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State of Food Insecurity 2010 – FAO says too little, too timidly

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Food and Agriculture Organization (FAO), State of Food Insecurity (SOFI) 2010The 2010 edition of the State of Food Insecurity says much too little and what it does say is unconvincing. There is a theme for this years edition of one of the Food and Agriculture Organization’s (FAO) ‘flagship’ reports. The theme is “countries in protracted crisis” by which FAO means conflict and war, internal and external.

FAO doesn’t say so explicitly in the introduction to SOFI 2010 on its website. There’s no excuses for FAO not to when the World Food Programme, Oxfam, ActionAid and a number of international agencies and aid groups have done so, not just this year but for at least a decade.

As the world’s pre-eminent compiler of food and agriculture-related research, data and analysis, FAO ought to see itself as duty-bound to be clear and fair in its reportage but it is not.

SOFI 2010 says that the majority of the world’s undernourished people live in developing countries. Two-thirds live in just seven countries (Bangladesh, China, the Democratic Republic of the Congo, Ethiopia, India, Indonesia and Pakistan) and over 40% live in China and India alone.

The report says that “FAO’s projections for 2010 indicate that the number of undernourished people will decline in all developing regions, although with a different pace. The region with most undernourished people continues to be Asia and the Pacific, but with a 12% decline from 658 million in 2009 to 578 million, this region also accounts for most of the global improvement expected in 2010″. Where does FAO think this improvement is going to come from, given the fact that its own food price index shows how cereals have risen at a clip this year to match the rise in 2007?

Food and Agriculture Organization (FAO), State of Food Insecurity (SOFI) 2010Just as it did a month ago, the FAO is sounding like it is in two minds about what to report. SOFI 2010 says that “developing countries as a group have seen an overall setback in terms of the World Food Summit goal (from 827 million in 1990–92 to 906 million in 2010), while some progress has been made towards MDG 1 (with the prevalence of hunger declining from 20% undernourished in 1990–92 to 16% in 2010)”.

Which are the 22 countries covered by the ‘protracted crisis’ theme? Here they are, the numbers in total population in millions followed by number of undernourished in millions, both for 2005-07. (Why couldn’t these have been for 2009 in a report dated 2010?): Afghanistan (na / na), Angola (17.1 / 7.1), Burundi (7.6 / 4.7), Central African Republic (4.2 / 1.7), Chad (10.3 / 3.8), Congo (3.5 / 0.5), Côte d’Ivoire (19.7 / 2.8), Democratic People’s Republic of Korea (23.6 / 7.8), Democratic Republic of the Congo (60.8 / 41.9), Eritrea (4.6 / 3.0), Ethiopia (76.6 / 31.6), Guinea (9.4 / 1.6), Haiti (9.6 / 5.5), Iraq (na / na), Kenya (36.8 / 11.2), Liberia (3.5 / 1.2), Sierra Leone (5.3 / 1.8), Somalia (na / na), Sudan (39.6 / 8.8), Tajikistan (6.6 / 2.0), Uganda (29.7 / 6.1), Zimbabwe (12.5 / 3.7).

SOFI 2010 says: “On average, the proportion of people who are undernourished is almost three times as high in countries in protracted crisis as in other developing countries (if countries in protracted crisis and China and India are excluded). Nonetheless, not all countries in protracted crisis present very high levels of undernourishment as in some of these countries crises are localized to certain areas or regions. There are approximately 166 million undernourished people in countries in protracted crisis – roughly 20% of the world’s undernourished people, or more than a third of the global total if China and India are excluded from the calculation.”

Food and Agriculture Organization (FAO), State of Food Insecurity (SOFI) 2010The question, what happens when China and India are excluded from calculations? With the exclusions 130.4 million (China) and 237.7 million (India) fall out of the equations? Moreover, SOFI isn’t following it’s own data. The para above says 166 million (approx) undernourished in countries in ‘protracted crisis’ but the table annex shows that the 22 countries together have 146.8 million undernourished. If the larger number for the 22 countries is the 2009 estimate, then FAO could have used the same method to provide estimates for all countries for 2009.

When FAO recalculates its food price index monthly (the current index is up-to-date for September 2010) why are these estimates three years old? Why should China and India be excluded when they account for over a third of the global undernourished population? Last month FAO said that 925 million people in the world live in chronic hunger and explained that “the decline (from 1,020 million in 2009) was primarily attributable to better economic prospects in 2010 and the fall in food prices since mid-2008”. What fall in food prices? What better economic prospects?

The State of Food Insecurity 2010 is a disappointing and pedestrian effort. FAO ought to retract this version and revise it thoroughly without dwelling on themes like ‘protracted crisis’ and instead get to grips with the market- and economics-related reasons for food price spikes and the hunger they bring.

Global farmland grab and the shadow of the Soviet kolkhozes

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Peasant girl with rake, 1930s, Simon Fridland

Peasant girl with rake, 1930s, Simon Fridland

The World Bank has just released an interesting document called ‘Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits?’. It is presented as a response to the global farmland grab, reviews global trends of land expansion as well as empirical evidence on land acquisitions in 14 countries between 2004 and 2009: Brazil, Cambodia, Democratic Republic of Congo, Ethiopia, Indonesia, Liberia, Lao PDR, Mexico, Mozambique, Nigeria, Peru, Sudan, Ukraine, and Zambia. (I’ll post more on the study as soon as I can read it fully.)

The inclusion of Ukraine is interesting, primarily because of the country’s long history (as a Soviet republic) of collective farming, and also because of the horrific famine that engulfed Ukraine, the northern Caucasus, and the lower Volga River area almost 80 years ago, in 1932-1933, was the result of Joseph Stalin’s policy of collectivisation. This is also part of the region which suffered in the July 2010 fires that traumatised Russia.

The Bank’s study contains a few paras about the Soviet farming system which are worth reading closely, for they help explain the current wheat shortage in Russia and the responses of both Russia and Ukraine to the continuing wheat crisis.

Woman Collective Farmer, 1932, Simon Fridland

Woman Collective Farmer, 1932, Simon Fridland

Eastern European countries have undergone major transitions from the former Soviet system of collective and state farms to new agrarian structures (says the Bank’s section on Russia). These transitions have unfolded in many ways depending on countries’ factor endowment, the share of agriculture in the overall labour force, infrastructure, and the way the reforms were implemented. In areas of low population density, where collectives were divided into small plots allocated to members, the plots were quickly rented back by companies with access to finance and machinery.

These companies were often created from former collective farms whose managers could more easily consolidate land parcels and shares. Services, institutions, and logistics were geared to large-scale production, so smallholder grain production was never viable option. Where farms were land- and capital-intensive, corporate farming was the dominant organisational structure. On the other hand, many countries where land was split up into smallholder farms also performed well. The diversity is illustrated by the share of area under corporate farms 10 years after the transition, ranging from 90 percent in Slovakia, 60 percent in Kazakhstan, 45 percent in Russia, to less than 10 percent in Albania, Latvia. and Slovenia.

In Russia, Ukraine, and Kazakhstan, the transition was associated with a 30 M ha decline in area sown, with most of that area returning to pastures or fallow. Large farms were better able to deal with the prevailing financing, infrastructure and technology constraints. Aided by the phasing out of an inefficient meat industry and the associated demand for grain as feed, the region turned from a grain deficit of 34 mt in the late 1980s to exports of more than 50 mt of grain and 7 mt of oilseeds and derivatives. In light of the scope for transfer of available technology, Russia, Ukraine and Kazakhstan, the region’s three land-abundant countries, have an opportunity to establish themselves as major players in global grain markets, especially if ways to effectively deal with volatility are found.

Farmer's first Spring. The Soviet region of Nizhnegorodsk's District, 1929, Arkadi Shishkin

Farmer's first Spring. The Soviet region of Nizhnegorodsk's District, 1929, Arkadi Shishkin

Given the slow development of markets, mergers to integrate vertically to help acquire inputs and market outputs led to the emergence of some very large companies. For example, in Russia, the 30 largest holdings farm 6.7 million ha, and in Ukraine, the largest 40 control 4 to 4.5 million ha. Many of the agricultural companies are home grown, though often with significant investment from abroad. Several have issued IPOs.

Some Western European companies have also invested directly in large-scale farming in the region. For example, Black Earth, a Swedish company, farms more than 300,000 ha in Russia. With greater demand and better logistics, there remains substantial potential for intensification and in some cases for area expansion. Cereal yields increased 38 percent from 1998-2000 to 2006-2008 but are still far below potential. For example, Ukraine’s cereal yields are 2.7 t/ha, some 40 percent of the Western European average. The potential to transfer technology and relatively cheap land has been one of the major motivations for foreign direct investment in the region.

In Russia land is either leased or owned, and in Ukraine. where private land sales are not allowed, all land is leased. usually for 5-25 years. But throughout the region, land rents are still very low relative to land of comparable quality in other parts of Europe. Competitive markets for land shares have yet to emerge. and in many situations imperfections in financial and output markets preclude own-cultivation as a viable option. So the bargaining power of landowners is often weak, suggesting that rental rates are low and that owners receive few of the benefits from large-scale cultivation.

The global water trade, by ship from Alaska to India

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Niger-Men draw water

Niger: Men draw water from a deep well in Zinder. They must make tough decisions as to how to divide the scarce resource between cattle, people and crops. Photo: Anne Isabelle Leclercq/IRIN

The ecological crimes committed in the name of trade and for the benefit of the ‘market’ grow in outrageousness. The latest example of utter irresponsibility, both regulatory and environmental, comes from a company headquartered in the state of Texas, USA, which plans to ship water from Alaska, USA, all the way across the Pacific Ocean, to India, where it plans to set up what it calls its ‘global water hub’.

The alert came on the Triple Pundit site, which quickly explained that the Texan company, S2C Global Systems, plans to ship 11.35 billion litres of water every year from the Blue Lake Reservoir in Sitka, Alaska to the west coast of India and other Asian countries. From there, S2C Global Systems plans to sell the water via “smaller ships that can deliver to shallower ports, like Umm Qasr in Iraq”. Do you smell the hand of US defence contractors like Halliburton here? S2C said the project is expected to begin moving water within six to eight months.

There are a number of obvious questions here. How has a Texan company gained conttrol of an entire lake in Alaska, which is a common property resource? How have the communities and settlements there in Alaska permitted this, or have they? How can US environmental regulation – the EPA for example – permit such commercial exploitation? Who is funding this obscene project – India may be a way-station for S2C now, but the company categorically says India is going to be an important market for its water. But at what cost to Alaska and to India?

S2C says it will sell the water in “20-foot containers with flexi-tanks suitable for pharmaceutical/high tech manufacturing and packaged water (18.9 and 10L) for the consumer markets anywhere containers are delivered in south and west Asia from India.” In a statement dated 07 July 2010, the company said that for “security reasons” the Indian port which is to serve as its “world water hub” will not be disclosed. It will “include a berth for a Suezmax vessel (156,000 cubic meters/41Million USG), an offloading system to a dedicated tank farm and a distribution complex for packaged water. Within 18 months after that we will be able to switch to a very large class vessel (302,833 cubic meters/80 Million USG), as both the ship and the berth for her will be completed within this time frame. Contracts for the distribution hub and ships are being finalised.”

Nepal-children fetch water

Nepal: In some places, children have to walk more than five hours to fetch water. Photo: Naresh Newar/IRIN

The company says: “India itself provides a particularly significant growth market for the packaged waters with a current population of 1.15 billion people, an emerging middle class and an increasing clean water shortage. Sales efforts throughout south and west Asia will continue with travels planned immediately through the region.”

Rod Bartlett, managing partner of Alaska Resource Management and President of S2C Global Systems, USA, is quoted in the statement as saying: “S2C Global has an exciting future in India and the region. After recently spending time in India meeting port authorities and potential distributors, our vision to distribute water globally became real. We fully expect the India World Water Hub to fulfill our minimum expectations of a half a billion gallons sold annually”.

Export Development Canada (EDC), Canada’s export credit agency, announced in March 2010 up to US$10 million in equity commitments to XPV Water Fund Limited Partnership, a venture capital fund focused on investing in the water sector. The press release described the water sector as an “area of significant growth potential for Canada”.

I can’t imagine this profiteering being part of a ‘growth’ strategy that the average Canadian would subscribe to. Meanwhile, what are conditions in countries which companies like S2C say are its world water market?

In India, figures from the Ministry of Rural Development show that the country had enough drinking water for its people in 1951 at 5,177 cubic metres per person per year. But by 2000 India had become a water-deficient country. In 2003, the country had a 25 per cent deficit, at a rate of 1,500 cubic metres per person per year. The deficit is projected to rise to 33 per cent by 2025, unless measures are taken to resolve it.

In Liberia, three out of four Liberians have no access to safe drinking water and six out of seven cannot access sanitation facilities, such as toilets, according to Oxfam. A further US$93.5 million is needed to boost clean water access to 50 percent of all Liberians; and to improve access to toilets to 33 percent – goals set out in the government’s 2008-2011 poverty reduction strategy.

Children draw water in Chad

Chad: Chadians receive US$3 in water aid per capita annually. Photo: WaterAid

In Iraq, there is an acute shortage of water nationwide and a collapsed economy, which makes it very difficult for farmers to do other work. Tribal sheikh Ali Ismael al-Zubaidi from Diwaniya Governorate, about 200 km south of Baghdad, said in an IRIN report he had been having “tough negotiations” over water allocations with another tribe that lives upstream from his. “We have daily problems with water. They are siphoning water with huge electric water pumps and leave only drops for us. Government officials can’t control the regulation of irrigation and stop those who violate their regulations either because of corruption or because they fear for their lives. So we have to solve this issue ourselves.”

In Nepal, according to government statistics, more than 4.4 million people do not have regular access to safe drinking water in rural and urban areas, be it via piped water, wells, rainwater or bottled water. Public health concerns are increasing as a result. Already, more than 10,500 children die before their fifth birthday from diarrhoea, mainly due to inadequate access to safe drinking water, sanitation and hygiene, according to WaterAid. More than 80 percent of diseases are the result of unsafe drinking water and poor sanitation, according to its 2009 report, ‘End Water Poverty in Nepal’.

In 2000 the world pledged that half the 2.6 billion people without safe drinking water and basic sanitation would have access to these basic facilities by 2015, but poor countries will need US$18.4 billion more a year to reach this Millennium Development Goal (MDG), which at this rate will only be met in 2200. In 1997, 8% of overall development aid went to water and sanitation; in 2008 this dropped to just 5%-less than commitments for health, education, transport, energy and agriculture, according to the Global Annual Assessment of Sanitation and Drinking Water (GLAAS) report by the UN Children’s Fund (UNICEF) and the World Health Organization (WHO). Moreover, the bulk of this global aid went to middle-income countries, with low-income countries receiving just 42%, said WaterAid, an international NGO working to provide access to clean water, sanitation and health education.