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An inequality chasm is fracturing Europe, warns the OECD

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April in Berlin, Germany. A homeless man sat begging for euros or food in the entrance of an S-Bahn station.

April in Berlin, Germany. A homeless man sat begging for euros or food in the entrance of an S-Bahn station.

Deepening inequalities in income between the richer and poorer families, greater relative income poverty in recent years compared with earlier, a greater burden borne by children and young people than before because of their being relatively poor – these are some of the stark conclusions contained in the OECD briefing, ‘New Results from the OECD Income Distribution Database’.

This is the picture of Europe today (and of the non-European members of the OECD). “Looking at the 17 OECD countries for which data are available over a long time period, market income inequality increased by more over the last three years than what was observed in the previous 12 years,” observed the new briefing, which is sub-titled ‘Crisis squeezes income and puts pressure on inequality and poverty’.

Annual percentage changes in household market income between 2007 and 2010, by income component. Chart: OECD

Annual percentage changes in household market income between 2007 and 2010, by income component. Chart: OECD

The figures and data show that many of the countries recording the most dramatic increases in inequality are European countries which have been subjected to punitive austerity measures by the European Union and International Monetary Fund. The OECD report singles out Spain and Italy, where the income of “the poorest 10 percent was much lower in 2010 than in 2007”.

Five percent falls in income (per year) amongst the poorest 10 percent were also recorded in Greece, Ireland, Estonia, and Iceland. The only non-European nation with a comparable level of income decline was Mexico. The report also stated that over the same period, poor families in the United States, Italy, France, Austria and Sweden all recorded income losses in excess of the OECD average.

Indeed the ‘New Results’ briefing has showed that across OECD countries, real household disposable income stagnated. Likewise, the average income of the top 10% in 2010 was similar to that in 2007. Meanwhile, the income of the bottom 10% in 2010 was lower than that in 2007 by 2% per year. Out of the 33 countries where data are available, the top 10% has done better than the poorest 10% in 21 countries.

This is the OECD picture till 2010. Since then, recession has been the companion of inequality. With an average growth of -0.2 per cent in the first quarter (against -0.1 per cent in the EU as a whole) and hardly better prospects for the whole rest of the year (-0.7 per cent), according to Eurostat, the dreaded “double dip” has become a reality. The press attributes the result largely to the austerity policies.

Gini coefficient of household disposable income and gap between richest and poorest 10%, 2010: Chart: OECD

Gini coefficient of household disposable income and gap between richest and poorest 10%, 2010: Chart: OECD

“Eurozone sets bleak record of longest term in recession,” reported the Financial Times. The daily noted that “this latest dismal record came after unemployment hit 12.1 per cent in the bloc, its highest level,” and that this data “is likely to add to pressure on the European Central Bank to take further action after cutting interest rates this month, and to revise down its economic forecast predicting a recovery later in the year.”

Moreover, relative income poverty – the share of people having less income than half the national median income – affects around 11% of the population on average across OECD countries. Poverty rates range between 6% of the population in Denmark and the Czech Republic to between 18% and 21% in Chile, Turkey, Mexico and Israel. Over the two decades up to 2007, relative income poverty increased in most OECD countries, particularly in countries that had low levels of income poverty in the mid-1990s.

In Sweden, Finland, Luxembourg and the Czech Republic, the income poverty rate increased by 2 percentage points or more. In Sweden, the poverty rate in 2010 (9%) was more than twice what it was in 1995 (4%). Relative poverty also increased in some countries, such as Australia, Japan, Turkey and Israel, with middle and high levels of poverty.

The OECD briefing has stated bluntly: “Households with children were hit hard during the crisis. Since 2007, child poverty increased in 16 OECD countries, with increases exceeding 2 points in Turkey, Spain, Belgium, Slovenia and Hungary.” The ‘New Results’ briefing added: “Since 2007, youth poverty increased considerably in 19 OECD countries. In Estonia, Spain and Turkey, an additional 5% of young adults fell into poverty between 2007 and 2010. In the United Kingdom and Ireland, the increase was 4%, and in the Netherlands 3%.”

Annual percentage changes in household disposable income between 2007 and 2010, by income group. Chart: OECD

Annual percentage changes in household disposable income between 2007 and 2010, by income group. Chart: OECD

Between 2007 and 2010, average relative income poverty in the OECD countries rose from 12.8 to 13.4% among children and from 12.2 to 13.8% among youth. Meanwhile, relative income poverty fell from 15.1 to 12.5% among the elderly. This pattern confirms the trends described in previous OECD studies, with youth and children replacing the elderly as the group at greater risk of income poverty across the OECD countries.

These results only tell the beginning of the story about the consequences of austerity, growing unemployment, the burden on children and youth, and burden on immigrant wage labour. The OECD data describes the evolution of income inequality and relative poverty up to 2010. But “the economic recovery has been anaemic in a number of OECD countries and some have recently moved back into recession”, said the briefing.

Worse, since 2010, many people exhausted their rights to unemployment benefits. In such a situation, the briefing has warned, “the ability of the tax-benefit system to alleviate the high (and potentially increasing) levels of inequality and poverty of income from work and capital might be challenged”. These are unusually blunt words from the OECD and their use reflects the depth and persistence of the crisis of modern, reckless, destructive capitalism in Europe.

A food policy pedlar’s annual derby

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IFPRI_GFPR_2012Evidence, investment, research, commitments and growth. You will find these reprised in the second Global Food Policy Report by the International Food Policy Research Institute (IFPRI, which, as I must never tire of mentioning, is the propaganda department of the CGIAR, the Consultative Group on International Agricultural Research, which, ditto, is the very elaborate scientific cover for control over the cultivation and food choices made especially by the populations of the South). And now, with the dramatis personae properly introduced, let me quickly review the plot.

The GFPR (to give this slick production an aptly ugly acronym) for 2012 follows the first such report and furthers its  claim to provide “an in-depth look at major food policy developments and events”. It comes equipped with tables, charts, cases, apparently authoritative commentary (many from outside IFPRI), and is attended by the usual complement of models and scenarios (can’t peruse a report nowadays without being assaulted by these).

In an early chapter, the GFPR 2012 has said:
“Evidence points to a number of steps that would advance food and nutrition security. Investments designed to raise agricultural productivity — especially investments in research and innovation — would address one important factor in food security.”
“Research is also needed to investigate the emerging nexus among agriculture, nutrition, and health on the one hand, and food, water, and energy on the other.”
“In addition, by optimizing the use of resources, innovation can contribute to the push for a sustainable ‘green economy’. Boosting agricultural growth and turning farming into a modern and forward-looking occupation can help give a future to large young rural populations in developing countries.”

The G20 in session

The G20 in session

Consider them one by one. Whose evidence? That of the IFPRI, the CGIAR and its many like-minded partners the world over (they tend to have the same group of funding donors, this institutional ecosystem). A round-up of food policy by any outfit would have ordinarily included at least some evidence from the thousands of studies and surveys, large and small, humble and local, that discuss policy pertaining to food and cultivation. But, you see, that is not the CGIAR method. What we have then is the IFPRI view which, shorn of its crop science fig leaf, is similar to that of the Asian Development Bank’s view, the World Bank’s view, the International Finance Corporation’s view or the European Bank for Reconstruction and Development’s view (raise your fist in solidarity with the working class of Cyprus for a moment). And that is why the GFPR 2012 ties ‘investment’ to ‘evidence’, and hence ‘research’ to ‘food security’.

What research? Well, into “the emerging nexus among agriculture, nutrition, and health” naturally. This extends the CGIAR campaign that binds together cultivation choices for food staples, the bio-technology mittelstand which is working hard to convince governments about the magic bullet of biofortification (especially where cash transfers and food coupon schemes are already running), and the global pharmaceutical industry. It is really quite the nexus. As to food, water and energy, that is hardly an original CGIAR discovery is it, the balance having being well known since cultivation began (such as in the fertile crescent of the Tigris and Euphrates, about seven millennia ago, now trampled into sterility by ten years of an invasion, or as was well recognised by the peons of central America, an equal span of time ago, and whose small fields are being reconquered by the GM cowboy duo of Bill Gates and Carlos Slim).

What kind of ‘green economy’? Among the many shortcomings of IFPRI (in common with the other CGIAR components) is its studied refusal to incorporate evidence from a great mass of fieldwork that supports a different view. ‘Growth’, ‘modern’ and ‘forward looking’ are the tropes more suited to a public relations handout than an annual review of policy concerning agriculture and therefore also concerning the livelihoods and cultural choices made by millions of households. IFPRI’s slapdash use of ‘green economy’ reflects also its use by those in the circuit of the G20 and by the Davos mafia – they are the hegemons of politics and industry who force through decisions (they use sham consensus and gunpoint agreement) that have scant regard for climate change, biodiversity loss or dwindling resources. Hence the IFPRI language of “optimizing the use of resources”. The idea of unfettered growth as the way to end poverty and escape economic and financial crisis remains largely undisputed within the CGIAR and its sponsors and currently reflects the concept as found in ‘green economy’.

Food (trade and commodity) security.

Food (trade and commodity) security.

[The GFPR 2012 report and associated materials can be found here. There is an overview provided here. There are press releases: in Englishen Français and in Chinese.]

“Building poor people’s resilience to shocks and stressors would help ensure food security in a changing world”, the IFPRI GFPR 2012 has helpfully offered, and added, “In any case, poor and hungry people must be at the center of the post-2015 development agenda”. Ah yes, of course they must be, in word and never mind deed. “International dialogues, such as the World Economic Forum, the G8, and the G20, must be used as platforms to develop this concept, propose policy options, and formulate concrete commitments and actions to reduce poor people’s vulnerability to food and nutrition insecurity and enhance their capacity for long-term growth”.

To call the World Economic Forum, the G20 and the G8 ‘platforms’ and ‘dialogues’ is laughable, for there are no Southern farmers’ associations present, nor independent trade unions, nor members of civil society and community-based organisations that actually pursue, rupee by scarce rupee, the agro-ecological restoration of rural habitats in the face of migration, rural to urban, that occurs through dispossession, nor are there any of the myriad representatives of socialist and humanist groups whose small work has a restorative power greater than that of the CGIAR and its sponsors.

Never part of the CGIAR-IFPRI sonata that is played at these ‘dialogues’, there is ample evidence (since that is the theme) of locally articulated and politically wrested food sovereignty that can be held up as examples with which to reduce poor people’s vulnerability. In the past ten years, countries particularly in South America (we salute you, Hugo Chavez) have incorporated food sovereignty into their constitutions and national legislations.

In 1999 Venezuela approved by referendum the Bolivarian Constitution of Venezuela whose Articles 305, 306 and 307 concern the food sovereignty framework. In 2001 Venezuela’s Law of the Land concerns agrarian reform. In 2004 Senegal’s National Assembly included food sovereignty principles into law. In 2006 Mali’s National Assembly approved the Law on Agricultural Orientation which is the basis for implementation of food sovereignty in Mali. In 2007 Nepal approved the interim constitution which recognised food sovereignty as a right of the Nepalese people. In 2008 Venezuela enacted legislation to further support food sovereignty: the Law of Food Security and Food Sovereignty; the Law for Integrated Agricultural Health; the Law for the Development of the Popular Economy; the Law for the Promotion and Development of Small and Medium Industry and Units of Social Production. In 2008 Ecuador approved a new constitution recognising food sovereignty. In 2009 Bolivia’s constitution recognised the rights of indigenous peoples as well as rights to food sovereignty. In 2009 Ecuador’s Food Sovereignty Regime approved the Organic Law on Food Sovereignty. In 2009 Nicaragua’s National Assembly adopted Law 693 on Food and Nutrition Security and Sovereignty.

This is what true resilience looks and sounds like. For those unfortunate populations that continue to struggle under a food price inflation whose steady rise is aided and abetted by the CGIAR and its sponsors, the alternatives become clearer with every half percent rise in the price of a staple cereal, and with the loss of yet another agro-ecological farming niche to the world’s land grabbers.

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