How the G20 ministers said ‘agriculture’ but meant ‘trade and commodities’
Under the presidency of France, the G20 called a meeting of its member countries’ agriculture ministers to consider the food production and food price problems. They have releaed a “ministerial declaration”. This declaration is being called a “renewed commitment” to tackling hunger by part of the financial media, or is being called “weak” and a mere restating of positions by the more critical, or is being called an empty document full of vague promises and no reform by some activists.
In fact, it is a strong statement alright. It supports the current model of agri-business, of international investment in arable land, it supports the operations of the global agriculture commodity markets and trading systems, and it ensures that the flows of finance and capital between the world’s financial markets and the commodity markets will continue with less restrictions rather than more control.
All this is done in the name of small farmers and poor consumers. They have talked about a new global agriculture market information system (Amis) so that governments can share better data about the state of food stocks and global production. This is nonsense – it is the bankers, food traders, commodity funds, retail food industry and foodgrain exporters who will use this new knowledge and data. They imply that the Food and Agriculture Organisation (FAO) will run the Amis and they will exploit the new data. Private sector players, such as the large grain traders for whom knowledge of stocks and harvests represent a key competitive advantage, are simply ‘urged’ to participate – they will, at a profit which further loots the urban and rural poor.
There are five main objectives the G20 ministers made commitments to. However, like earlier inter-governmental statements over the last few years concerning agricultural production and access to food, it’s always safer I find to consider what is being meant here.
If we look at the five objectives and take the first:
“i. improve agricultural production and productivity both in the short and long term in order to respond to a growing demand for agricultural commodities”
There is a growing demand for “agricultural commodities”. So investment and research and trade arrangements and enabling policy are to be deployed to help fulfil this kind of demand?
“ii. increase market information and transparency in order to better anchor expectations from governments and economic operators”
Do governments and “economic operators” (what are these? food traders? commodity funds? integrated retailers?) have the same kinds of expectations? Is better “market information and transparency” to benefit only government and “operators” or do food producers and consumers also require them?
“iii. strengthen international policy coordination in order to enhance confidence in international markets and to prevent and respond to food market crises more efficiently”
Confidence in international markets may be a concern for governments and economic operators, but in what way are they essential for food producers and consumers, who have since late 2007 suffered through price spikes amplified by these same international markets? The implication here is that responses to “food market crises” can be provided by – among other measures such as policy direction – these markets, which I find troublesome especially given the evidence since 2007.
“iv. improve and develop risk management tools for governments, firms and farmers in order to build capacity to manage and mitigate the risks associated with food price volatility, in particular in the poorest countries”
What are these risk management tools? Are they commodity hedge funds? Are they trading agreement? Are they bilateral agreements and FTAs? Are they commodities exchanges? Who will wield these tools? In poor and the poorest countries farmers have little or no capacity to manage and mitigate existing risk – they surely cannot bear the additional risks brought about by price volatility, but in what way will these tools help and function?
“v. improve the functioning of agricultural commodities’ derivatives markets.”
To what end? Agricultural commodities derivatives markets tie up crop production and food-in-stock, but for whom do they do this? If the functioning of these markets is to be “improved”, who will benefit from this improvement? Will it be the smallholder farmer and if so in what way? How many farmers of the South are directly connected to the agricultural commodities derivatives markets as beneficiaries? Are consumer coops connected?
These are some questions that come to mind when reading these five objectives. I see that Sarkozy has stated, “”We all know that agricultural production is insufficient to meet demand”. This may be so, for certain crops in certain regions, but against the background of these five objectives, I have to question: demand from whom or what and to what end?
Here are a few sentences from paras 18 and 19 of the ‘ministerial declaration’:
“18. We commit to creating an enabling environment to encourage and increase public and private investment in agriculture. In particular, we stress the need to support public-private partnership on investments, based on a value-chain approach, for services (such as access to financial services, agricultural education and extension services), and for infrastructure and equipment for production (such as irrigation), for agroprocessing, for access to markets (such as transport, storage, communication) and for reducing pre and post-harvest losses.”
“19. We encourage countries, international organizations and the private sector to increase investment in developing countries agriculture, and in activities strongly linked to agricultural productivity growth, food security and generation of income in rural areas, such as agricultural institutions, extension services, cooperatives, research, roads, ports, cold chain, power, storage, irrigation systems, information and communication technology, climate change mitigation and adaptation. We also encourage them to enhance public-private partnerships in this field, in particular to improve market and value-chain operators’ cooperation and procurement from smallholders.”
This is a direct and unambiguous call for greater industrialisation of agriculture, for the strengthening of the tools of globalisation that have given rise to the agri commodity markets and products like derivatives, for the intensification of corporate R&D in agbiotech and with the support of national agricultural reseach systems in various countries – and at the likely cost of traditional knowledge and ecological approaches to cultivation. This sounds to me like an unambiguous statement of support for the food trading and food retail industries and their vast ‘verticals’ (as they call the integrative links these days), and finally for the systems of finance and banking that undergird the globalisation of food.