Vandana Shiva: Why We Face Both Food and Water Crises

By Maria Armoudian and Ankine Aghassian, AlterNet, May 15, 2008

Policy-makers are finally grappling with the growing global food and water crises that are upon us. While they grope for answers, Vandana Shiva reminds them that it was their wild economic schemes that created these crises in the first place.

The globalized economic structure is simply incompatible with the basic physics of the planet and the principles of democratic governance, she says. And until we align the economic system with those of the ecological system, the problems will only get worse. While many of Shiva’s books address some aspect of this fundamental problem, one title captures it most succinctly, Earth Democracy, Justice, Sustainability and Peace.

Shiva is a physicist, author, director of the Research Foundation on Science, Technology and Ecology and the founder of Navdanya.

AlterNet: Much of your writing and speaking has focused on our economic structure’s incompatibility with the ecological functioning of the earth. Talk about that incompatibility.

Vandana Shiva: One aspect of the inconsistency is between the principles of Gaia, the principles of soil, the ecology, renewability, how the atmosphere cleans itself and the laws of the global marketplace. The global marketplace is driven by the World Bank and the World Trade Organization (WTO) and the illogic of so-called “free trade,” which is totally not free. [The result of this incompatibility] is the current food crisis: The more agriculture is “liberalized,” the greater the food scarcity, the higher the food prices and the more people will go hungry.

Never has there been this rate of escalation in food prices worldwide as we witness now with the global integration of the food economies under the coercive and bullying force of the WTO.

AlterNet: You have said, in the past, that these activities are done in the name of improving human welfare. But instead, poverty and dispossession have increased. Where do we see this the most?

VS: We see the worst dispossession in the countries of the South — tragically — those countries that could feed themselves. India, for example, was food self-sufficient. We were able to feed our people with a universal distribution system, affordable food for all, and agriculture policies that put food first. Small farmers could make a living.

But a decade and a half of globalization’s perverse rules have led to 200,000 farmers committing suicide because they can’t make a living anymore — all their money goes to make profit for Monsanto or Cargill. Meanwhile, with the economy’s so-called growth, people are starving. Per capita entitlement to food has dropped in a decade and half from 177 kg to 152 kg per year.

This contradicts the false propaganda being spread about the reason prices are rising. They say it is because Indians are getting richer and Indians are eating more. Well, some Indians are getting richer, but they’re not eating more. There’s a limit to how much you can eat. And the handful of billionaires buys a few more private jet planes and builds a few more private mansions. [But in reality], the average Indian is eating less. The average child has a bigger chance today of dying of hunger. The Cargill’s of the world have a stranglehold of the world’s economy; they’re harvesting super-profits while people die of hunger.

AlterNet: You talk about India being worse off, but many economists — including those on the political left — say that places like China and India are, overall, actually improving. But you say that is not true.

VS: It’s not true. India, under the perverse growth of globalization, has beaten out Africa in the number of hungry people. While we have 9.2 percent growth measured by GNP and GDP, 50 percent of our children have very severe malnutrition. Fifty percent of deaths for children under five are due to lack of food. That’s about a million kids per year.

AlterNet: That is a considerable change that I don’t think the world is seeing.

VS: That’s because the media orchestrates every analysis and interpretation. They would like this crisis to look like a success of globalization, and they would like to offer more globalization as a solution. In fact, the World Bank has said there should be more liberalized trade. Before the WTO was formed, we had protests with 500,000 farmers on the streets of Bangalore in 1993 to say that this is a recipe for starvation, for destroying agriculture, self-reliance and food security. And the General Agreement on Trade and Tariffs — before the WTO was born — had a press conference to say that globalization will make food affordable for all.

They forget that food ultimately is not produced in the speculation and commodity exchanges controlled by Cargill in Chicago. It is produced by hard working women and men working with the soil and sun. And if you destroy the capacity of the people to work the land and the capacity of soil to produce, you’re going to have hunger. The tragedy is that the hunger of today and the rise of food [prices] is the result of globalization policies, and it is being implemented on a global scale. Unless we bring local food sovereignty and “food democracy” back into the picture, we will not have a solution to this.

AlterNet: You’re talking about basic ecological principles here. But there are two other aspects about food shortages that are being discussed. One of them is that among some societies, such as China, the diet is changing, which contributes to food shortage. Reportedly, after being exposed to western diets, they are eating more meat which requires an enormous amount of grain — normally fed to people — to instead be fed to cattle. Do you see this as part of the problem?

VS: Well, I can definitely say that is not true for India. Vegetarian India will stay vegetarian India — rich or poor, integrated globally or not integrated globally. And the Chinese have always eaten meat. The difference is that now they are integrated into the global production system: It is factory farming that feeds grain to chicken and pigs and cows.

No indigenous culture — not China or India — has fed grain to animals. Animals have fed on what humans could not eat. Global agribusiness, which makes huge money out of the feed industry, is creating this pressure while destroying what I would call the “real free economy” — the free-range cattle, the free range chicken — and replacing it with prison factories for animals. In fact, in my interpretation, even the Avian flu is being used to violently shut down small economies, the free economies of Asian peasants, and turning them into Tyson and Cargill factory farming systems.

AlterNet: What about the role of climate change in this global food crisis?

VS: Climate change and agricultural food crises do have a connection. In fact, my next book is precisely about this connection. Industrial farming — driven by agribusiness in order to sell more chemicals, pesticides, and costly seeds to farmers — is heavily responsible for emissions of greenhouse gases such as methane from factory farms nitrogen oxide from chemically fertilized soil and fossil fuels from mechanized farming systems.

Further, the long distance trade is responsible for adding food miles, which adds more carbon emissions. Taken together, more than 25 percent of climate instability is being caused by unsustainable farming that [simultaneously] displaces small peasants, creates poverty and bad food. So, tomorrow we could solve 25 percent of the planet’s climate instability if we returned to ecological agriculture as the earth wants it, farming according to 10,000 years of wisdom that evolved from the third world.

Research that we are undertaking now shows a 200 percent higher level of carbon return and 10 times higher level of moisture retention. So if increased drought is one consequence of climate change, what you need is sorted organic matter, not more chemical fertilizers. We have two issues pertaining to climate change: We need to get rid of emissions from agriculture and long-distance transport.

This means ecological farming, localization of the food system and only importing what can’t be grown locally — not forcing imports as the U.S has done on India. It has forced us to buy wheat, give up our mustard and coconut oil and to live on soya. These trade factors are “forcings” that are causing more damage to our climate and destroying our food culture, nutrition and access to food.

Finally, biodiverse systems actually produce more food. It is an illusion that because there’s a food crisis, we must have [genetically modified food] spread around the world. First, genetically-engineered crops don’t produce more food. And secondly, they make the soil more vulnerable to climate change. They are herbicide resistant and toxin traps. That is not a yield increase.

AlterNet: So the genetic altering of food ultimately exacerbates the already difficult circumstances with food shortages.

VS: Absolutely. I think any recipe today offered in agriculture should be measured against the test of whether it will enhance the food production capacity of the poor and if it will reduce the pressure on the planet.

AlterNet: Let’s also incorporate another concept that you feature in your writing — “biopiracy.”

VS: Biopiracy is the strange phenomenon whereby the richest and biggest of corporations steal genetic resources and traditional knowledge from poor little women and peasants who have shared it for free for over a millennium. The first case I had to fight was against the United States government with W.R. Grace, which became infamous in the film A Civil Action, when it polluted the groundwater outside of Boston.

They stole Neem, which is a tree that gives us [natural] pest and fungal control through its oil. The USDA along with Grace claim to have invented Neem. Of course, my grandmother and my mother used it. Then, I popularized it after Bopal with a campaign called “No more Bopal. Plant a Neem.” When I saw this patent, I had to fight it. We fought for 11 years, and eventually the biggest governmental powers and one of the biggest chemical companies were beaten out by a coalition of civic society groups and movements.

Another case of biopiracy is the famous Basmati rice that comes from my valley. A company in Texas claims to have invented it. The third case was Monsanto, which claimed to have invented an ancient wheat variety, which is very low in gluten. The problem with biopiracy is not simply that they’re taking genetic material and knowledge for free, but that they are claiming an exclusive right to it and then demanding royalty, claim and fame from the very communities and societies [from which they have taken it], communities that have had this biodiversity and this knowledge for years.

AlterNet: Speaking of Monsanto, you have done considerable research on this company and published a report, “Peddling Life Sciences or Death Sciences.”

VS: If I had to rank criminality of corporations, Monsanto will easily walk away with the highest award. Monsanto has taken over the control of world’s seed supply. It has bought up every small seed company in India, Brazil and the United States and become the biggest seed corporation. But its entire model of functioning is through corruption. They corrupted the United States decision-making such that U.S. citizens no longer have a right to know what they are eating, whether milk has bovine growth hormone in it or if soybeans and corn are genetically engineered. They are spreading this corruption worldwide.

I am fighting them through three cases in our supreme court. And we’ve managed to hold them at the level of Bt cotton. They have not yet managed to invade into our food economy with genetically modified food crop. But the worst thing Monsanto is doing is buying Delta and Pine Land, a company that has the patent for terminator technology that designs seeds to be sterilized. It is genetically engineering life for life’s extinction.

AlterNet: We should also talk about water scarcity. There are major water wars occurring and considerable concern about the future of water. Do you think that water scarcity is being created largely by the phenomenon of privatization or is it resulting from climate change and other such phenomena?

VS: Water scarcity [is] being created by non-sustainable systems of production for both food and textile. Every industrial activity has huge water demands. Industrial agriculture requires ten times more water to produce the same amount of food than ecological farming does. And the “green revolution” was not so green because it created demand for large dams and mining of groundwater.

Industrial agriculture has depleted water resources. In addition, as water has become polluted and depleted, a handful of industry saw water as a way of making super-profits by privatizing it. They are privatizing it in two ways. The first is through buying up entire civic, municipal distribution. The big players in this are Bechtel, Suez and Vivendi.

And interestingly, wherever they go, they face protests. Bechtel was thrown out of Bolivia. Suez wanted to take Delhi’s water supply, but we had a movement for water democracy and did not allow them to take over. But there’s a second kind of privatization, which is more insidious — and that is the plastic water bottle. Coca-Cola and Pepsi are leading in this privatization. But in India where Coca-Cola was stealing water, I worked with a small group of village women, and they shut their plant down. Across India, these giant corporations are taking between 1.5 to 2 million liters of water a day and leaving behind a water famine.

AlterNet: Given what is happening as a result of climate change, would we still face a water crisis without these practices?

VS: We would not be facing water problems if people have been allowed to have their economies, to practice sustainability and to live their lives. Every step in the water crisis is due to greed. As the water becomes increasingly scarce, the corporations who control the water become richer. It is the same with food. As food becomes scarce, the corporations controlling food become richer. That is the paradox of the global economy. Growth shows up in the profits of corporations while in the real world, the resources from which they make their profits, shrink.

AlterNet: You have also suggested that these same economic principles are incompatible with the sustenance of democratic governance.

VS: There are many levels at which a market economy called corporate globalization has to kill democracy in order to survive. Take the birth of World Trade Organization (WTO), an undemocratic institution. There are no negotiations on the rules it imposes. These rules are created undemocratically. Then, every time these rules are implemented, there are protests. Normally in democracy, if the will of people say change this policy, governments change. Unfortunately, governance today is run by corporations not the people. Every step of deepening the market economy is a depletion of democracy. Our very governments have been stolen from us, and we have to use democracy to counter these rules, this paradigm, and the absolute destruction [it causes].

AlterNet: Describe your alternative vision that could replace what we currently have.

VS: I try to articulate an alternative vision in terms of a democracy. Global market economy makes the first citizen the corporation. The rest of us are slaves, second class citizens. Secondly, it creates an identity for the human species as consumers in a global supermarket. We are no longer creators and producers. We are just consumers of goods that corporations bring to us from the place where they can manufacture them — at the highest cost to the environment and workers.

What we need is a reclaiming of who we are as human beings. We are first and foremost citizens of this beautiful planet. Our first duty is to protect this planet. And out of that flows the rights to the earth, air, water and food that the earth gives us. Those gifts are common resources, not commodities, private property or intellectual property. They are the commons of the earth and all of us have equal access to it. Nobody can interfere in the access of a person to their share of water, land and air. That interference is a violation of the rules of Gaia and the rules of democracy.

But the polluting industry has privatized even the air by first putting their pollutants into it and then by the carbon trade. They’re basically are saying that because we polluted the atmosphere, we own it. So we can pollute as much as we want and then buy up clean credits from someone else who is not polluting. The commons and the recovery of commons is vital to earth democracy. It’s at the heart of sustainability of the earth and democratic functioning of society.

AlterNet: Do property rights fit into this vision of the commons?

VS: Most private property rights have been carved out of the shared resources of the earth. In India we say “land belongs to creation.” We can use it and have “use rights,” but that is different from ownership and tradable rights. It is British colonialism that created private property in land the way it is now practiced.

Now, the World Bank is trying to create private property in land among indigenous communities. Water was never property either, but today, they are trying to change that. Seeds were meant to be shared and distributed, not treated as property. Intellectual property rights are as recent as the World Trade Organization and need to be eliminated because they are inconsistent with life [principles]. A world of the future governed by intellectual property rights over seed in Monsanto’s hands is a future where biodiversity will be destroyed, farmers will be wiped out and there will be no food worth eating.

AlterNet: You’ve also been involved in the “slow food” movement and organic farming.

VS: I was just elected Vice President of Slow Food [International], and I chair an international commission on the future of food, a commission started by the region of Tuscany in Italy. I convinced the [founder], Carlo Petrini, to recognize that food does not begin in the kitchen or in the chef’s hands. It begins in the farmers’ fields. One of the contributions that I and my colleagues have made in the seed-saving and organic farming movements is the recognition that biodiversity, organic farming and small-scale agriculture produces more food. It is a myth created by industrial agriculture and agribusiness that monocultures and chemical farming produce more food. They use more energy and chemicals, and do not produce more nutrition per acre. In fact, they use ten times more energy inputs than they produce as food. So with the food crisis, it is vital that we move to efficient food systems that also give us better quality food.

AlterNet: How would we carry your vision and language into actual political and farming structure?

VS: In countries like India, it’s not a case of vision being translated into practice. It’s defending a practice that’s being destroyed by a perverse vision. For us, it is defending the rights of small peasants. That’s where lot of my energy goes. An India of the villages was Gandhi’s dream and is my dream. But I do not see India surviving if her villages and her food capacity are wiped out. In the Northern countries like the United States farmers have already been uprooted. We need more farms producing more locally-grown foods. This country that can subsidize biofuel and chemicals should instead subsidize the return of small farmers to the land. This would solve much of the unemployment problem too.

Maria Armoudian is a singer/songwriter, a commissioner on the environment for the City of Los Angeles and host and producer of the Insighters for KPFK. Ankine Aghassian is co-producer of the Insighters on KPFK and a human rights activist.

Multinationals Make Billions In Profit Out of Growing Global Food Crisis

Speculators blamed for driving up price of basic foods as 100 million face severe hunger.

By Geoffrey Lean, May 4, 2008. CommonDreams.org

Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation, The Independent on Sunday can reveal. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.

The prices of wheat, corn and rice have soared over the past year driving the world’s poor - who already spend about 80 per cent of their income on food - into hunger and destitution.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world’s richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill’s net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world’s largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

Similarly, the Mosaic Company, one of the world’s largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.

The Food and Agriculture Organisation reports that 37 developing countries are in urgent need of food. And food riots are breaking out across the globe from Bangladesh to Burkina Faso, from China to Cameroon, and from Uzbekistan to the United Arab Emirates.

Benedict Southworth, director of the World Development Movement, called the escalating earnings and profits “immoral” late last week. He said that the benefits of the food price increases were being kept by the big companies, and were not finding their way down to farmers in the developing world.

The soaring prices of food and fertilisers mainly come from increased demand. This has partly been caused by the boom in biofuels, which require vast amounts of grain, but even more by increasing appetites for meat, especially in India and China; producing 1lb of beef in a feedlot, for example, takes 7lbs of grain.

World food stocks at record lows, export bans and a drought in Australia have contributed to the crisis, but experts are also fingering food speculation. Professor Bob Watson - chief scientist at the Department for Environment, Food and Rural Affairs, who led the giant International Assessment of Agricultural Science and Technology for Development - last week identified it as a factor.

Index-fund investment in grain and meat has increased almost fivefold to over $47bn in the past year, concludes AgResource Co, a Chicago-based research firm. And the official US Commodity Futures Trading Commission held special hearings in Washington two weeks ago to examine how much speculators were helping to push up food prices.

Cargill says that its results “reflect the cumulative effect of having invested more than $18bn in fixed and working capital over the past seven years to expand our physical facilities, service capabilities, and knowledge around the world”.

The revelations are bound to increase outrage over multinational companies following last week’s disclosure that Shell and BP between them recorded profits of £14bn in the first three months of the year - or £3m an hour - on the back of rising oil prices. Shell promptly attracted even greater condemnation by announcing that it was pulling out of plans to build the world’s biggest wind farm off the Kent coast.

World leaders are to meet next month at a special summit on the food crisis, and it will be high on the agenda of the G8 summit of the world’s richest countries in Hokkaido, Japan, in July.

Additional research by Vandna Synghal

Intimidation, pressure alleged in Phulbari coalfield area

NewAge, May 5, 2008. 

National Committee to Protect Oil, Gas, Mineral Resources, Power and Port on Sunday alleged that some army men were creating panic among the people of Phulbari in Dinajpur in the name of taking opinion on the controversial open-pit coal project.
   

It also alleged that the British government through its high commissioner in Dhaka was continuing lobbying in favour of Asia Energy in Bangladesh and creating pressure on the government to allow the company for coal mining.
   

‘We have recently come to know that some members of the army wearing military uniforms have been visiting different areas of the coalfield zone in their vehicles and asking people whether they will agree to leave the village in exchange of compensation,’ said the committee’s member-secretary Anu Muhammad at a press conference in the city.
   

‘If the government really wants to conduct survey on the coal project to take people’s opinion, it can do that. We are also ready to extend support. But it is similar to take consent by intimidation, if any army man with arms conducts public opinion survey,’ he said.
   

Anu also condemned such activities and demanded immediate end to such move.
   

Replying to a question on whether the army was supporting the Asia Energy’s proposed open-pit mine at Phulbari, Anu said, ‘We do not know anything about it. We do not know why the army is there. We also want to understand what the army is doing there. We request the government to clear its position in this regard.’


When contacted, an official of the Inter Service Public Relations, however, said they were not aware of any allegation made by anyone regarding to any study. He declined to elaborate.
   

Anu said Asia Energy had engaged some lobbyists, comprising former bureaucrats, consultants and journalists, in pressing ahead with the devastating project. The company was also campaigning in northern districts that it was a ‘development project’, he added.
   

He called upon the British government and lending agencies like Asian Development Bank to stop lobbying in favour of the devastating project of Asia Energy which would destroy the environment in the northern region and push thousands of people on streets.
   

Anu demanded immediate scrapping of the Phulbari coal project and ouster of the company from the country as per the agreement signed with the people of Phulbari in 2006.
   

The committee convenor Sheikh Md Shahidullah said the people of Phulbari had given their verdict against the coal project, and there was no need to conduct public opinion survey.
   

When asked what the committee would do, if the government did not scrap the project, he said, ‘We are protesting against it and we will continue with our protest.’
   

Three persons were killed and few others injured at Phulbari on August 26, 2006 when law enforcers opened fire on the people who were staging demonstration in protest against the planned open pit mining project.
   

Professor Hossain Monsur of Dhaka University, Professor Shamsul Alam of Chittagong University of Engineering and Technology and left leader Ruhin Hossain Prince were, among others, present at the press conference.

Making a killing from hunger

We need to overturn food policy, now!

GRAIN, April 2008

Download a PDF version!

For some time now the rising cost of food all over the world has taken households, governments and the media by storm. The price of wheat has gone up by 130% over the last year.[1] Rice has doubled in price in Asia in the first three months of 2008 alone,[2] and just last week it hit record highs on the Chicago futures market.[3] For most of 2007 the spiralling cost of cooking oil, fruit and vegetables, as well as of dairy and meat, led to a fall in the consumption of these items. From Haiti to Cameroon to Bangladesh, people have been taking to the streets in anger at being unable to afford the food they need. In fear of political turmoil, world leaders have been calling for more food aid, as well as for more funds and technology to boost agricultural production. Cereal exporting countries, meanwhile, are closing their borders to protect their domestic markets, while other countries have been forced into panic buying. Is this a price blip? No. A food shortage? Not that either. We are in a structural meltdown, the direct result of three decades of neoliberal globalisation.

Farmers across the world produced a record 2.3 billion tons of grain in 2007, up 4% on the previous year. Since 1961 the world’s cereal output has tripled, while the population has doubled. Stocks are at their lowest level in 30 years, it’s true,[4] but the bottom line is that there is enough food produced in the world to feed the population. The problem is that it doesn’t get to all of those who need it. Less than half of the world’s grain production is directly eaten by people. Most goes into animal feed and, increasingly, biofuels – massive inflexible industrial chains. In fact, once you look behind the cold curtain of statistics, you realise that something is fundamentally wrong with our food system. We have allowed food to be transformed from something that nourishes people and provides them with secure livelihoods into a commodity for speculation and bargaining. The perverse logic of this system has come to a head. Today it is staring us in the face that this system puts the profits of investors before the food needs of people.

Market realities

The policy makers who have shaped today’s world food system – and who are supposed to be responsible for averting such catastrophes – have come out with a number of explanations for the current crisis that everyone has heard over and over again: drought and other problems affecting harvests; rising demand in China and India where people are supposedly eating more and better than in the past; crops and lands being massively diverted into biofuel production; and so on. All of these issues, of course, are contributing to the current food crisis. But they do not account for the full depth of what is happening. There is something more fundamental at work, something that brings all these issues together, and which the world’s finance and development chiefs are keeping out of public discussion.

Nothing that the policy makers say should obscure the fact that today’s food crisis is the outcome of both an incessant push towards a “Green Revolution” agricultural model since the 1950s and the trade liberalisation and structural adjustment policies imposed on poor countries by the World Bank and the International Monetary Fund since the 1970s. These policy prescriptions were reinforced with the establishment of the World Trade Organisation in the mid-1990s and, more recently, through a barrage of bilateral free trade and investment agreements. Together with a series of other measures, they have led to the ruthless dismantling of tariffs and other tools that developing countries had created to protect local agricultural production. These countries have been forced to open their markets and lands to global agribusiness, speculators and subsidised food exports from rich countries. In that process, fertile lands have been diverted away from serving local food markets to the production of global commodities or off-season and high-value crops for Western supermarkets. Today, roughly 70% of all so-called developing countries are net importers of food.[5] And of the estimated 845 million hungry people in the world, 80% are small farmers.[6] Add to this the re-engineering of credit and financial markets to create a massive debt industry, with no control on investors, and the depth of the problem becomes clear.

Agricultural policy has completely lost touch with its most basic goal of feeding people. Hunger hurts and people are desperate. The UN World Food Programme estimates that recent price hikes have meant that an additional 100 million people can no longer afford to eat adequately.[7]Governments are frantically seeking shelter from the system. The fortunate ones, with export stocks, are pulling out of the global market to cut their domestic prices off from the skyrocketing world prices. With wheat, export bans or restrictions in Kazakhstan, Russia, Ukraine and Argentina mean that a third of the global market has now been closed off. The situation with rice is even worse: China, Indonesia, Vietnam, Egypt, India and Cambodia have banned or severely restricted exports, leaving just a few sources of export supply, mainly Thailand and the US. Countries like Bangladesh can’t buy the rice they need now because the prices are so high. For years the World Bank and the IMF have told countries that a liberalised market would provide the most efficient system for producing and distributing food, yet today the world’s poorest countries are forced into an intense bidding war against speculators and traders, who are having a field day. Hedge funds and other sources of hot money are pouring billions of dollars into commodities to escape sliding stock markets and the credit crunch, putting food stocks further out of poor people’s reach.[8] According to some estimates, investment funds now control 50–60% of the wheat traded on the world’s biggest commodity markets.[9] One firm calculates that the amount of speculative money in commodities futures – markets where investors do not buy or sell a physical commodity, like rice or wheat, but merely bet on price movements – has ballooned from US$5 billion in 2000 to US$175 billion to 2007.[10]

The situation today is untenable. Look at Haiti. A few decades ago it was self-sufficient in rice. But conditions on foreign loans, particularly a 1994 package from the IMF, forced it to liberalise its market. Cheap rice flooded in from the US, backed by subsidies and corruption, and local production was wiped out.[11] Now prices for rice have risen 50% since last year and the average Haitian can’t afford to eat. So people are taking to the streets or risking their lives to journey by boat to the US. Food protests have also erupted in West Africa, from Mauritania to Burkina Faso. There, too, structural adjustment programmes and food-aid dumping have destroyed the region’s own rice production, leaving people at the mercy of the international market. In Asia, the World Bank constantly assured the Philippines, even as recently as last year, that self-sufficiency in rice was unnecessary and that the world market would take care of its needs.[12] Now the government is in a desperate plight: its domestic supply of subsidised rice is nearly exhausted and it cannot import all it needs because traders’ asking prices are too high.

Making a killing from hunger

The truth about who profits and who loses from our global food system has never been more obvious. Take the most basic element of food production: soil. The industrial food system is a chemical-fertiliser junkie. It needs more and more of the stuff just to keep alive, eroding soils and their potential to support crop yields in the process. In the current context of tight food supplies, the small clique of corporations that control the world’s fertiliser market can charge what they want – and that’s exactly what they are doing. Profits at Cargill’s Mosaic Corporation, which controls much of the world’s potash and phosphate supply, more than doubled last year.[13] The world’s largest potash producer, Canada’s Potash Corp, made more than US$1 billion in profit, up more than 70% from 2006.[14]Panicking now about future supplies, governments are becoming desperate to boost their harvests, giving these corporations additional leverage. In April 2008, the joint offshore trading arm for Mosaic and Potash hiked the price of its potash by 40% for buyers from Southeast Asia and by 85% for those from Latin American. India had to pay 130% more than last year, and China 227% more.[15]

Table 1. Profit increase for some of the world’s largest fertiliser corporations

Company	Profits 2007 (US$ million)	Increase from 2006 (%)
Potash Corp (Canada)	1,100	72%
Yara (Norway)	1,116	44%
Sinochem (China)	1,100	95%
Mosaic (US)	708	141%
ICL (Israel)	535	43%
K + S (Germany)	420	2.8%

Source: Compiled from corporate reports

While big money is being made from fertilisers, it is just a sideline for Cargill. Its biggest profits come from global trading in agricultural commodities, which, together with a few other big traders, it pretty much monopolises. On 14 April 2008, Cargill announced that its profits from commodity trading for the first quarter of 2008 were 86% higher than the same period in 2007. “Demand for food in developing economies and for energy worldwide is boosting demand for agricultural goods, at the same time that investment monies have streamed into commodity markets,”said Greg Page, Cargill’s chairman and chief executive officer. “Prices are setting new highs and markets are extraordinarily volatile. In this environment, Cargill’s team has done an exceptional job measuring and assessing price risk, and managing the large volume of grains, oilseeds and other commodities moving through our supply chains for customers globally.”[16]

Table 2. Profit increase for some of the world’s largest grain traders

Company	Profits 2007 (US$ million)	Increase from 2006 (%)
Cargill (US)	2,340	36%
ADM (US)	2,200	67%
ConAgra (US)	764	30%
Bunge (US)	738	49%
Noble Group (Singapore)	258	92%
Marubeni (Japan)	90*	43%*

Source: Compiled from corporate reports
*Data is for Marubeni’s Agri-Marine division only.
Absent from this list is Louis Dreyfus (France), a private agricultural commodities trader with annual sales in excess of US$22 billion, which does not report its profits.

Managing and assessing are not so difficult for a company like Cargill, with its near monopoly position and a global team of analysts the size of a UN agency. Indeed, all of the big grain traders are making record profits. Bunge, another big food trader, saw its profits of the last fiscal quarter of 2007 increase by US$245 million, or 77%, compared with the same period of the previous year. The 2007 profits registered by ADM, the second largest grain trader in the world, rose by 65% to a record US$2.2 billion. Thailand’s Charoen Pokphand Foods, a major player in Asia, is forecasting revenue growth of 237% this year.

The world’s big food processors, some of which are commodity traders themselves, are also cashing in. Nestlé’s global sales grew 7% last year.“We saw this coming, so we hedged by forward-buying raw materials”,says François-Xavier Perroud, Nestlé’s spokesman.[17] Margins are up at Unilever, too. “Commodity pressures have increased sharply, but we have successfully offset these through timely pricing action and continued delivery from our savings programmes”, says Patrick Cescau, Group CEO of Unilever. “We will not sacrifice our margins and market share.”[18] The food corporations don’t seem to be making these profits from of the retailers. UK supermarket Tesco reports profits up 12.3% from last year, a record rise. Other major retailers, such as France’s Carrefour and the US’s Wal-Mart, say that food sales are the main factor sustaining their profit increases.[19] Wal-Mart’s Mexican division, Wal-Mex, which handles a third of overall food sales in Mexico, reported an 11% increase in profits for the first quarter of 2008. (At the same time Mexicans are demonstrating in the streets because they can no longer afford to make tortillas.[20])

It seems that nearly every corporate player in the global food chain is making a killing from the food crisis. The seed and agrochemical companies are doing well too. Monsanto, the world’s largest seed company, reported a 44% increase in overall profits in 2007.[21] DuPont, the second-largest, said that its 2007 profits from seeds increased by 19%, while Syngenta, the top pesticide manufacturer and third-largest company for seeds, saw profits rise 28% in the first quarter of 2008.[22]

Such record profits have nothing to do with any new value that these corporations are producing and they are not one-off windfalls from a sudden shift in supply and demand. Instead, they are a reflection of the extreme power that these middlemen have accrued through the globalisation of the food system. Intimately involved with the shaping of the trade rules that govern today’s food system and tightly in control of markets and the ever more complex financial systems through which global trade operates, these companies are in perfect position to turn food scarcity into immense profits. People have to eat, whatever the cost.

The urgent need for a policy rethink

The larger backdrop to this perverse food market situation is the global financial system, which is now teetering on its flimsy axis. What began as a localised housing loan collapse in the US in 2007 has unravelled into something far more serious, as people realise that the emperors of the global financial system have no clothes. The world economy is living on debt that no one can pay. While central bankers and Lear jet executives try to patch the holes and restore confidence, the underlying truth is that the system is close to bankruptcy and no one in power wants to take the necessary tough measures: not the IMF, nor the World Bank, nor the leaders of the world’s most powerful nations. Not much more than public relations glitter can be expected from the G8 meeting in June.

Similar problems lie at the heart of the food crisis: an ideologically driven elite has forced countries to wrench open markets and let the free market run, so that a few megacorporations, investors and speculators can take huge payoffs. Many countries have lost that most basic power: the ability to feed themselves. This loss, coupled with the corruption that plagues our countries and trading systems, shows that neoliberalism has lost any legitimacy that it might once have had. It is a measure of how out of touch these ideologues are that many now openly call for more trade liberalisation as a solution to the food crisis, with some even proposing that the rules of the WTO be changed to prevent countries from imposing export restrictions on food.[23]

The World Bank president, Robert Zoellick, has tried to win the world over with his call for a “New Deal” to solve the hunger crisis, but there is nothing new about it: he calls for more trade liberalisation, more technology and more aid. Today’s food crisis is the direct result of decades of these policies, which must now be rejected. While immediate action is necessary to lower food prices and to get food to those who need it, we also need radical changes in agricultural policy so that small farmers around the world gain access to land and can make a living from it. We need policies that support and protect farmers, fishers and others to produce food for their families, for the local markets and for people in cities, rather than money for an abstract international commodity market and a tiny clan of corporate boardroom executives. And we need to strengthen and promote the use of technologies based on the knowledge and in the control of those who know how to grow food. To put it another way, we need food sovereignty, now – the kind that is defined and driven by small farmers and fisherfolk themselves.

Social movements around the globe have been struggling to promote such a reversal of strategy, only to be dismissed as unrealistic and backward by those in power, and often violently repressed. The glimmer of hope in this crisis is that the situation can be reversed. Peasant organisations have concrete proposals about what needs to be done to resolve the crisis in their countries, and governments should listen to what they are saying. Already some governments are talking of a policy change towards food self-reliance.[24] Others are starting to question the fundamental rationale of pushing for more free trade. Neoliberal hawks at the top of the global food policy pyramid have lost whatever credibility they may think they once had. It is time for them to move out of the way so that the visions of food sovereignty and agrarian reform that come from the grassroots can take their place and get us out of this hellish mess.

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Going further:

• Overview: FAO, World Food Situation:http://www.fao.org/worldfoodsituation
• Overview: Financial Times, “The global food crisis”, interactive map, last updated 21 April 2008: http://tinyurl.com/6knmy8
• Overview: Stefan Steinberg, “Financial speculators reap profits from global hunger”, Global Research, Centre for Research on Globalisation, Montreal, 24 April 2008.
  http://globalresearch.ca/index.php?context=va&aid=8794
• Overview: Confédération Paysanne, “Les révoltes de la faim dans les pays du Sud : l’aboutissement logique de choix économiques et politiques désastreux”, Press release, 18 April 2008:http://tinyurl.com/5glx8u (French only)
• Structural Adjustment Programmes: “UNCTAD official blames food crisis on structural adjustment programme,” This Day, Lagos, 23 April 2008: http://allafrica.com/stories/200804230375.html
• Food sovereignty: http://www.viacampesina.org and http://www.nyeleni2007.org
• Agrofuels: GRAIN, Agrofuels special issues, Seedling, July 2007,http://www.grain.org/seedling/?type=68
• Rice in the Philippines: GRAIN, Philippines and beyond: rice crisis – reaping the ‘fruit’ of market capitalism, Hybrid rice blog, 22 April 2008, http://www.grain.org/hybridrice/?lid=201

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References

1      Bloomberg, quoted by the BBC, London, 14 April 2008,http://news.bbc.co.uk/2/hi/business/7344892.stm

2      BBC, “Action to meet Asian rice crisis”, London, 17 April 2008,http://news.bbc.co.uk/2/hi/business/7352038.stm

3       See http://www.riceonline.com for daily reports. With many Asian rice exporters out of the game, needy countries from Asia and Africa are turning to the US market where prices are going through the roof.

4       Brian Halweil, “Grain harvest sets record, but supplies still tight”, Worldwatch Institute, Washington DC,http://www.worldwatch.org/node/5539

5      Katarina Wahlberg, “Are we approaching a global food crisis?”, World Economy & Development in Brief, Global Policy Forum, 3 March 2008,

6      Food policy expert interviewed on Radio France International, Paris, 20 April 2008.

7      “UN food chief urges crisis action,” BBC, London, 22 April 2008,http://news.bbc.co.uk/2/hi/americas/7360485.stm

8      Sinclair Stewart and Paul Waldie, “U.S. food producers, speculators square off”, Globe and Mail, Toronto, 23 April 2008,

9      Ibid. and Paul Waldie, “Why grocery prices are set to soar”, Globe and Mail, Toronto, 24 April 2008,

10     Paul Waldie, “Why grocery prices are set to soar”, op cit.

11    Bill Quigley, “USA role in Haiti hunger riots”, ZNet, US, 23 April 2008,

12    World Bank, “Can the world market for rice be trusted”, Box 1 on p. 52 of “Philippines: Agriculture Public Expenditure Review,” Technical Paper, World Bank, Washington DC, 2007,http://go.worldbank.org/TGRSK19300

13    Potash and phosphates are two of the main ingredients in chemical fertiliser.

14    David Ebner, “Saskatchewan: A lot more than wheat” Globe and Mail, Toronto, 11 April 2008,

15    John Partridge and Andy Hoffman, “China deal sends Potash soaring”Globe and Mail, Toronto, 17 April 2008,

16    “Cargill income up sharply in third quarter”, World Grain, Kansas City, 14 April 2008, 

17    “Tightening belts,” The Economist, London, 10 April 2008,

18    Jonathan Sibun, “Unilever profits surge despite price pressures,”Daily Telegraph, London, 3 November 2007, http://tinyurl.com/6p8tcx; and, “Get set for more price hikes: Unilever chief,” Business Standard, India, 16 March 2008, http://tinyurl.com/694cqn

19    Foo Yun Chee, “Major European retailers post higher profits for 2007,” Reuters, 6 March 2008,www.iht.com/articles/2008/03/06/business/RETAIL.php

20    Associated Press, “Wal-Mart de Mexico’s 1Q profits rise 11 percent on higher sales, cost controls,” 8 April 2008,

21    Monsanto, Annual Report, 2007.

22    DuPont, Annual Report 2007, and “Syngenta anuncia cifra negocio en progresión 28 por ciento primer trimestre”, EFE, 22 de abril 2008,

23    Isabel Reynolds, “WTO should pressure food exporters – Mandelson”, Reuters, 23 April 2008,

24    See, for example, recent comments from West African farmers and officials: Noel Tadégnon, “Le ROPPA préconise une pression sur les autorités politiques pour soutenir l’agriculture africaine,” APA, 23 April 2008, http://www.apanews.net/apa.php?article61599; and, “Réunion extraordinaire du Conseil des ministres de l`UEMOA, hier : 200 milliards pour freiner la flambée des prix,” Le Nouveau  Réveil, Abidjan, 24 April 2008, http://www.lenouveaureveil.com/a.asp?n=290011&p=1903

Central Planning and Market Freedom: Manifestations of the Same Fundamentalist Mindset

Walden Bello*, Focus on the Global South, April 11, 2008

Walden Bello was invited to participate in the Economist’s Debate Series on “Freedom and its Digital Discontents.” The proposition of the debate was “By intervening to regulate business and financial risks, governments have made things worse.” The debate can be accessed at http://www. Economist.com/debate/

There are two doctrinaire positions that have proved singularly destructive over the last half century. One is that the government riding herd on the economy is the way to go. The other is that the market is always right.

The first brought us the gem that was central planning; and the second, the wondrous neoliberal economics that has reigned over the last 25 years. Despite opposite locations on the ideological spectrum, both approaches were united at a metaphysical level by the Platonic paradigm that there is one ideal straitjacket into which you can cram all actually existing economies.

We all know where central planning and the elimination of the market brought the Soviet Union and eastern Europe. Over the last few decades, we have witnessed how the holy trinity of radical liberalization, deregulation and privatization has increased the numbers of people living in absolute poverty, redistributed income towards the rich and reduced global economic growth per year in the 1980-2000 period by more than half of what it was during the 1960-80 period. Despite claims to the contrary, what we have had under the reign of unfettered market processes is not Schumpeterian creative destruction, but long-term stagnation combined with periodic destabilization.

The current financial crisis that may lead to what the former Federal Reserve chairman, Alan Greenspan, describes as possibly the “world’s worst economic crisis since the second world war” provides a cautionary tale of what happens if you eliminate all effective controls on the market. The housing bubble is but the latest of some 100 financial crises that have swiftly followed one another ever since Depression-era capital controls began to be lifted during the Thatcher-Reagan years.

Owing to the devastating impact of uncontrolled gyrations and permutations of speculative capital, there were calls for capital controls and a return to strong financial regulation following the Asian financial crisis in 1997 and the dot.com craze of the late 1990s. The first event led to the economic collapse of all the so-called Asian tiger economies that did not impose capital controls, the second to the wiping out of $7 trillion in investor wealth and the US recession of 2001.

Instead of heeding these calls, Washington caved in to Wall Street’s insistence on private sector “self-surveillance” and “self policing”. Instead of stronger monitoring and regulation of sophisticated financial instruments such as derivatives,, governments meekly agreed to leave this to market players who were supposed to have access to complex quantitative computer models that would undertake sophisticated risk assessment.

Instead of busting the housing bubble by decisively raising interest rates, Mr Greenspan simply stood by, as he did during the dot.com mania, and allowed another bubble to grow and grow. Instead of pushing Mr Greenspan to prick the bubble, the then US Council of Economic Advisers chairman, Ben Bernanke, provided his guru with technocratic cover and attributed the rise in US housing prices to “strong economic fundamentals” instead of speculative mania. Both Mr Greenspan and Mr Bernanke disregarded the overwhelming evidence that, as the economist Dean Baker put it a few years ago, when the bubble was taking off, “Like the stock bubble, the housing bubble will burst. Eventually, it must. When it does, the economy will be thrown into severe recession, and tens of millions of homeowners, who never imagined that house prices could fall, likely will face serious hardship.”

What happened to self-policing? When it came to risk assessment of derivatives such as collateralized debt obligations (CDOs) and structured investment vehicles (SIVs), the process collapsed almost completely, with the most sophisticated quantitative risk models left in the dust as risk was priced according to one simple rule by the sellers of securities: underestimate the real risk and pass it on to the suckers down the line.

What happens when you leave the market unregulated is best described by the Wall Street Journal’s summary of the report of the meeting of the Group of Seven’s Financial Stability Forum in Tokyo in early February: “[T]here is plenty of blame to go around for the financial chaos: The US subprime mortgage market was marked by poor underwriting standards and ‘some fraudulent practices.’ Investors didn’t carry out sufficient due diligence when they bought mortgage-backed securities. Banks and other firms managed their financial risks poorly and failed to disclose to the public the dangers on and off their balance sheets. Credit-rating companies did an inadequate job of evaluating the risk of complex securities. And the financial institutions compensated employees in ways that encouraged excessive risk-taking and insufficient regard to long-term risks.”

In other words, a bloody mess.

With the global economy on the brink of a deep recession, citizens in the developed and developing worlds have had their fill of doctrinaire policymakers from the far left and the far right imposing their fundamentalist views on them. Just as they were disillusioned with central planning, they have had enough of government inaction as speculative capital triggered permanent instability and redistributed the national income towards a small minority of market players. They want the market to be subjected to the discipline of the public interest. We are now entering what the great Hungarian economist Karl Polanyi described as the second phase of the “double movement” under capitalism: an era following a period of uncontrolled market gyrations when, forced by a civil society that is up in arms, governments again intervene, this time to stabilise the economy, bring about a just income distribution, eliminate poverty and - a critical goal in this era of global warming - promote environmental sustainability.

* Walden Bello is Senior Analyst with Focus on the Global South