Posts Tagged ‘G20’
It must be difficult to be a senior official in the Food and Agriculture Organisation (FAO) of the UN these days, especially if the official is above 40 years old and has spent the last two decades working “in the field” (which usually means away from some capital city somewhere, in discomfort that is amusingly relative to most of us proletarian toilers). For, I do think that there is still a majority of folk in the FAO who care about their work and the aims of the organisation, muddled though these get when 190-odd member states each bring their own version of reality (and ambition) into the proceedings.
More difficult it is nowadays in an FAO that is being shepherded more closely into the embrace of the OECD, the World Bank-International Monetary Fund, World Trade Organisation embrace, with its murmuring old boys’ clubs all shadowy in their suits, adept at facilitating the trade of political positions for corporate board seats. And more difficult it is nowadays in an FAO that is scrutinised every day by NGOs and civil society groups that have successfully ensured that negotiations called ‘multi-lateral’ must be open before public gaze and can no longer hide behind empty principles when hunger – FAO’s single problem – stalks the planet.
Perhaps that is one reason why the FAO has called this year’s World Food Day ‘Sustainable Food Systems for Food Security and Nutrition’ – and notice the addition of ‘nutirion’, there’s no getting away from the N-word these days, so loaded has it become. The theme, to borrow from the typically bland FAO pronouncement, “gives focus to World Food Day observances and helps increase understanding of problems and solutions in the drive to end hunger”. Well said, for the umpteenth time.
But there have been departures from the corporate script lately which are surprising. On 2013 October 04 the Director General of FAO, José Graziano da Silva, formalised a tie with La Via Campesina, recognising it as the most important voice of small food producers worldwide. This is seen by Campesina as “yet another welcome step in a series of ongoing reforms of the FAO, which have created a unique and unprecedented space to collaborate with civil society and democratize the arena of global food policy”. Easier wished for than done, as Campesina well knows, because the financiers and bankers, agri-commodity trading oligopolies and mafioso, the crooked politicians in the European Union and their willing partners in the ‘developing’ world are not going to quietly let this happen.
These reforms are aimed at giving the FAO not just more political legitimacy by becoming more inclusive, but also at reviving it as the cornerstone for international cooperation in the area of food security, starting to take such policy decisions out of the hands of the World Bank (WB) or the World Trade Organization (WTO.) While these developments are welcome, the global peasants’ movement remains realistic about the amount of energy that should be put into the UN, maintaining its greatest strength on the ground mobilizing farmers and building alternatives.
In 2012, at the 39th session of FAO’s Committee on Food Security (CFS), the G20 approached the CFS and asked the Committee to agree with what it said on price volatility in agricultural commodities, which since 2007 has dragged tens of millions of households in South and North into hunger and debt. When that happened, and when a compromised CFS agreed, the civil society delegation to the session walked out. The NGOs, social movements, representatives of peasants’ federations and associations who were present had, on the contrary, demanded strong regulation of the commodity futures markets that fuel price volatility and the food insecurity of the poorest. But the G20 (and that means the investors in a global agribusiness industry) won that round.
With the help of the CGIAR, what for the sake of convenience we call the G20 will want to win every time. The CGIAR is the Consultative Group on International Agricultural Research which runs 15 centres around the world that are described as “independent, non-profit research organizations, innovating on behalf of poor people in developing countries” and as being “home to almost 10,000 scientists, researchers, technicians, and staff working to create a better future for the world’s poor”. The descriptions about ‘independent’, ‘non-profit’ and ‘for the poor’ are lies, as they have been for every single one of the 40 years of this plague called the CGIAR. But the CGIAR system is large, powerful, almost invisible and little understood except by those in agricultural research systems (such as those in the Indian Council of Agricultural Research) in ‘developing’ countries.
And that is why the release, a few days ago, of the ‘Global Hunger Index’ 2013 needs to be interpreted for what it is, because it is the product of one of the CGIAR centres, the International Food Policy Research Institute (IFPRI). The annual index offers a ranking of hunger, or food insecurity/security for many countries but not all (see the image of the map and its caption). The IFPRI functions worldwide as a motivated think-tank that commissions carefully scripted research to fulfil pre-determined outputs that serve the interests of those who profit from the industrial agricultural system and retail food system.
That such an obvious fifth column finds residence and a willing ear in India ought to be a matter of shame to us. Here is a small example why. The IFPRI, in the 2013 Global Hunger Index, has distributed its ‘recommendations’ which are from the typical neo-liberal charter of subjugation of the working classes and the denial of choice, all camouflagued by whichever development jargon is found to be currently in vogue.
Hence “broader policy coherence for development is also a key requirement for efforts to strengthen resilience. Policies that undermine resilience must be revised. To foster resilience to undernutrition, policies should be designed with the intention of improving nutrition outcomes and realising the right to adequate food” in fact means – do away with policies that still see a role for the state and the public sector, hide this behind trendy concepts like ‘resilience’ and ‘right to food’, but include nutrition (which I mentioned earlier) because that is the route the MNCs have successfully used.
Hence “encourage and facilitate a multisectoral approach to resilience (as the Scaling Up Nutrition movement encourages a multisectoral approach to nutrition, for example), coordinating plans and programs across line ministries” in fact means – phase out your thinking and replace it with ours, which comes with a United Nations endorsement and which places private business at the centre of policy and its implementation.
Hence “adjust policies and strategies that undermine the resilience of poor and vulnerable groups, such as the low import tariffs or the structural neglect of smallholder agriculture in Haiti” in fact means – remove barriers to food imports, stop subsidies and subventions that the poor, marginalised and vulnerable have a right to in your country (consider the ruckus the World Trade Organisation has been making about India’s new National Food Security Act) and spout righteous claptrap about ‘neglect’.
Hence “ensure that policies and programs draw on a wide range of expertise such as collaborative, multiagency, and multisectoral problem analysis. National governments should support the emergence of multistakeholder platforms and make active use of such forums” in fact means – the expertise will be foreign and provided by the CGIAR and its numerous allies in all garbs, these ‘multi’ platforms will be public showcases to conceal an agenda already set.
[The full IFPRI Global Hunger Index 2013 report is here. The ‘issue brief is here’ for those who want a condensed dose of dangerous neo-liberal vitamins. And the obligatory data set used to support the well-set arguments is here.]
There is no comparison between the IFPRI propaganda and the annual report of the Right to Food and Nutrition Watch 2013, the sixth edition of which was released in 2014 October. The Watch identifies a number of policies that generate hunger and malnutrition instead of reducing them. The Watch insists on the need for meaningful participation – at every level – of people and communities in the development of those public policies which affect their lives.
You will find here national case studies and analysis that show (1) policies that foster violence and discrimination against women with regard to equal access to natural resources, inheritances, equal wages and political decision-making, (2) policies that systematically limit and exclude large groups, including peasants, agricultural workers, fisherfolks, pastoralists and indigenous peoples from participating in those decisions that affect their very livelihoods and (3) policies on a global level that facilitate land grabbing, concentrated ownership of natural resources and the commodification of public goods that deprive smallholders and other people of their food resources.
Evidence, 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.”
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’.
[The GFPR 2012 report and associated materials can be found here. There is an overview provided here. There are press releases: in English, en 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.
Conducted by the Potsdam Institute for Climate Impact Research (PIK) and Climate Analytics in Berlin, the report, ‘Turn Down The Heat’, released this month just before the next round of climate change negotiations begin in Doha, Qatar, discusses bluntly the frightening risks of a future without climate policy.
There are several sharp and extremely urgent messages for politicians and policy-makers alike in the Potsdam report. Politicians, whether in the OECD countries or in the BRICS or in the G20, have proven themselves time and again, year after year, to favour the enrichment of themselves and their constituencies over any consideration of a shared planet and a cooperative future. What do we have left? Policy-makers, bureaucrats, NGO and community representatives and hundreds of thousands of concerned citizens in our countries, and so it becomes necessary that these are the people who read and digest what Potsdam has had to say.
What does the Potsdam Institute for Climate Impact Research and Climate Analytics have to say? “Humankind’s emissions of greenhouse gases are breaking new records every year. Hence we’re on a path towards 4-degree global warming probably as soon as by the end of this century. This would mean a world of risks beyond the experience of our civilisation – including heat waves, especially in the tropics, a sea-level rise affecting hundreds of millions of people, and regional yield failures impacting global food security.”
As usual, it is the poorest in the world are those that will be hit hardest, the researchers conclude, making development without climate policy almost impossible. But we have to ask – how possible is it with the current apology of climate policy? What is popularly called the “global community” by the world’s mainstream media (most of which is owned by corporations, politicians or both) is considered to have committed to holding warming below 2°C to prevent “dangerous” climate change. This is rubbish, and the Potsdam report all but says so: “The sum total of current policies – in place and pledged – will very likely lead to warming far in excess of this level. Indeed, present emission trends put the world plausibly on a path toward 4°C warming within this century.”
As I am intimately concerned with agriculture and food and therefore the effects of a changing climate upon them, I turned to that section of the ‘Turn Down The Heat’ report (get the pdf here). The Potsdam researchers said that projections for food and agriculture over the 21st century indicate substantial challenges irrespective of climate change. They added: “As early as 2050, the world’s population is expected to reach about 9 billion people and demand for food is expected to increase accordingly.”
Here I found the first problem, and that indicated yet again that the climate scientists are good at modelling climate, but bad at understanding how the food system (not the natural one, the corporate one) actually works. What is more correct in my view is that primary agricultural produce at current levels is enough to feed a growing population for the next two generations provided (1) food crops such as maize are not grown to provide biofuel, (2) meat in all its hideous factory-farmed forms is drastically reduced in all agro-ecological regions, (3) the huge inventories held by the regional and global food processing and food retail industries are drastically cut down (that their businesses are shut down).
The Potsdam report continued that “based on the observed relationship between per capita GDP and per capita demand for crop calories (human consumption, feed crops, fish production and losses during food production)” it is reasonable (from the evidence it cites) to “project a global increase in the demand for crops by about 100 percent from 2005 to 2050”. It mentions “other estimates for the same period project a 70 percent increase of demand” and that “several projections suggest that global cereal and livestock production may need to increase by between 60 and 100 percent to 2050, depending on the warming scenario”.
Here I found the second problem. What is meant by these expert reports when they talk about the relationship between per capita GDP and per capita demand for crop calories? Beyond a localised recommended daily dietary allowance designed to provide proper nutrition, extra consumption of food calories (and protein and fats and sugar and micro-nutrients) can no longer be seen as expected to rise in parallel with rising income (where is income rising in real terms anyway, my thermometric friends, other than for the 1% who are causing most of this trouble in the first place?). The reform of diet and the return of local slow food is the answer to those complex, altogether unnecessary equations that posit 40%, 50%, 70% or 100% increases in food production over X, Y or Z years.
Then, the Potsdam report goes on to say that “the historical context can on the one hand provide reassurance that despite growing population, food production has been able to increase to keep pace with demand and that despite occasional fluctuations, food prices generally stabilise or decrease in real terms”.
Here I found the third problem and it is, as the more laid-back of Americans tend to say, it’s a doozy. What’s the historical context? Is it the Green Revolution by any chance? Is it the mutation of hybrid agri into bio-tech agri? Considering that the climate scientists are the ones who are very familiar with the gases now crowding our atmosphere, have they not made the connection between industrial, synthetic, high-external input agriculture and the nitrification of the atmosphere they’re so good at measuring? I’ll bet they are, so how can they point to the relentless growth of primary crop tonnage as a “reassurance” when it’s in fact the opposite?
That’s my quick reaction to the food growth part of what they have said. As for “food prices generally stabilise or decrease in real terms”, clearly they don’t consult even the mild-mannered FAO food price index, which has entered in 2012 November yet another month of its high plateau which makes it the longest sustained maintenance of elevated food price index since it began. The climate scientists are good at climate, but they surely need a crash course in understanding how the corporations and their patrons, those pesky politicians who are preparing for another jaw-jaw in Doha, exploit climate change for profit, and that includes making an extra penny out of a kilo of wheat flour, never mind the weather outside.
Ever since October 2011 when the world’s seventh billion person was born, there has been a new flurry of articles and prognoses about the need to increase ‘global’ food production to feed a ‘global’ population. While this may be all very well for earth systems scientists and researchers who are accustomed to dealing with planetary scale, those in charge of planning for agriculture at national and sub-national levels find it difficult enough relating to their own numbers (in India, the population of the smallest states are between 1 and 2 million, while that of the largest, Uttar Pradesh, is close to 200 million (!) which if it were a country would be placed between the fourth and fifth most populous countries – Indonesia and Brazil).
Through this year, numerous inter-governmental agencies and large organisations – including the FAO, WFP and IFAD – have discussed the need to be able to feed a population of nine billion, which we are expected to be in 2050 or thereabouts. And so says, recently, the ‘Sustainable Agricultural Productivity Growth And Bridging The Gap For Small-Family Farms’, which is the ‘Interagency Report to the Mexican G20 Presidency’ (12 June 2012).
Explaining that “the growing global demand for food, feed and biofuel is well established”, this inter-agency report has said that income growth will increase the quantity and change the composition of agricultural commodity demand. I find this approach a troublesome one because on the one hand there is growing recognition (even if corrective action is small and mostly symbolic) that consumption is to sustainable the way energy efficiency is to total energy use. Why are large agency and inter-agency reports continuing to skirt a matter which should be dealt with head-on – that consumption of food by the populations of ‘developing’ countries, on the lines of that practiced by the populations of OECD countries – cannot be encouraged by the food MNCs and the global food retail consortia?
It is because of this consistent refusal to see – and name – the elephant in the room that this report, to the Mexican G20 Presidency, has said: “Significant increases in production of all major crops, livestock and fisheries will thus be required”.
What are the estimates provided? “Estimates indicate that by 2050, agricultural production would need to grow globally by 70% over the same period, and more specifically by almost 100% in developing countries, to feed the growing population alone… ” I am puzzled by the easy acceptance of this simple equation by the following agencies and institutions, all of whom have contributed to this report: Bioversity, CGIAR Consortium, FAO, IFAD, IFPRI, IICA, OECD, UNCTAD, Coordination team of UN High Level Task Force on the Food Security Crisis, WFP, World Bank, and WTO.
There is a mathematics here that is eluding me. The estimate is that from now until 2050, world population will grow around 30% – from the current 7 billion to an estimated 9.1 billion. However, if population grows at 30%, why must the available food (excluding biofuels demand) grow at 70% over the same period? It is extremely difficult for most people (earth system scientists excluded) to make sense of such large numbers. In order to break up large numbers into more familiar terms, I have (from UN’s World Population Prospects 2010) extracted the following data. These are the populations of France, DR Congo, Thailand, Turkey and Iran, these are the world’s 21st to 17th most populous countries (in that order).
In 2012 their populations are: France 63.5 million, DR Congo 69.6 m, Thailand 69.9 m, Turkey 74.5 m, and Iran 75.6 m. Let’s not try to strain to look ahead as far as 2050 (by which time some of us will have returned to our ecosystems as dust or as ashes) but look to 2027, or 15 years ahead. Then, the populations will look like this: France 67.7 million, DR Congo 99.6 m, Thailand 73.1 m, Turkey 85.1 m and Iran 83.7 m.
Thus we see that, as the ‘Interagency Report to the Mexican G20 Presidency’ has explained, it is indeed some ‘developing’ countries which will need to provide for considerably more food being grown and made available – DR Congo will have, in this short span of years, 30 million more people! Turkey will have more than 10 million more! The growth – again for the 2012 to 2027 period alone – is France 7%, DR Congo 43%, Thailand 5%, Turkey 14% and Iran 11%.
Does it then still make sense to speak of 2050 horizons and 2.1 billion more people when we are at best talking to national planners, sectoral administrators and thematically-oriented agencies accustomed more to district boundaries than continental spreads? I say it doesn’t – and the less time and money and conferencing we expend on these beyond-humanscale numbers the more sense we will make to those in need of guidance. The question then resolves itself as being more prickly, and more in need of hard answers – if the 30 million additional people in DR Congo are to choose a diet that has 50% less meat and 50% more indigenous vegetables and tubers and roots in it, will DR Congo still – over this period alone – need to plan for growing 43% more food (grain) to keep pace with population growth? Will Turkey need to do the same (time to encourage more çorbasi and less schwarma perhaps!)?
UNCTAD’s Global Commodities Forum is back. The theme of this third meeting (23-24 January, 2012) is “Harnessing development gains from commodities production and trade”. Participants are to discuss the debt crisis and analyse the trade-related innovations developed in response to it.
This year, the Forum will focus on ways to spur development through commodity production and trade, and on practical approaches to developing supply markets in commodity-dependent developing countries. Participants are also expected to discuss the sovereign debt crisis and analyse the trade-related innovations developed in response to the credit crunch. A special session is going to be dedicated to identifying opportunities for applying existing private-sector solutions to the challenges faced by developing countries.
The third GCF is divided into two parallel streams: the Plenary A stream treats the Forum’s overall theme of harnessing development gains from commodities production and trade; the Parallel B stream examines the development of supply markets in commodity-dependent countries.
Plenary A: Recent developments in international commodities trade, their impacts and implications (Joint A1/B1); The sovereign debt crisis and its impacts on commodities production and trade (A2); Trade-related financial innovations developed in response to the post-2008 credit crunch (A3); Key challenges facing commodity-dependent developing countries (A4/5); Identifying emerging opportunities in the changing global energy mix (A6); Practical examples of supply chain development in developing countries (A7).
Parallel B: Recent developments in international commodities trade, their impacts and implications (Joint A1/B1); In practice: Financing commodity-based development in developing countries (B2/3); Expanding access to markets and trade-enabling tools (B4/5); Identifying potential opportunities for collaboration (B6/7).
From the concept note: Many developing countries are heavily dependent on exports of commodities. Throughout most of the 1980s and 1990s, prices for these goods remained low, but since 2002 they have risen considerably. Despite the resulting increase in the value of their chief exports, most commodity-dependent developing countries (CDDCs) have been unable to convert the additional revenue into a diversification of their export industries. Since 2002, the number of countries whose commodity exports represent more than 60% of merchandise exports has risen from 85 to 91.
Their persistent dependence on commodities exports has been particularly poignant for CDDCs as the fallout from the 2008 global economic crisis continues. Many of these nations are dependent on imports of food, oil, and manufactured goods. Poverty and food security are often pressing concerns. As the global crisis has squeezed government and household budgets, CDDCs find themselves less able to confront these major challenges. It is vital for them to realize greater lasting value from their commodities exports.
Over the past year, the pressure on CDDCs has increased with the worsening of the sovereign debt crisis, which threatens to reduce the amount of credit available to commodities producers and to increase the amount of speculative capital that flows from financial markets into commodities in search of profitable investments. Continued price volatility in commodities markets has prompted high-level collaborative international action, including most recently by the UN High Level Task Force (UN HLTF) and the G-20 grouping of major economies. This year’s UNCTAD Global Commodities Forum (GCF) will focus on what CDDCs can do to reverse the pattern. The event’s theme is ‘Harnessing development gains from commodities production and trade.’
Le Monde Diplomatique, that fearless critic of globalisation and the tyranny of the multilateral lending institutions, has said in its 2011 December issue that in November, the Franco-German directorate of the European Union, the European Central Bank and the International Monetary Fund — the ‘troika’ — were furious when the Greek prime minister, George Papandreou, announced plans to hold a referendum.
Absolute oligarchs dislike referendums because the idea has a great deal to do with consultation – not a favourite subject for the IMF in the 67 years it has claimed to shape the global economy. That is why, summoned to Cannes for an interview during a summit that his country was too small to attend, kept waiting, and publicly upbraided by Angela Merkel and Nicolas Sarkozy (who were responsible for exacerbating the crisis), Papandreou was forced to abandon the plan for a referendum and resign. His successor, a former vice-president of the ECB, promptly decided to include in the Athens government a far-right organisation banned since the Greek colonels lost power in 1974.
In ‘Europe in crisis, rule by troika’, Serge Halimi has written in LMD that the European project was supposed to secure prosperity, strengthen democracy in states formerly ruled by juntas (Greece, Spain, Portugal), and defuse “nationalism as a source of war”. But it is having the opposite effect, with drastic cuts, puppet governments at the call of the brokers, and renewed strife between nations. Everything, in short, that the IMF and the World Bank have pursued since 1944 mostly successfully in Asia, Africa and South America.
Former bankers Lucas Papademos and Mario Monti have taken over in Athens and Rome, exploiting the threat of bankruptcy and the fear of chaos. They are not apolitical technicians but men of the right, members of the Trilateral Commission that blamed western societies for being too democratic. “Having crushed Greece and Italy, the EU and the IMF have now set their sights on Hungary and Spain,” Halimi has written, and it is a grim warning.
Red Pepper has more on the ways and means of the IMF.
“It’s stripped millions of people of their livelihoods, but the global economic crisis has brought one institution back from the dead: the International Monetary Fund. Two years ago, the IMF looked to be on its last legs. It had got to the stage where nobody wanted to borrow its money. Many developing countries started accumulating reserves to avoid ever having to go to the IMF loan shark. Developed countries in trouble would go just about anywhere – China, Russia, Saudi Arabia – to avoid the IMF.”
Then came the meltdown. “The IMF failed to see it coming – pretty damning for a body supposed to oversee global financial stability – but bankrupt countries suddenly had no choice but to come begging.” Exactly the point – the IMF did see it coming because this is what its prescriptions for the previous decade were aimed at in the first place. In April last year, the G20 pumped the organisation with £330 billion of new funds. Uruguayan writer Eduardo Galeano called the decision ‘black humour’, saying it would ‘rub salt in the wound’ of countries hit by a crisis they did not create. The IMF is now re-armed and doubly dangerous, with large new areas in what was formerly the Eurozone to subjugate.
Not quietly by any means. After all, the Greeks are Greeks first and then, perhaps, Europeans. Ditto with the Italians, Portuguese, Hungarians, Spaniards and Latvians. It is looking rather like the Germans and the French (elite, mind you, not the labour, the unemployed, the migrants and the armies of informal workers struggling on 25 euros a day) are the last Europeans left.
But this is why major protests have been convulsing Greece throughout the autumn with strikes, and occupations of the main squares in many towns. Civil servants blockaded their ministries, preventing ministers from accessing their departments in September and October. The early November surprise announcement of a popular referendum in Greece on the EU-IMF loan terms and conditions would have marked the first time an IMF lending package was subjected to a test of popular ownership. In the end the political pressure heaped on the Greek prime minister by other European countries, the Greek political opposition and factions from within his own government forced him to back down and resign as prime minister.
After the collapse of the Greek government, Elena Papadopoulou of the Athens-based Nicos Poulantzas Institute said: “Despite the proclaimed enthusiasm, there is no realistic reason to believe that the new coalition government – with the participation of the extreme right – will follow anything other than the socially destructive policies applied according to IMF recipes with the agreement of the European elites.”
FAO has released its Food Price Index for October 2011, saying the index has dropped dropped to an 11-month low, declining 4 percent, or nine points, to 216 points from September. Indeed the index has dropped, declined and has certainly not risen. But does this mean food prices for the poor in many countries, for labour, for informal workers, for cultivators too – has the cost of food dropped for any of them?
The answer is a flat and unequivocal ‘No’. FAO has said so too: “Nonetheless prices still remain generally higher than last year and very volatile.” At the same time, the Rome-based food agency has said that the “drop was triggered by sharp declines in international prices of cereals, oils, sugar and dairy products”.
The FAO has said that an “improved supply outlook for a number of commodities and uncertainty about global economic prospects is putting downward pressure on international prices, although to some extent this has been offset by strong underlying demand in emerging countries where economic growth remains robust”.
Once again, the FAO is speaking in two or more voices. It should stop doing so. A very small drop in its food price index does not – repeat, does not – indicate that prices for food staples in the world’s towns and cities has dropped and people can afford to buy and cook a square meal a day for themselves and their children. Not so at all.
I am going to contrast what FAO has said about its October food price index with very recent reportage about food and food price conditions in various parts of the world.
FAO: “In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012. International cereal prices have declined in recent months, with the FAO Cereal Price Index registering an eleven month-low of 232 points in October. But nonetheless cereal prices, on average, remain 5 percent higher than last year’s already high level.”
Business Week reported that rising food prices in Djibouti have left 88 percent of the nation’s rural population dependent on food aid, the Famine Early Warning Systems Network said. A ban on charcoal and firewood production, which provides about half of the income of poor people in the country’s southeast region, may further increase hunger, the Washington- based agency, known as Fewsnet, said in an e-mailed statement today. Average monthly food costs for a poor urban family are about 33,907 Djibouti francs ($191), about 12,550 francs more than the average household income, Fewsnet said. Urban residents in the Horn of Africa nation don’t receive food aid, it said.
FAO: “According to [FAO’s November 2011] Food Outlook prices generally remain ‘extremely volatile’, moving in tandem with unstable financial and equity markets. ‘Fluctuations in exchange rates and uncertainties in energy markets are also contributing to sharp price swings in agricultural markets,’ FAO Grains Analyst Abdolreza Abbassian noted.”
A Reuters AlertNet report quoted Brendan Cox, Save the Children’s policy and advocacy director, having said that rising food prices are making it impossible for some families to put a decent meal on the table, and that the G20 meeting [currently under way in Cannes, France] must use this summit to agree an action plan to address the food crisis. Malnutrition contributes to nearly a third of child deaths. One in three children in the developing world are stunted, leaving them weak and less likely to do well at school or find a job. Prices of staples like rice and wheat have increased by a quarter globally and maize by three quarters, Save the Children says. Some countries have been particularly hard hit. In Bangladesh the price of wheat increased by 45 percent in the second half of 2010. In new research, Save the Children analysed the relationship between rising food prices and child deaths. It concluded that a rise in cereal prices – up 40 percent between 2009 and 2011 – could put 400,000 children’s lives at risk.
FAO: “Most agricultural commodity prices could thus remain below their recent highs in the months ahead, according to FAO’s biannual Food Outlook report also published today. The publication reports on and analyzes developments in global food and feed markets. In the case of cereals, where a record harvest is expected in 2011, the general picture points to prices staying relatively firm, although at reduced levels, well into 2012.”
IRIN News reported that food production is expected to be lower than usual in parts of western Niger, Chad’s Sahelian zone, southern Mauritania, western Mali, eastern Burkina Faso, northern Senegal and Nigeria, according to a report by the World Food Programme (WFP) and the Food and Agriculture Organization (FAO), and a separate assessment by USAID’s food security monitor Fews Net. “We are worried because these irregular rainfalls have occurred in very vulnerable areas where people’s resilience is already very weakened,” said livelihoods specialist at WFP Jean-Martin Bauer. Many Sahelian households live in a state of chronic food insecurity, he said. “They are the ones with no access to land, lost livestock, without able-bodied men who can find work in cities – they are particularly affected by a decrease in production.” A government-NGO April 2011 study in 14 agro-pastoral departments of Niger noted that pastoralists with small herds lost on average 90 percent of their livestock in the 2009-2010 drought, while those with large herds lost one quarter. Those who had lost the bulk of their assets have already reduced the quality and quantity of food they are consuming.
FAO: “Food Outlook forecast 2011 cereal production at a record 2 325 million tonnes, 3.7 percent above the previous year. The overall increase comprises a 6.0 percent rise in wheat production, and increases of 2.6 percent for coarse grains and 3.4 percent for rice. Globally, annual cereal food consumption is expected to keep pace with population growth, remaining steady at about 153 kg per person.”
The Business Line reported that in India, food inflation inched up to 11.43 per cent in mid-October, sharply higher than the previous week’s annual rise of 10.6 per cent, mainly on account of the statistical base effect of the previous year. Inflation in the case of non-food items and the fuels group, however, eased during the latest reported week. According to data released by the Government on Thursday, an increase in the year-on-year price levels of vegetables and pulses contributed to the surge in the annual WPI-based food inflation for the week ended October 15, apart from the base effect. Sequentially food inflation was up 0.25 per cent.
FAO: “The continuing decline in the monthly value of the FAO Cereal Price Index reflects this year’s prospect for a strong production recovery and slow economic growth in many developed countries weighing on overall demand, particularly from the feed and biofuels sectors.”
Al Ahram reported that Egyptian household budgets had mixed news in September with prices for some basic foods tumbling month-on-month and others showing small climbs, according to state statistics agency CAPMAS. Figures released this week show the price of local unpacked rice fell 15.6 per cent to LE4.96 per kilo between August and September 2011. It was the commodity’s first decline in nearly a year, although the per kilo price remains 68 per cent higher than the LE2.95 that rice cost in October 2010. Chicken also fell 5.8 per cent to LE16.26 per kilo between August and September. Other staples, however, continued to rise; the price of potatoes climbed 14 per cent to LE4.89 per kilo, while a kilo of tomatoes gained a monthly 14.8 per cent to cost LE4.65.
Today, the United Nations Development Programme (UNDP) will release its 2011 Human Development Report, the 21st in the annual series that lets us know how well – or not – the populations in countries are doing. Whether on education, health, income, poverty, cost-of-living the human development indices are now well-constructed and evolved measures of the well-being of people. Today, we’ll know a little more about how 7 billion people live on our Earth.
This year’s ediition is called ‘Sustainability and Equity: A Better Future for All’. The HDR website has said the report will call for the urgent global challenges of sustainability and equity to be addressed together – and that the 2011 HDR identifies policies on the national and global level that could spur mutually reinforcing progress towards these interlinked goals.
These introductory articles are uniformly boring and uniformly useless to all those who deal with real questions, hard quetions and tough decisions every day. They say things like “bold action is needed if the recent human development progress for most of the world’s poor majority is to be sustained” and things like “the benefit of future generations as well as for those living today”.
This is irritating, but has become part of the HDI furniture. For some perverse reason top politicians and top UN agency muckamucks seem unwilling to cut the waffling and get on with it. Anyway. we’re interested in the rest of the report, the data, the statistics, the methodologies, the background studies and a whole bunch of related research – so that’s what this and related HDI posts will dwell on in the weeks to come.
The HDR website has mentioned that the 2011 report will talk about living standards. Here’s a sentence I want to read more about when the big package opens up: “Yet the 2011 Report projects a disturbing reversal of those trends if environmental deterioration and social inequalities continue to intensify, with the least developed countries diverging downwards from global patterns of progress by 2050.” What are the numbers that led to this prickly insight, I would very much like to see.
Let’s look back. A year ago, in 2010 November, UNDP when releasing the HDR 2010 said that “most developing countries made dramatic yet often underestimated progress in health, education and basic living standards in recent decades, with many of the poorest countries posting the greatest gains”. HDR 2010 cautioned that “patterns of achievement vary greatly, with some countries losing ground since 1970”.
Overall, HDR 2010 showed that life expectancy climbed from 59 years in 1970 to 70 in 2010, school enrolment rose from just 55 percent of all primary and secondary school-age children to 70 percent, and per capita GDP doubled to more than US$10,000 (sorry, but this last is a particularly meaningless number). Life expectancy, for example, rose by 18 years in the Arab states between 1970 and 2010, compared to eight years in sub-Saharan Africa. The 135 cuntries studied include 92 percent of the world’s population.
Within the pattern of overall global progress, the variation among countries is striking, said HDR 2010. Over the past 40 years – that is, tilll 2010 – the lowest performing 25 percent experienced less than a 20 percent improvement in HDI performance, while the top-performing group averaged gains of 54 percent. Yet as a group, the quartile of countries at the bottom of the HDI scale in 1970 improved faster than those then at the top, with an average gain of 61 percent. Somewhat zanily, HDR 2010 then advised us that “the diverse national pathways to development documented … show that there is no single formula for sustainable progress”. Umm, we did somehow notice that, all by ourselves actually.
What was enormously useful in HDR 2010 were three new indices that the world’s rambunctious and usually argumentative development community has still not grasped firmly with opposable thumbs. These are:
• The Inequality-adjusted Human Development Index (IHDI) – For the first time, this year’s Report examines HDI data through the lens of inequality, adjusting HDI achievements to reflect disparities in income, health and education. The HDI alone, as a composite of national averages, hides disparities within countries, so these adjustments for inequality provide a fuller picture of people’s well-being.
• The Gender Inequality Index (GII) – The 2010 Report introduces a new measure of gender inequities, including maternal mortality rates and women’s representation in parliaments. The Gender Inequality Index is designed to measure the negative human development impact of deep social and economic disparities between men and women.
• The Multidimensional Poverty Index (MPI) – this is the equivalent of the 400-pound gorilla for all HDI-related stuff – it complements income-based poverty assessments by looking at multiple factors at the household level, from basic living standards to access to schooling, clean water and health care. About 1.7 billion people—fully a third of the population in the 104 countries included in the MPI—are estimated to live in multidimensional poverty, more than the estimated 1.3 billion who live on $1.25 a day or less.
So, while waiting for the goodies from HDR 2011, there are some questions that still smoulder from earlier editions. Here’s one: what does the evidence from the past 40 years tell us about the relationship between growth and changes in human development? The two-panel chart which accompanies this post (below) presents the basic result. The left panel shows a positive association — though with substantial variation — suggesting that growth and improvements in human development are positively associated.
Remember, however, that income is part of the HDI; thus, by construction, a third of the changes in the HDI come from economic growth, guaranteeing a positive association. That’s why a far more useful exercise is to compare income growth with changes in the non-income dimensions of human development (gift economies would be wonderful subjects). This has been done using an index similar to the HDI but calculated with only the health and education indicators of the HDI to compare its changes with economic growth. The non-income HDI is presented in the right panel of the chart – looking for the correlation? Remarkably weak and statistically insignificant, as they said so themselves.
That will deliver a smart kick in the collected pants of the G20 muckamucks when they assemble (what? again!) in France (Cannes) for a new episode of creative bullshitting fiscal sophistry. But, here’s the strange thing. Previous studies have found the same result. One of the first scholars to study this link systematically was US demographer Samuel Preston, whose landmark 1975 article showed that the correlation between changes in income and changes in life expectancy over 30 years for 30 countries was not statistically significant. As ideas such as ‘sustainability’ and ‘environmental’ began gaining traction from the early 1970s onwards – think ‘Limits to Growth‘ – more data became available, and other researchers obtained the same result. In a 1999 article, ‘Life during Growth‘, William Easterly found a remarkably weak association between growth and quality of life indicators such as health, education, political freedom, conflict and inequality. Easterly’s work was ignored by the bankers and their compradors for years thereafter.
Next, François Bourguignon, director of the Paris School of Economics, and several African and European colleagues concluded that “the correlation between GDP per capita growth and nonincome [Millennium Development Goals] is practically zero”. That should have been turned into a poster and hung on the wall of every bloody finance minstry from Abuja to Auckland. More recently, World Bank economist Charles Kenny recently confirmed the lack of correlation between improvements in life expectancy and growth, using both a large sample of countries over 25 years and a smaller sample covering a much longer period. I advise his still-serving colleagues to dust off his file and read his work, for the first time for them.
Well, ’nuff said. Let’s wait till the HDR 2011 starts streaming towards us, tweets and video and all.
The World Development Movement has been bringing to public attention, and to policymakers in Britain, the effects of financial market speculation in food. Recently, a WDM campaign group circulated a letter amongst economists in all countries addressed to the finance ministers of the countries that make up the G20. They met in Paris, France, on 15 October.
I am honoured to be amongst the 450 who have signed the statement. Those who have lent their names to the statement are amongst a group of economists, social scientists, academics and activists who are witnessing – every day no matter where they live – the impacts of relentless food inflation on the lives of poor households whether urban or rural. This statement is one way to remind the G20 powers of their social responsibilities.
Here follows the text of the letter, which is available on the original site here:
11 October 2011
Dear G20 Finance Ministers,
We write to you ahead of the October meeting of the G20 Finance Ministers to urge you to commit with your counterparts to take effective action to curb excessive speculation on food commodities. Excessive financial speculation is contributing to increasing volatility and record high food prices, exacerbating global hunger and poverty.
While there are many pressures on food prices, fundamental changes in supply and demand cannot fully account for the dramatic price fluctuations that have occurred in recent years.
In June, a report for the G20 by international organisations including the IMF and the OECD noted that “too much speculation can cause frequent and erratic price changes” in futures markets.
Evidence suggests that financial speculators are less likely to make trading decisions based on information regarding supply and demand and are more prone to herding behaviours than commercial traders. Excessive speculation undermines the price discovery function of futures markets, driving real prices away from levels determined by supply and demand.
The High Level Panel of Experts on food security for the Committee on World Food Security at the FAO reported in July that “tighter regulation of speculation is necessary.” The panel suggested that “Increasing transparency, by requiring exchange trading and clearing of most agricultural commodity contracts, and setting lower limits for noncommercial actors could be the first set of measures taken by the countries that house major commodity exchanges.”
Increasing market transparency is vital, but will not go far enough to tackle excessive financial speculation. We therefore urge you to support the establishment of position limits to cap the proportion of agricultural commodity derivatives markets that can be held by financial speculators.
Limits could be set at a level that would maintain sufficient liquidity in the markets while preventing an excessive concentration of purely financial actors. The US has already passed legislation including provisions to introduce such limits and the G20 should act to prevent regulatory arbitrage between exchanges.
Position limits would be more effective in tackling excessive speculation than position management powers, which rely on the use of judgement by exchanges and provide little assurance that powers will be exercised effectively. Clear limits would provide regulatory certainty, promoting stable and sustainable derivatives markets to the benefit of food producers, consumers and broader economic stability.
With around 1 billion people enduring chronic hunger worldwide, action is urgently needed to curb excessive speculation and its effects on global food prices.
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.”
“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.