goes on inside the corporation. The bodiescritical agro-food researchers often work alongside NGOs, unions, affectedcommunities and government agencies increasingly require this knowledge.

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The tangible and intangible spaces of agro-food capital

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