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Why agricultural investment ‘principles’ must be buried

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FAO_IYFF_1This year the Food and Agriculture Organisation (FAO) will through its Committee on World Food Security, advocate principles concerning what are called ‘responsible agricultural investments’. The adoption of principles such as these are expected to promote investments in agriculture that contribute to food security and nutrition, and which support the realisation of the right to food, particularly within national contexts of how food security is defined.

While the principles are intended to provide practical guidance to governments, private and public investors, intergovernmental and regional organisations, civil society groups, research units and universities, donors and philanthropic foundations, they will be voluntary and will not be binding upon their signatories.

FAO_IYFF_2The problem with such a conceptualisation of international or globally applicable principles is that the negative consequences that accompany investment are left undefined and therefore weak as a countervailing argument. Investment made to acquire land, to pursue industrial agricultural techniques (in contrast to policies and programmes that support smallholder cultivation), and which – experiences of the last three decades have shown – have deepened income inequalities while making those vulnerable to food scarcity and food price volatility even more so.

These investments are determined by a dominant political economy found in a country, or a sub-national region – important variations that cannot be recognised or dealt with in any meaningful way by a set of voluntary principles (nor even with the aid of a ‘knowledge platform’ on the subject set up by the World Bank, FAO, UNCTAD and IFAD.

In this article published by Pambazuka News – the pan-African community of some 2,600 citizens and organisations that make it one of the largest and most innovative and influential web forums for social justice in Africa – I have examined the rationale and background to the principles pertaining to ‘responsible agricultural investment’ (which is now referred to commonly by the ‘RAI’ short form); and also concepts about agricultural investment (or public and private spending on agricultural activities) especially what are assumed and what are implied; and a conclusion criticises the RAI and the effort to promote a multi-lateral common ground for problems that are essentially local.

FAO_IYFF_3“The adoption of RAI will aid, in any host country, the tailoring of all policies and strategies to fit investors (foreign and domestic, for the technological advantages are now common, as much as the conduits of capital flow for food and agriculture investment are many) so that they can be ‘competitive’ in the market. Instead of prioritising a model of agricultural production where women, farmers/peasants, pastoralists and all small-scale food producers are at its core, in which agro-ecological forms of farming and raising livestock are supported, and through which local markets and economies are strengthened, the draft RAI principles will if accepted legitimise policies that put the government and country at the service of such investors (both foreign and domestic, it must be noted).”

Moreover, from the point of view of human rights terms this is discriminatory; and will turn a parlous situation into a destabilising one – already countries are falling short of their obligations related to realising the right to adequate food (a foretaste of which was seen most recently during the World Trade Organisation ninth ministerial conference in 2013 December which brought to the fore disagreements about governments’ own procurement of food for public programmes as distorting world trade).

[Read the full article on Pambazuka News.]

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For whom do the FAO and its director-general work?

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A farmer accompanies his cattle through the fields of Uttara Kannada district, in the state of Karnataka, south India.

A farmer accompanies his cattle through the fields of Uttara Kannada district, in the state of Karnataka, south India.

For farmers small and large?  For the tens of millions of food-consuming households, poor or just getting by?  For the governments and bureaucracies of small countries who want to import less and grow more?  For the organic cultivators on their small densely bio-diverse plots?  Or for the world’s large food production, trading, and retail corporations, whose influence is wide and whose power is vast? [This is an extract from the full article at Monthly Review’s MRZine.]

FAO director-general Jose Graziano da Silva

There is the continuing if travel-stained hope — held by so many of us, those who work at humble stations in the food and agriculture sector — that, of all those whom the director-general of the Food and Agriculture Organization (FAO of the United Nations) does work for, it is not that last.  But, since 2011 June, when José Graziano da Silva became the head of the FAO, the signs have been otherwise, and they are growing stronger with each passing month.

What effect does this have on the way the 190-odd member states of the UN deal with agriculture and food, with nutrition and food security, with making food affordable?  A great deal.  These are questions the member states of the FAO (and of the UN) have faced since 1945, with the end of World War Two.  If you read this passage, it helps illustrate how little has changed from one point of view, and how much has, from another, far more insidious and destabilizing point of view:

. . . [S]ome of the basic problems that have afflicted humanity since the beginning of society remain unsolved.  Large parts of the world still suffer from hunger, and the threat of famine is ever present.  Today we are confronted by a new challenge in human history which, if not faced, could sweep away the little progress we have so far achieved — this is the upward surge of world population at a rate never experienced before.

That was the fourth director-general of the FAO, B. R. Sen of India, and he said these words during his inaugural address at the First African Regional Conference held in Lagos, Nigeria, on 3 November 1960.

Sen appealed “… to our Member Governments not only to discuss their problems, but also to avail themselves of the knowledge and skills FAO has acquired over many years in the fields of agricultural development and food production and distribution.”  He said: “While the increase of agricultural productivity must remain the sine qua non of economic development of the less developed regions, the importance of education, public health and institutional factors must be recognised in any plan of balanced economic development.”

The FAO 'real' food price index. What will a private sector 'political commitment' do to these trends?

The FAO ‘real’ food price index. What will a private sector ‘political commitment’ do to these trends?

As you see, it has been over 50 years and few of the deficits recorded then have been banished.  How could they have been?  In the years — the decades — since 1960, many a development theory has been advanced only to be discarded . . . but not before the worst of them were thrust upon poor folk and choiceless urban dwellers, as they are now.

Only the armory of the food giants today is far more potent than it ever has been.  And still more powerful will they become, if championed by the FAO as they currently are.  Graziano da Silva at the end of 2012 November said that the private sector can make an important contribution to the fight against poverty and hunger and promote sustainable food production and consumption.  Where did he say this?  At the FAO Headquarters, to participants whose associations represent more than five thousand companies, during the first in a series of planned dialogues on what the FAO is calling “private sector involvement in poverty- and hunger-reduction initiatives.”

This is deeply worrying.  Food companies, global grain traders, commodities exchanges, multi-national food retail chains, and large processed-food corporations have been using all the means they could muster to influence the FAO during the 2001-10 decade.  Now, under Graziano da Silva, the gates have opened wide in a manner that was still resisted during the tenure of his immediate predecessor, Jacques Diouf (1994-2011), and could hardly be countenanced during the tenure of Edouard Saouma (1976-1993).  What would those who came before — A. H. Boerma (1968-1975), B. R. Sen (1956-1967), P. V. Cardon (1954-1956), N. E. Dodd (1948-21), and J. B. Orr (1945-1948) — have thought of such a swerve marketward?

Indigenous and organic cereals displayed in Bangalore, Karnataka

Indigenous and organic cereals displayed in Bangalore, Karnataka

The signs came early.  In 2011 October, for the World Food Day of that year, Graziano da Silva in an article wrote of “boosting investments in agriculture and food security” but didn’t say whether he meant public investment or private.  What he did do was extol what he believes are the benefits of “boosting cash flows into economically stagnant rural communities,” as the FAO release of that day explained.  The director-general’s words were: “Cash transfers and cash-for-work programmes work in the same way as rain on dry soil, allowing these communities to bloom once again.”

It was a turn of metaphor that, when similarly used by him in an article about eleven months later, infuriated 109 farmers’ and peasants’ movements and associations.  Graziano da Silva and Suma Chakrabarti, the president of the European Bank for Reconstruction and Development (EBRD), wrote an article published in the Wall Street Journal on 6 September 2012.  In the article, they called on governments and social organizations to embrace the private sector as the main engine for global food production.

mrzine_logo“The language used by Graziano da Silva and Chakrabarti is offensive,” said the signatories to the common statement issued by the 109 organizations.  “Phrases like ‘fertilize this land with money’ or ‘make life easier for the world’s hungry’ call into question the FAO’s ability to do its job with the necessary rigor and independence from large agribusiness companies and fulfill the UN mandate to eradicate hunger and improve the living conditions of rural people.”[You can read the rest on MRZine.]

Written by makanaka

December 5, 2012 at 16:35

The UNDP’s surprising, alarming, Africa view, lurid with green manipulation

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In mid-May 2012, the United Nations Development Programme (the UNDP) released its Africa Human Development report for 2012. Entitled ‘Towards a Food Secure Future’, the report is unremarkable for its assessments and language – these have changed but little where Africa (indeed where the recalcitrant South is concerned) is concerned over the last 30 years – and remarkable for the subtext of the agriculture and food focus to human development.

Houley Dia ran out of food a month ago and is now existing on water. A 60-something-year-old widow, she lives in Houdallah, a village of the Fula ethnic group in southern Mauritania on the border with Senegal. Photo: IRIN / Nils Elzenga

The UNDP today, like the World Bank and the International Monetary Fund (and their cousin multilateral lending agencies, the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, all incestuous, all unscrupulous, all functioning as think-sinks for mendacious economists who lie with flash charts and sophisticated ppts), is softly softly peddling an industry line. The industry in this case, in the 2012 for Africa case, is food and agriculture, land and poverty, the provisioning of specials foods and the provisioning of the money with which to purchase this reconstituted manna.

For most of Africa south of the Maghrib (or Maghreb, if you prefer, it is impossible to render adequately the flowing Arabic, the Ar’biyy’a, into l’Anglais, into the stilted Roman alphabet) wherever white settlement occured in quantity, the pattern in land expropriation and the use of labour was set by the Union of South Africa. So said Basil Davidson in ‘Let Freedom Come’ (Little, Brown & Co., 1978). This pattern heralded a long period of rising white prosperity still continuing in the 1970s, if with some checks and hiccups (hiccoughs too, the uprising kind) in the 1920s and 1930s, remarked Davidson. He pointed out that South Africa’s Land Act of 1913 provided a model that abolished all African land ownership (i.e., ownership by ‘native’ Africans). Labour supply was increased and the wage rate was lowered and Davidson went on to say that “the same system of proletarianising self-sufficient peasants and of driving them into a labour market where they could have no bargaining power, was used elsewhere with local variants”.

Now, almost a century after that Land Act come into being (providing the precursor to apartheid) an African Development Report from the UN’s development experts has said that “addressing hunger is a precondition for sustained human development in sub-Saharan Africa” (who writes such sentences, I wonder, for do they truly not see the puppet of hunger in Africa and the South) dancing from the threads in the hands of the grain marketeers of the North and their local agents?). “Food security must be at centre of continent’s development agenda,” the report observes magisterially.

A Malian refugee woman in Mangaize, northern Niger, ponders her future. In January, she and her family fled Menaka, a town in Mali, because of the general insecurity and fighting between the army and Tuareg fighters. Photo: IRIN / UNCHR / H.Caux

Pithy statements of concern are duly provided (and recirculated by the world’s press) by the UNDP public relations robots. Hence UNDP Administrator Helen Clark is quoted: “Impressive GDP growth rates in Africa have not translated into the elimination of hunger and malnutrition. Inclusive growth and people-centred approaches to food security are needed.” Hence Tegegnework Gettu, Director of UNDP’s Africa Bureau is quoted: “It is a harsh paradox that in a world of food surpluses, hunger and malnutrition remain pervasive on a continent with ample agricultural endowments.”

And that is why this report, ‘Towards a Food Secure Future’, is replete with paragraphs like the following, appropriating the language of fairness to conceal behind it the naked greed of the globe’s industrial food networks, their agri-biotechnology partners, their unreliable allies the commodity exchanges, and the political brokers who stitch together, for huge commissions, the whole wreck of an exploitative opera: “Breaking with the past, standing up to the vested interests of the privileged few and building institutions that rebalance power relations at all levels of society will require courageous citizens and dedicated leaders. Taking these steps is all the more pressing as new threats to the sustainability of sub-Saharan Africa’s food systems have emerged. Demographic change, environmental pressure, and global and local climate change are profoundly reconfiguring the region’s development options.”

This is the sort of hearkening to ‘green capitalism’, a disgusting notion, that the UNDP is steering dangerously close to. Why must it be so? Why should this UN agency err on the wrong side of propriety? A closer reading of Africa Human Development Report 2012, ‘Towards a Food Secure Future’, may answer these questions. Underlying the pregnant concern in the UNDP’s prose is an environmentalism that conforms to “weak sustainability” (as Samir Amin, director of the Third World Forum in Dakar, Senegal, has called it) and that is the marketing of “rights of access to the planet’s resources.” Great regiments of conventional economists have openly rallied to this position, proposing “the auctioning of world resources” (fisheries, pollution permits, forests, watersheds, and of course land). As Amin has said, this is a proposition which simply supports the oligopolies in their ambition to mortgage the future of the peoples of the South still further.

In villages in Mangalmé District, Guéra Region, central Chad, women have resorted to digging up ant nests in search of the grains of food ants leave behind. Some 3.5 million Chadians are food insecure this year (2012). Photo: IRIN / Oxfam / Stephen Cockburn

As the World Bank knows, the borrowing of an ecological discourse provides a very useful service to Imperialism Version 2.0. I find it impossible to imagine that the phalanx of authors who contributed to the Africa Human Development Report 2012 were all unaware of this capture, this mangling of the ecological discourse, this driving of a weak sustainability doctrine, this marginalising of the development issue and the diminishing, the ruthless diminishing, behind a sequined screen of consensual politics, of the agriculture and food rights of 53 countries that we have come to call Africa.

‘Towards a Food Secure Future’ has said, with the air of heavy pronouncement, with the air a cardinal of the curia adopts perhaps during a papal succession: “With more than one in four of its 856 million people undernourished, Sub-Saharan Africa remains the world’s most food-insecure region. At the moment, more than 15 million people are at risk in the Sahel alone – across the semi-arid belt from Senegal to Chad; and an equal number in the Horn of Africa remain vulnerable after last year’s food crisis in Djibouti, Ethiopia, Kenya, and Somalia.” Is there a hint of opportunism in these words? Is it possible that the Rockefeller of this era – in the form of the Bill and Melinda Gates Foundation – has subtly (or forcefully, for the era of subtle manipulation is as firmly buried as the Bandung cooperation and the Warsaw Pact) influenced the UNDP’s authors? This is, to my mind, a manifesto for the feeding of Africa which extends ambitiously the ecologist discourse in the direction of the merchants of nutrition, the brokers of grain, the doctors of plant DNA.

The UNDP’s Africa Human Development Report 2012, ‘Towards a Food Secure Future’, may prove to be a turning point for the agency, or it may prove, I hope, a bridge too far, too dangerous, and saner counsel will pull it back into the realm of the familiar damnation of the world’s majority that Frantz Fanon spoke about, which ended not with the withdrawal of formal colonial rule, which continues for Africa in the razorwire-bounded transit camps, in rural pauperisation (Asia too, South America too, East and Central Europe too) and in shanty towns where odes to Steve Biko are still sung.

Earth 1 : Humans 7,000,000,000

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The United Nations Population Fund (UNFPA) has released its annual State of the World Population report for 2011. Here are a few samplers from the mass of analysis and data:

Our record population size can be viewed in many ways as a success for humanity. But not everyone has benefited from this achievement or the higher quality of life that this implies. Great disparities exist between and within countries. Disparities in rights and opportunities also exist between men and women, girls and boys. Charting a path now to development that promotes equality, rather than exacerbates or reinforces inequalities, is more important than ever.

The Population Division of the United Nations Department of Economic and Social Affairs, in its World Population Prospects: The 2010 Revision (published in May 2011), foresees a global population of 9.3 billion people in 2050, and more than 10 billion by the end of this century. Much of this increase is expected to come from high-fertility countries, which comprise 39 in Africa, nine in Asia, six in Oceania and four in Latin America.

Asia will remain the most populous major area in the world in the 21st century, but Africa will gain ground as its population more than triples, increasing from 1 billion in 2011 to 3.6 billion in 2100. In 2011, 60 per cent of the world population lives in Asia and 15 per cent in Africa. But Africa’s population is growing about 2.3 per cent a year, a rate more than double that of Asia (1 per cent). Asia’s population, which is currently 4.2 billion, is expected to peak around the middle of the century (5.2 billion in 2052) and to start a slow decline thereafter.

The populations of all other major areas combined (the Americas, Europe and Oceania) amount to 1.7 billion in 2011 and are projected to rise to nearly 2 billion by 2060 and then decline very slowly, remaining still near 2 billion by the turn of the century. Among the regions, the population of Europe is projected to peak around 2025 at 0.74 billion and decline thereafter.

[See What’s Your Number – Population Action International]
[See Population Reference Bureau – features, video, interactive world map, reference data sheets]

This report makes the case that with planning and the right investments in people now—to empower them to make choices that are not only good for themselves but for our global commons—our world of 7 billion and beyond can have thriving, sustainable cities, productive labour forces that can fuel economic growth, youth populations that contribute to the well-being of economies and societies, and a generation of older people who are healthy and actively engaged in the social and economic affairs of their communities.

In many parts of the developing world, where population growth is outpacing economic growth, the unmet need for reproductive health care, especially voluntary family planning, remains great. The attainment of a stable population is a sine qua non for accelerated economic growth and development. Governments that are serious about eradicating poverty should also be serious about providing the services, supplies, information that women, men and young people need to exercise their reproductive rights.

Written by makanaka

October 31, 2011 at 23:04

FAO’s World Food Day sermon, well balanced with a few blind spots

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This is worth a close read for it reflects, in my view, the pull and tug of various opinions and convictions inside the United Nations Food and Agriculture Organization (FAO), the single entity that we rely on the most to inform us about the state of cultivators, what they’re growing in our world, and who isn’t getting enough of those crops as food.

I have extracted some important paragraphs of this publication [get it here as a pdf], and commented on them. Here goes:

“At the level of individuals, people living on less than US$1.25 a day may need to skip a meal when food prices rise. Farmers are hurt too because they badly need to know the price their crops are going to fetch at harvest time, months away. If high prices are likely they plant more. If low prices are forecast they plant less and cut costs.”

Yes and no. The one-dollar-a-day global poverty line really ought to be done away with. It means nothing at national level and less within countries. Trying to equate real prices and actual consumption (in grams or hundred grams a day) with purchasing power parity-adjusted international dollars is generally a pointless exercise that generates lists and rankings that distract rather than inform. Anyway, the important part of what FAO said here is that when they’re under a certain daily income line, people can’t buy food to eat what they need to. The comment on farmers making decisions based on expected prices is a good one, something that most people miss, assuming that farmers are as interested in food security as academics are – which is quite untrue. For a farming household, sowing a field is a cost, and that cost needs to be more than recouped in order to make the decision to sow a good one.

“Rapid price swings make that calculation much more difficult. Farmers can easily end up producing too much or too little. In stable markets they can make a living. Volatile ones can ruin them while also generally discouraging much-needed investment in agriculture. Recognizing the major threat that food price swings pose to the world’s poorest countries and people, the international community, led by the G20, moved in 2011 to find ways of managing volatility on international food commodity markets. Under the presidency of France’s Nicolas Sarkozy, the world’s 20 largest economies agreed that any strategy directed to that purpose should have the protection of vulnerable countries and groups as its main priority.”

Now here’s the FAO getting to grips with today’s problem. Rapid price swings is what we tend to call volatility – this can be volatility in retail food prices, or in input prices for farmers, or in offtake (purchase at the farm gate or local market) prices of harvested crops. I don’t see any stable markets the FAO is referring to here. Under Europe’s Common Agricultural Policy (CAP) the stability is constructed by coordinating a monstrous array of incentives and subventions – causing instability elsewhere in the world and particularly when that ‘elsewhere’ is importing (under duress) European agri products and processed food. But that’s another though related story.

The idea of “much-needed investment in agriculture” is an ill-defined one. The best investment a farmer can make, so goes an old Indian proverb, is that she walks the soil of her field every day with her bare feet – and that means for the farmer to till her land and come face to face with her natural resources and biodiversity. It is not the sort of investment the ‘market’ can understand. But FAO ought to, especially since it also has a Save And Grow programme aimed at addressing the organic, low input, community side of cultivation. This is an example of the contradictions in this FAO document. The “international community” is a tired and non-existent label, describing nothing while pretending to be collegial. Mediocre editorial writers still use it but no realists do. The G20 statement this time around may be a little less wishy-washy than it was last year, but that is scant comfort to the hungry or to the cultivators of small plots.

“Today’s turbulent commodities markets contrast sharply with the situation that characterized the last 25 years of the twentieth century. Between 1975 and 2000 cereal prices remained substantially stable on a month-to-month basis, although trending downwards over the longer term. For despite rapid population growth – world population doubled between 1960 and 2000 – the Green Revolution launched by Dr Norman Borlaug in the 1960s helped food supply to meet and even exceed demand in many countries, including India, thanks to the work of M. S. Swaminathan, then Director of the Indian Agricultural Research Institute.”

Oh dear. This is one step forward and three back for the FAO. It should not – not – go looking at Green Revolution history in an attempt to encourage beleaguered small farmers and consumers battered by food price inflation. Yes, the Indian Council of Agricultural Research (ICAR) and CIMMYT (the CGIAR International Maize and Wheat Improvement Centre) will establish the Borlaug Institute for South Asia in India. This institute will be at the forefront of the so-called Second Green Revolution in eastern India (and thereafter sub-Saharan and East Africa). The kind of infrastructure demanded by the first Green Revolution by way of irrigation canals, dams with extensive command areas, provision of rural electricity to run pumpsets with, heavily subsidised inorganic fertilisers produced by a monolithic industry closely allied to the petro-chemicals industry and fossil fuel suppliers – all these were overlooked in the rush to raise yield per hectare. We do not want to see that being attempted again with public monies. It is this investment – rather this big fat public money pipe – which kept cereal prices “substantially stable on a month-to-month basis” in what used to be called the First World. It is not possible there now, it is not possible here (Asia and Africa) now. And that’s what FAO should have said, clearly and bluntly.

“In fact there was, in the Western Hemisphere at least, an over-abundance of food, caused in no small part by the generous subsidies which OECD countries paid to their farmers. But the picture today is a very different one. The global market is tight, with supply struggling to keep pace with demand and stocks are at or near historical lows. It is a delicate balance that can easily be upset by shocks such as droughts or floods in key producing regions.”

So it does try to say this, in a push-me-pull-you sort of way, but the truth is there is no delicate balance. Markets do not tolerate delicate balances because investors have no time for such niceties.

“In order to decide how, and how far, we can manage volatile food prices we need to be clear about why, in the space of a few years, a world food market offering stability and low prices became a turbulent marketplace battered by sudden price spikes and troughs.”

Hear, hear.

“The seeds of today’s volatility were sown last century when decision-makers failed to grasp that the production boom then enjoyed by many countries might not last forever and that continuing investment was needed in research, technology, equipment and infrastructure. In the 30 years from 1980 to date the share of official development assistance which OECD countries earmarked for agriculture dropped 43 percent. Continued under-funding of agriculture by rich and poor countries alike is probably the main single cause of the problems we face today.”

Why does the FAO continue stubbornly to see “investment” as an output of only, and exclusively, national agricultural research systems that are in the vast majority of countries government departments with little real connection to growers and household consumers, or are adjuncts of industrial agriculture multinationals? The seeds of volatility (FAO’s pun, not mine) were planted when commodity exchanges invented commodity futures in collusion with banks and investment consulting companies – production booms were not, in the ecological economics framework of measuring things, booms of any kind, nor were they seen in many countries other than the subvention-drunk OECD of the 1970s and 1980s. In this para, FAO has blundered clumsily by now apportioining some blame to “continued under-funding” while having already mentioned the “generous subsidies” years in the West.

“Contributing to today’s tight markets is rapid economic growth in emerging economies, which means more people are eating more meat and dairy produce with the need for feedgrains increasing rapidly as a result. Global trade in soymeal, the world’s leading protein feed for animals, has grown 67 percent over the past 10 years.”

Hear, hear. Type 2 diabetes and the burden of non-communicable diseases (see the WHO’s recent campaign) have also increased dramatically as a result of the wanton carpet-bombing of “emerging economies” (another revolting label) by the food-agbiotech-retail MNCs.

“Population growth, with almost 80 million new mouths to feed every year, is another important element. Population pressure is compounded by the erratic and often extreme meteorological phenomena produced by global warming and climate change. A further contributing factor may be the recent entry of institutional investors with very large sums of money into food commodity futures markets. There is evidence to suggest that food prices may have surged partly as a result of speculation. But there is considerable debate over the issue.”

Yes and no. FAO is right about the impact of population growth, about climate change (it has an enormous amount of documentation on the subject), about institutional investors and how they distort prices and about food speculation and its effects on street prices. There is plenty of evidence. There is not “considerable debate”, unless the FAO thinks that the angry bleatings of bankers to the contrary is some sort of debate. If so, it should consult its fellow UN agency, the United Nations Conference on Trade and Development (UNCTAD), which this year released a study titled ‘Price Formation in Financialized Commodity Markets: The Role of Information’. The UNCTAD experts who wrote this paper concluded that the commodities market isn’t functioning properly, or at least not the way a market is supposed to function in economic models, where prices are shaped by supply and demand. But the activities of financial participants, according to the study, “drive commodity prices away from levels justified by market fundamentals”. This leads to massively distorted prices, which are not influenced by real factors but by the expectation that economic developments will improve or worsen.

“Lastly, distortive agricultural and protectionist trade policies bear a significant part of the blame. In addition, with agriculture now substantially part of the wider energy market, any shock to the latter – such as unrest in a producing country – can have immediate repercussions on food prices. Responding to food price volatility therefore involves two different kinds of measures. The first group addresses volatility itself, aiming to reduce price swings through specific interventions while the other seeks to mitigate the negative effects of price swings on countries and individuals. One measure frequently invoked under the first heading is the setting up of an internationally held food stock able to intervene on markets to stabilize prices. But FAO’s view is that such a stock would be of dubious value, as well as expensive and difficult to operate. Also, government intervention in food markets discourages the private sector and hinders competition.”

Again the FAO push-me-pull-you is at work here, but the premier food agency has made some important points. The connection between agriculture and energy is one – and that means biofuels, which has a para to itself in the FAO document. Conflict is also brought in as a factor affecting prices – in how many food-producing and exporting countries is there now war or armed conflict? The idea of ‘strategic food reserves’ – which countries in South-east Asia and in the Persian Gulf region are pursuing – has been given short shrift, rightly in my view. But once again the FAO makes a tired attempt to placate the pro-WTO groups by bemoaning protectionist trade policies – which in WTO-speak means no barriers to entry for OECD food products anywhere so that all that accumulated legacy subsidy can pay back a little. Not acceptable, FAO folks. And to round off the contradictory para, the FAO statement again criticises “government intervention” as hindering competition. Governments have to serve their citizens according to constitutions and charters – these are internal matters and this is where sovereignty and self-determination come before market. Better believe it FAO. At least, for now.

IGC on world grains in August: stocks down, maize down

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The International Grains Council (IGC) in its end-August 2011 Grain Market Report has said that world grains production is expected to rise significantly from last year’s reduced outturn, but the forecast is lowered from July due to a sharp cut in the US maize crop estimate.

IGC 2011 August - total grains

While a downward adjustment is also made to the 2011-12 consumption forecast, global end-of-season grain stocks are nevertheless placed lower than before, projected to decline by 4% from their estimated level at the start of the season. Total production is now forecast at 1,808m. tons, down by 9m. from the previous month but still significantly higher than in 2010-11 (1,748m.). While the wheat crop figure is raised by 3m. tons, to 677m. (651m.), the world maize production forecast is reduced by 10m. tons, to 849m. (824m.) because of the further decline in US yield prospects.

In view of the tightness in the US maize market, with prices likely to stay firm, also in relation to wheat, feed use of grain is placed 3m. tons lower than before, at 766m., but still up from the past year’s 749m. Global feed use of maize is trimmed by 4m. tons, but that of wheat is placed slightly higher than before, at a twenty-year peak of 125m. tons, reflecting ample availabilities of lower quality grades. With the reduction in the global production total only partly absorbed by a cut in the consumption forecast, the projection of world carryover stocks in 2011-12 is reduced by 5m. tons, to 342m. This would represent a drop of 16m. tons from the estimated carry-in level, mainly due to the expected decline in maize inventories.

[Tables: total grains supply and demand ; total grains trade ]

In particular, end-season stocks in the eight major exporters are projected to fall to 112m. tons, down from 128m. at the start of 2011-12 and from 170m. the year before. These would be the smallest since 2003-04. The global trade forecast for grains in 2011-12 is almost unchanged at 244m. tons, up 1m. from the year ended this June. Bigger than previously projected imports lift the wheat figure by 1.5m. tons, to 128.2m., but this is balanced by a reduction for maize trade, now placed at 92.7m. tons. The substantial recovery in Black Sea region supplies will result in a major shift back to this origin, especially for wheat, with the downturn in US maize exports also partly offset by expected record Ukraine shipments of this grain.

IGC wheat 2011 August

WHEAT: World wheat supply and demand are forecast to be broadly balanced in 2011-12, with a rise in production matched by higher use. With winter wheat harvests nearing completion in the northern hemisphere, better than expected results in the EU, CIS and China outweigh the somewhat reduced prospects in the US and Australia, and the forecast of world production is raised by 3m. tons, to 677m. (651m.).

[Table: Grains and oilseeds index ]

Much of the rise in supply compared with last month is absorbed by a further increase in projected feed wheat demand, contributing to a larger than normal year-on-year upturn in total world wheat consumption, to 678m. tons (657m.). The global carryover is expected to be broadly unchanged, placed 1m. tons higher than in the last Market Report, at 191m. However, stocks of the highest-protein milling wheats are expected to tighten, especially in the US and Canada, contributing to a 3.9m. ton fall in the combined carryover in the eight major exporters, to 64.6m. This is up by 2.0m. tons from last month’s figure, including larger projections for the EU, Kazakhstan and Ukraine.

IGC corn 2011 August

MAIZE (CORN): The US crop forecast is cut sharply from last month, but production prospects in the southern hemisphere have improved and the 2011-12 maize crop is still projected to be the largest on record at 849m. tons (824m.). Demand is expected to increase, but at a slower pace. Growth in feed use will be limited mainly to developing countries, with meat output in most industrialised nations likely to increase relatively slowly due to high feed prices and flat demand.

Growing supplies of competitively-priced lower grade wheat will limit demand for maize, while use of distillers dried grains (DDG) will also remain high. After rising sharply in recent years, maize used for the manufacture of fuel ethanol is forecast to show very little growth, with the figure for the US projected to be unchanged from 2010-11. EU import needs are seen lower than before and, with some buyers in Asia likely to further boost feed wheat purchases, the 2011-12 world trade forecast is trimmed by 1.4m. tons, to 92.7m., almost unchanged from last year.

IGC rice 2011 August

RICE: World rice production (milled basis) in 2011-12 is projected to increase by 2%, to a record 457m. tons. This assumes larger outturns in Far East Asia, including in India, where prospects for this year’s kharif crop are generally favourable. Increased supplies should also enable a further rise in that country’s consumption, with world use forecast to expand to an all-time peak of 457m. tons. With global production and consumption expected to be broadly in balance, the 2011-12 carryover is set to show little overall change, at a nine-year high of 99m. tons. Within the total, inventories in the five major exporters are expected to climb to 30.9m. tons (29.2m.). World trade in calendar 2012 is projected to expand by 1%, to a record 32.2m. tons, with larger shipments to several countries in Asia and sub-Saharan Africa.

[Tables: rice supply and demand ; rice trade ]

IGC soyabean 2011 August

SOYABEANS: World soyabean production in 2011-12 is projected at 258.1m. tons, a decline of 3% from last year, mostly reflecting prospects for a smaller US outturn. Solid demand from Asia (China) will spur further growth in world trade in 2011-12, forecast to rise to a record 96.4m. tons (92.5m.). Global soyameal trade is placed at 60.3m. tons (58.3m.), the year-on-year expansion resulting from bigger purchases by the EU and Far East Asia.

[Table: soyabeans trade ]

Written by makanaka

September 1, 2011 at 11:42

Mussolini and Ethiopia, Italy and Libya, the mill of history

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Un tunisino appena salvato dalla Guardia costiera ringrazia dio per la sua buona sorte. Photo: Immigrazione a Lampedusa/ Jean-Marc Caimi/ Redux Pictures

This week in 1936 the Mussolini regime’s declaration of an Italian empire in East Africa, upon its formal annexation of Ethiopia, increased tensions among the Great Powers, pushing the world closer toward a global conflagration.

The annexation was an open repudiation, said the World Socialist Web Site, of the norms of international law and the most devastating rebuke yet suffered by the League of Nations, forerunner of the United Nations, which had failed miserably to check Rome’s aggression. Likewise implicated were Britain, which had allowed the Italian war machine to pass through the Suez canal, and France, which was seeking to maintain Italian support for the Locarno Pact against Germany aggression.

A cartoon deriding the League of Nations

In response, Britain sent a diplomatic mission to Hitler seeking Germany’s non-recognition of Mussolini’s conquest, while France remained oriented toward maintaining Italy’s support against Germany. With all of Africa now divided by the Europeans—the exception being small Liberia in the west—no further gains could be made on the continent without war among the European powers.

Today, Italy’s participation in the war stems from the fear that it could lose its influence in Libya to France, Britain and the United States. The Financial Times noted: “The Franco-Italian spat over immigration follows sharp differences over Libya, where Rome has been dragged into a war it would rather avoid, fearing a Paris-Benghazi nexus will freeze out its substantial interests in Libyan oil and gas”.

The Libyan oil and gas reserves are a powerful motive for the Italian bourgeoisie to participate actively in the inter-imperialist struggle over their North African neighbour. Italy draws a quarter of its oil imports and ten percent of its natural gas from Libya. The energy group ENI has invested billions of euros in assets in Libya. Until the outbreak of open hostilities, Italy was the largest foreign trade partner of Libya, the largest buyer of its crude oil, and one of Gaddafi’s largest arms suppliers.

FAO March bulletin, Crop Prospects and Food Situation for 2011

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The FAO has released its Crop Prospects and Food Situation, the first for 2011, in March. The overview is:

  • Wheat production: leading producers, (million tonnes)

    FAO’s first forecast for world wheat production in 2011 stands at 676 million tonnes, 3.4% up from 2010. This level of production would still be below the bumper harvests of 2008 and 2009.

  • International grain prices remained volatile in the first three weeks of March.
  • The cereal import volume in low-income food deficit countries (LIFDCs) as a group is anticipated to decline in 2010-11 due to increased production. However, their import bill is forecast to rise by 20% following higher international prices.
  • In Asia, prospects for the 2011 wheat crop are mostly favourable. In China, the outlook remains uncertain but the easing of the drought situation in the North China Plain is a positive development. In Japan, a powerful earthquake and subsequent tsunami have caused devastation with a potentially significant impact on agriculture and food trade.
  • In North Africa, the current situation in Libyan Arab Jamahiriya has resulted in the displacement of large numbers of people and disruption to the flow of goods and services in this heavily cereal import dependent region. WFP has initiated a regional emergency operation to provide food assistance to the affected people.
  • In Southern Africa, prospects for the main 2011 maize crop are generally favourable and relatively low prices have helped stabilize food security.
  • In Eastern Africa, food insecurity has increased in drought-affected pastoral areas of Somalia, Kenya and Ethiopia despite bumper harvests in 2010 and generally low and stable food prices.
  • In Western Africa, post-election violence continues to cause a large population disruption and disturb trade and livelihoods in Côte d’Ivoire and the neighbouring countries.

Countries requiring external assistance for food, 29 of which 21 in Africa

Overall favourable outlook for global 2011 wheat production: At this stage of the season, with the bulk of the coarse grains and paddy crops yet to be planted in the coming months, it is still too early for even a preliminary forecast of global cereal output in 2011. For wheat, however, in the northern hemisphere, which accounts for the bulk of the global production, winter crops are already developing or soon to come out of dormancy, while spring planting is underway in some countries and a preliminary picture of global prospects is already available.

FAO’s first forecast for world wheat production in 2011 stands at 676 million tonnes, representing a growth of 3.4% from 2010. Plantings have increased, or are expected to increase, in many countries in response to strong prices, and yield recoveries are expected in areas that were affected by drought in 2010, the Russian Federation in particular. The global output forecast for 2011 would be still below the bumper harvests in 2008 and 2009.

In Asia, prospects for the 2011 wheat crop, to be harvested from April, are mostly favourable in India and Pakistan, where good harvests are forecast. However, the outlook in China is uncertain because of winter drought in the North China Plain despite recent beneficial precipitation.

Cereal export prices

In the Asia CIS subregion, Kazakhstan is the major producer and the bulk of the crop is yet to be sown this spring. Weather permitting, farmers are expected to maintain the relatively high planting level of the past two years, especially in view of strong prices. Assuming also a recovery in yields after last year’s drought-reduced level, a significant increase in production could be achieved. In North Africa, early prospects for the 2011 wheat crops are generally favourable, except in Tunisia where dry conditions point to a repeat of last year’s drought-reduced crop.

In the southern hemisphere, where the major wheat crops are still to be sown, producers are also expected to increase plantings in response to this year’s favourable price prospects. However, this may not translate to larger crops in Australia or Argentina, where yields are assumed to return to average after bumper levels in 2010.

World cereal production and utilisation

Estimate of world cereal production in 2010 slightly up on December forecast: The estimate for world cereal production in 2010 has been revised upward slightly since previously reported (Crop Prospects and Food Situation, December 2010) to 2,237 million tonnes (including rice in milled terms), just 1.1% below the bumper output in 2009. The decline in cereal production in 2010 was entirely due to lower output in developed countries while in developing countries production rose significantly by almost 5%. The estimate for world wheat production in 2010 now stands at almost 654 million tonnes, 1 million tonnes above FAO’s December forecast but still some 4% less than in 2009.

The latest revision mostly reflects a better than expected outcome of the harvest in Argentina, which more than offset some downward adjustments to estimates in Asia (most notably Kazakhstan) and Europe (mostly the Russian Federation). For coarse grains, the estimate of output in 2010 is now put at 1 117 million tonnes, 7 million tonnes up from the previous forecast and just marginally less than the 2009 level. The upward revision was largely driven by increased estimates for China, India, Ethiopia and Sudan.

The estimate for global rice production in 2010 remains unchanged since December at 466 million tonnes (in milled terms). Improved prospects for Brazil, China mainland and Thailand largely offset a sizeable downward revision for India. At this level, the aggregate output of the 2010 rice seasons, which will close when the northern hemisphere countries complete the harvest of their secondary crops by May-June, would be 2% up from 2009, mostly on account of large gains in Asia, where Bangladesh, China, India and Indonesia, the leading world producers, are all expected to tally larger crops.

In Dakar, a call to ‘clear away invaders’

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Ringing statements from Bolivian president Evo Morales and former Brazilian president Luiz Inácio Lula da Silva have been made at the World Social Forum 2011. Addressing tens of thousands who marched through Dakar, the Senegalese capital, to mark the start of the World Social Forum 2011, Morales called for a programme of social struggle to build a new world. “There must be awareness and a mobilisation to put an end to capitalism and clear away invaders, neocolonialists and imperialists […] I support the popular uprisings in Tunisia and in Egypt. These are signs of change.”

Lula told delegates that economic doctrines imposed on the world’s poorest countries no longer have a place in modern societies. “In South America, but above all in the streets of Tunis and Cairo and many other African cities, a new hope is being born. Millions of people are rising up against the poverty to which they are subjected, against the domination of tyrants, against the submission of their countries to the policies of the big powers,” said Lula.

Marching in the streets of Dakar. Photo: Abdullah Vawda/IPS

Marching in the streets of Dakar. Photo: Abdullah Vawda/IPS

In its eleventh year, the Forum remains a space for open and honest debate. Senegalese President Abdoulaye Wade did not hesitate to declare himself a supporter of the market economy which most here reject, and threw down a challenge to participants regarding their engagement with established global institutions such as the United Nations. “If you who are here, if you had supported the idea, then Africa would already be on the Security Council. Since 2000, I have followed your movement and I still – excuse my frankness – ask myself this question: have you succeeded in changing the world at the global level?”

IPS news has reported that this is a challenge participants in the WSF take very seriously. Kenyan social justice activist Onyango Oloo was a key organiser of the 2007 edition of the Forum in Nairobi; he was unable to attend this year, but he suggested that the building of another world is already begun, away from the fleeting attention of the media. The WSF is a place where those builders can meet each other directly. Organisers said 75,000 people from 132 countries attended, to share their experiences of injustice and resistance, to test each others’ analyses and return home newly-inspired.

Eurodad has reported that a new international debt justice campaign has launched at the World Social Forum in Dakar. Several civil society organisations are launching a global campaign for a new international debt court. The campaign, “Defuse the Debt Crisis,” calls upon French President Nicolas Sarkozy (G20 Chair in 2011) and the international community to establish new rules for debt justice. These rules must ensure fair settlement of debt disputes when a country struggles to repay its loans or when the legitimacy of a debt is in question.

Countries all over the globe are experiencing worryingly high levels of sovereign debt, much of which has been caused by reckless private lending which triggered the global financial crisis. Unsustainable and illegitimate debt impedes development and prevents poverty reduction in developing countries. A fair and lasting solution to the debt problem is urgently needed.

European activists on stilts carry a banner reading "For a world without borders" as they walk in a march on the opening day. Photo: Rebecca Blackwell/AP

European activists on stilts carry a banner reading "For a world without borders" as they walk in a march on the opening day. Photo: Rebecca Blackwell/AP

“The European approach to the current debt crisis repeats the errors that helped turn the sovereign debt crisis of Southern countries in the 1980s into what was later called “a lost decade for development,” says Oygunn Brynildsen Policy Officer at Eurodad. “Rather than holding investors responsible for the risks of their investments, public funds are being used at the expense of tax payers to bail-out the private sector,” she added.

However, “there are alternatives to handle such protracted crises in ways which do not put the burden on the poor,” says Nuria Molina, Eurodad Director. “Rather than condemning debtor countries to protracted adjustments, while securing profits from risky investments, governments must put in place fair and transparent debt workout mechanisms based on well-tested insolvency principles.”

The Guardian reported that migration and movements of people are a key theme of this year’s World Social Forum, along with the growing role of the countries of the “south” and the evolving geopolitics of south-south relations. The city’s Cheikh Anta Diop University, which is hosting the forum, has seen its population explode overnight. The expansive campus – if you get lost, allow three-quarters of an hour to find your way – is home to around 80,000 students: a city within a city. The forum brings another 75,000 participants weaving in, out and among the university’s daily crowds.

“The mobilisation here at Dakar is beyond any expectation,” said one of the forum’s organisers on Wednesday. The overwhelming size of the forum shows both the momentum of the claim that “another world is possible” and brings the limitations of the current structure into sharp relief, she adds. More local and regional forums are needed, interjects another organiser, to complement the world edition and deepen the movement against “globalisation under the interests of capital”.

Gauging China’s influence on the world-IMF

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Salesperson in a textile shop in Beijing, China. Photo: IMF/Finance & Development

In an article in the International Monetary Fund magazine ‘F&D’ (Finance & Development), Vivek Arora and Athanasios Vamvakidis discuss the ramifications of China’s opening-up policy. They said that the effects are well documented but even so, “the facts are astonishing”. From relatively poor beginnings three decades ago, the authors have said, China’s economy is now second in size only to that of the United States of America.

“Real gross domestic product (GDP) has grown by about 10% annually, implying a doubling every seven to eight years. The resulting 16-fold increase in a major economy’s national income during a single generation is unprecedented.”

China’s opening up has meant increasing linkages with the rest of the world, as reflected in its rising share in world trade, global markets for selected goods, and capital flows. China’s stronger linkages with the global economy have also led to a growing use of its currency, the yuan, abroad, as well as closer correlation of market sentiment in China and the rest of Asia and, more recently, the world. China’s share in world trade has increased nearly tenfold over the past three decades, to about 9 percent, while its share in world GDP has risen to 13% from less than 3%.

“The increase in China’s share of world trade is particularly striking in the markets for certain products. China now accounts for nearly one-tenth of global demand for commodities and more than one-tenth of world exports of medium- and high-technology manufactured goods. China’s rising share in world trade over the past three decades is underpinned by a rise in its share in the external trade of every major region (chart). China’s share is, perhaps unsurprisingly, largest in the trade of other emerging Asian economies (13%), and this share has seen a striking increase over time. But its share of African trade is almost as large, and its share in trade with the Middle East, the Western Hemisphere, and Europe has increased several-fold in recent decades.”

To quantify the effects of China’s growth on the rest of the world, Arora and Vamvakidis conducted an empirical analysis using data from the past few decades (the details are to be found in the paper this article is based upon). Shifting to the longer term, they estimated the impact on the rest of the world of long-term changes in Chinese growth, smoothing over the short-term fluctuations associated with the typical business cycle and focusing on longer-term fluctuations. Their results, based on data for the past two decades, suggest that a 1 percentage point change in China’s growth sustained over five years is associated with a 0.4 percentage point change in growth in the rest of the world (coincidentally the same amount as for the short and medium term).

Written by makanaka

January 25, 2011 at 15:10