Food

In Corrupt Global Food System, Farmland Is the New Gold
http://www.globalpolicy.org/home/217-hunger/49686-in-corrupt-global-food-sys
tem-farmland-is-the-new-gold-.html

High food prices are caused by market speculation in a corrupt global food
system. Growing concern over access to food creates a new geopolitics
around food security, with many countries buying farmland and banning food
exports. One billion people cannot afford to buy enough to feed themselves
and their families. Seventy percent of those hungry people are farmers,
herders and other food producers who could feed themselves if they had
access to land and markets.  In recent months the world's largest
agricultural commodities trader, Cargill (based in the US), announced a
tripling of profits.

By Stephen Leahy January 13, 2010 IPS
http://ipsnews.net/

Famine-hollowed farmers watch trucks loaded with grain grown on their
ancestral lands heading for the nearest port, destined to fill richer
bellies in foreign lands. This scene has become all too common since the
2008 food crisis.

Food prices are even higher now in many countries, sparking another cycle
of hunger riots in the Middle East and South Asia last weekend. While bad
weather gets the blame for rising prices, the instant price hikes of recent
times are largely due to market speculation in a corrupt global food
system.

The 2008 food crisis awoke much of the world's investment community to the
profitable reality that hungry people will do almost anything, even sell
their own children, in order to eat. And with the global financial crisis,
food and farmland became the "new gold" for some of the biggest investors,
experts agree.

In 2010, wheat futures rose 47 percent, U.S. corn was up more than 50
percent, and soybeans rose 34 percent.

On Wednesday, U.S.-based Cargill, the world's largest agricultural
commodities trader, announced a tripling of profits. The firm generated
1.49 billion dollars in three months between September and November 2010.

Meanwhile, U.S. Treasury Bills pay a return of less than one percent.

"We have set up a global food system that supports speculation. And with
[such] markets, we can't get speculators out of the food business," said
Lester Brown, an agricultural policy expert and founder of the Washington-
based Earth Policy Institute.

"Farmland is better gold than gold for speculators," Brown told IPS.

Growing concern over access to food is also creating a new geopolitics
around food security, with many countries buying up farmland and banning
the export of food, he said.

World leaders have utterly failed to address the simple fact that while
there is enough food, a billion people, living in every country in the
world, simply can't afford to buy it, said Anuradha Mittal of the Oakland
Institute, a U.S.-based policy think tank on social, economic and
environmental issues.

"Why were a billion hungry with a record wheat harvest in 2008?" Mittal
told IPS.

And how is it there are one billion people who are overweight, with 300
million of those considered medically obese?

The global food system is designed to generate profits not feed people, and
nothing has changed since 2008, she said. "There has been no focus on how
to achieve food security or on regulating the food trade," Mittal noted.

Instead, the World Bank, World Trade Organisation and other multilateral
organisations are pushing for more production and more trade
liberalisation, she said. That approach is exactly how Africa became unable
to feed itself after being previously food secure.

"Africans have become share-croppers, exporting coffee, cotton, flowers and
now food while going hungry," Mittal said.

Under the guise of investing in agriculture, huge amounts of money are
being offered to debt-ridden countries in exchange for long-term leases to
their foodlands. "Our research shows that the most fertile lands are being
secured. There are huge issues around governance and corruption in this
land grabbing," said Mittal.

More than 100 billion dollars has been invested in buying farmland since
2008, mainly in Africa by foreign companies and foreign-state owned
industries, according to GRAIN, a small international non-profit
organisation that works to support small farmers.

This massive investment hasn't yet translated into more food availability,
says Lester Brown. Often times, buying land is just the first step. Major
investments are also needed in farming infrastructure like roads, vehicles,
storage capacity, mechanical services for equipment, irrigation and so on.

"I haven't seen a big increase in grain production anywhere. Right now it
looks like a lot of land speculation," he said.

Brown has long documented the fact that yields of rice, wheat and other
grains have not been increasing in many countries while demand has
escalated. China, he notes, now imports 70 percent of its soy and is
expected to begin to use its plentiful cash reserves to buy large
quantities of wheat and corn in the near future.

And with the U.S. converting 30 percent of its corn crop into ethanol to
'feed' its cars and trucks, food supplies will be tight for some years, he
predicts.

With the decline in traditional equity stocks along with collapse of
housing and commercial real estate markets, billions of investment dollars
are being mobilised to buy farmland and food commodities. It's not just
Wall Street looking for big returns, it's also private and public pension
funds in Europe and North America as well, said Devlin Kuyek of GRAIN.

Investors from Saudi Arabia have leased large tracts in land in Ethiopia,
Senegal, Mali and other African countries amounting to several hundred
thousand hectares. "How can African countries hope to have food security by
signing long-term leases to foreign interests?" Kuyek told IPS.

When South Korea's Daewoo Logistics tried to buy 1.3 million hectares, or
one-third, of Madagascar's farmland in 2008, violent protests erupted and
the government was toppled. South Korea still has at least a million
hectares in long- term leases elsewhere and China 2.1 million ha, mainly in
Southeast Asia.

Some of the leases are for 99 years at a one dollar a hectare, but local
people "are not eligible for the deals being promoted in countries where
millions of people remain dependent on food aid", said Howard Buffett, a
U.S. farmer and philanthropist whose father is Warren Buffett, the well-
known billionaire investor.

Howard Buffet reports being offered land deals where African governments
promise to provide 70 percent of the financing, all utilities, and a
98-year lease requiring no payments for four years.

The last thing Africa needs are policies that "enable foreign investors to
grow and export food for their own people to the detriment of the local
population" writes Buffet in the introduction to the 2010 Oakland Institute
report, "(Mis)investment in Agriculture".

Buffet's foundation has a research farm in South Africa and says
investments are needed, but in terms of seeds, inputs, improved extension
services, education on conservation techniques and generally assisting
local farmers. Investing in land grabs will simply fuel conflict over land
and water, he concluded.

Shockingly, about 70 percent of the billion hungry people in the world are
farmers, herders and other food producers who could feed themselves if they
had access to land, markets and a little bit of credit, said GRAIN's Kuyek.

"That well-understood reality has been ignored for years," he said. "These
land grabs are just wrong: morally and socially wrong."