IMF “Cure” for Food Crisis Also a Cause

By Emad Mekay, May 21, 2008 Inter Press Service

WASHINGTON - The International Monetary Fund (IMF) says it is responding to the global food crisis by doling out new emergency loans to 15 of the world’s poorest nations, mostly in Africa.

But the new loans carry the same controversial conditions, such as tariff and subsidies cuts, that many analysts now agree are partly to blame for the soaring inflation and inability of developing country governments to cope.

Mark Plant, deputy director of the IMF’s Policy Development and Review Department, told an IMF publication last week that the so-called Exogenous Shocks Facility (ESF), which the fund uses to disburse fast loans in emergency situations, would be open for business to the world’s poorest nations by June.

Already 15 countries are talking to the Washington-based IMF about tapping loans from the programme, which is designed to offset expenses and budget imbalances incurred from shuffling expenditures to ease food prices in poor nations.

“The IMF is preparing a review of the Exogenous Shocks Facility for Board consideration in June,” Plant told the IMF Survey.

“But I would underscore that the ESF is available now, if any country needs immediate help,” he added.

The IMF official said that in addition to the emergency programme, developing countries suffering high food prices could also receive advance loans from the more traditional Poverty Reduction and Growth Facility (PRGF), the loan framework under which poor countries typically have to agree to revamp their economies in return for IMF cash.

Countries resorting to the Fund’s emergency loans for the first time will have to accede to the terms of the controversial PRGF, if they do not have one in place already.

But analysts say that both loan programmes could in fact make a bad situation worse. The conditions that these two programmes share include trade liberalisation, cutting social spending, trimming subsidies to local producers and limiting bailouts to troubled national sectors.

Under those conditions, international financial institutions such as the IMF and its sister institution the World Bank helped force developing countries to dismantle much of their agricultural tariff systems, allowing in huge quantities of cheaper farm goods from Europe and the United States.

Critics say this effectively sabotaged national food security systems and has left poor countries ever more reliant on food imports and defenseless in the face of the latest price increases. Today, according to figures from the Global Policy Forum, nearly three in four developing countries are net importers of food.

“The IMF adjustment programmes forced poor countries to abandon policies that protected their farmers and their agricultural production and markets,” said Henk Hobbelink of the international non-governmental organisation GRAIN, which promotes sustainable agriculture and biodiversity.

“As a result, many countries became dependent on food imports, as local farmers could not compete with the subsidised products from the North. This is one of the main factors in the current food crisis, for which the IMF is directly to blame,” he added.

According to data from the U.N. Food and Agriculture Organisation, these food import surges have had an especially harsh impact on rural poor and local economies in Africa.

For example, in Cameroon, lowering tariff protection to 25 percent saw poultry imports increase by about six-fold. In Senegal, 70 percent of the poultry industry has been wiped out in recent years because of an influx of European poultry.

And when Ghana cut its rice tariffs from 100 to 20 percent under structural adjustment policies ordered by the World Bank, rice imports to the country increased from 250,000 tonnes in 1998 to 415,150 tonnes in 2003. Domestic rice, which had accounted for 43 percent of the domestic market in 2000, captured only 29 percent of the domestic market three years later.

Rising food prices are having their biggest impact on poor people in low-income developing countries. Rice prices have reached record levels, while wheat prices have nearly tripled and corn doubled since 2000.

Some 33 countries, most in Sub-Saharan Africa, which already carries the world’s heaviest debt burden, have been particularly affected. New loans from the ESF could further plunge these nations into the red.

GRAIN also notes that IMF policy advice to eliminate tariffs on some food items, as Plant has advocated, would simply continue to discourage local production and put poor countries even more at the mercy of international commodity markets over which they have no control.

It is unclear whether pushing more funds in the form of new loans in the market will ease prices, although such a move would likely fatten profits for international food companies, traders and speculators.

GRAIN says that Cargill, the world’s biggest grain trader, achieved an 86-percent increase in profits from commodity trading in the first quarter of 2008. Another company, Bunge, had a 77-percent increase in profits during the last quarter of 2007, while ADM, the second largest grain trader in the world, had a 67-percent increase in profits in 2007.

As part of its package to deal with the crisis, the IMF is also arguing that poor nations redirect new subsidies only to the poor while removing subsidies to petroleum products, an argument that overlooks the major impact of fuel on food prices.

The IMF insists that it is offering varied advice to suit different countries and avoid destabilising their economies.

“Individual country circumstances will require different approaches calibrated against the nature of each country’s shock,” said Bill Murray of the IMF’s media office in an email message.

But food security activists say that poor nations should reject the advice they are getting from institutions such as the IMF and World Bank and work instead towards “food sovereignty”.

The answer to the current crisis, argues Anuradha Mittal of the U.S.-based Oakland Institute, is for developing countries to “break with decades of ill-advised policies that have failed to benefit their people”.

 

The World Food Crisis – A Human Rights Disaster

FIAN International press release

Geneva/Heidelberg, 22.05.08: Today, the UN Human Rights Council stresses the key role of the Human Right to Food to address the immediate and root causes of the current world food crisis. FIAN, the International Human Rights Organisation for the Right to Food, welcomes this clear message to the international community. “The World Food Crisis is a Human Rights Disaster”, stated FIAN International General Secretary Flavio Valente today in Geneva.

The Human Rights Council has adopted the urgent call of the new U.N. Special Rapporteur on the Right to Food to hold today in Geneva a Special Session on the negative impact of the world food crisis on the realization of the Right to Food. The Right to Food perspective is crucial to revise thoroughly all international and national policies which have, in fact, generated hunger.

In a Joint Written Statement to the Human Rights Council, FIAN, CETIM, Action Aid, Habitat International Coalition, the International Federation of Human Rights Leagues (FIDH) and Vía Campesina point out: “Differently from the diagnosis that the UN presented at the creation of its Task Force on the Global Food Crisis, we recognize the present crisis as deeply rooted in decades of misguided international policies - decided and implemented under the auspices of the Bretton Woods Institutions and, more recently, the WTO - that have failed to create and maintain an enabling environment for states to respect, protect and fulfil the human right to adequate food.”

“The world does not need more of the same medicine”, the FIAN General Secretary said. “It is remarkable that the the UN Task Force Response to the World Food Crisis under the clear influence of the Bretton Woods Institutions and the WTO does not mention with a single word the Human Right to Food, but it calls for a green revolution in Africa and accelerated trade deregulation processes .”

FIAN welcomes the statement delivered by the UN Committee on Economic, Social and Cultural Rights to the Council. The Committee “urges State parties to address the structural causes at the national and international levels, including by: revising the global trade regime under the WTO to ensure that global agricultural trade rules promote, rather than undermine the right to adequate food and freedom from hunger, especially in developing and net food-importing countries”.

Further Information

Flavio Valente +49- 172-1394447

Sandra Ratjen +49- 174- 1925 771

Links to sources:

Joint Written NGO Statement to the Human Rights Council

Statement of the UN Special Rapporteur to the Human Rights Council

Statement of the UN Committee on Economic, Social and Cultural Rights to the Human Rights Council

FIAN is an international human rights organization that since more than 20 years advocates for the realization of the right to food. FIAN consists of national sections and individual members in over 50 countries around the world.

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.

The Triple Threat: Our Food, Water and Climate Challenges

By Shiney Varghese*, Institute for Agriculture and Trade Policy, May 14, 2008

Food prices rose 4 percent in the United States last year, the highest rise since 1990. All over the world food prices are on the rise. At the spring meetings of the International Monetary Fund and the World Bank finance ministers wanted to focus the world’s attention on food crisis rather than the credit crisis.

There are many factors contributing to this current crisis, including the rising price of oil, deregulated agricultural markets, financial speculation, and biofuels. Another key factor is climate change, which is affecting crop yield and food production. It is time for us to get serious about understanding the way climate change affects water resources for food production and conversely the way agricultural water use is leading to climate change.

In January, scientists at the Scripps Institution of Oceanography in the U.S. published an article in the journal Science that said what many climate change experts had already been saying for some time: global warming is responsible for the extreme changes that we see in the hydrological cycle in the western U.S. Moreover, the scientists from Scripps found that up to 60 percent of the climate-related trends of river flow, winter air temperature and snow pack between 1950 and 1999 are human-induced.

While the Scripps scientists analyzed data for the western United States, similar changes have been happening around the world in the second half of the twentieth century. The Fourth Assessment Report of the Intergovernmental Panel on Climate Change (2007) found that “climate and freshwater systems are interconnected in complex ways and that any change in one of these systems induces a change in the other.”

The IPCC further concluded that the changes in precipitation patterns and glacier melts are projected to significantly affect water availability for an entire range of socially valued water uses, including human consumption, agriculture and energy generation. The most dramatic effect of climate change is likely to be on agricultural production. The impact is already manifesting itself in countries such as Australia. The global price of wheat hit its highest level in decades in December, partly due to Australia’s drought. Irrigated agriculture accounts for almost 70 percent of world water withdrawals and close to 90 percent of the total consumptive water use (the portion that is lost to the immediate environment for use). Existing irrigation and drainage infrastructures have been designed for stable climate conditions. They are very likely inadequate to cope with extreme climatic variations in precipitation and reduced water supply reliability and availability, as well as floods.

On the other hand, since irrigation accounts for such a large percentage of total water withdrawals, any reduction in irrigation water use (either through introducing water use efficient technologies or through changing agroecological practices) will go a long way in coping with climate-related water stress especially, in water-stressed regions.

While irrigated agriculture accounts for 40 percent of global food production, the remaining 60 percent of world’s food crops are produced by those practicing rain-fed agriculture. Such agriculture covers more than 80 percent of global agricultural land. In these regions, particularly those without local water conservation measures, crop productivity depends solely on sufficient precipitation to meet both evaporative demand and soil moisture needs. Any variation in precipitation patterns and temperature increases can affect crop productivity substantially.

The IPCC predicts that in some countries, “yields from rain-fed agriculture could be reduced by up to 50 percent by 2020.” This would most certainly affect food security in many communities and nations. But it is not only that climate change-related water stress will affect agriculture. The converse is also true: current water use patterns and associated practices contribute to climate change.

It is noteworthy that the two sectors in the world that use the most water, chemical intensive agriculture and fossil fuel-based energy production, are also the biggest contributors to global warming, which in turn further increases water stress in many regions.

For example, agriculture, as it is practiced now, sequesters much less carbon than it used to because of land use changes. A recent report by Greenpeace, “Cool Farming: Climate Impacts of Agriculture and Mitigation Potential,” found that “industrial, chemical-intensive agriculture degrades the soil and destroys the resources that are critical to storing carbon, such as forests and other vegetation.”

There are a number of ways in which national agricultural, trade and energy policies affect both water resources of a nation and climate change at the global level. Let us take a brief look at irrigated agriculture. Irrigation water use increased dramatically in most parts of the world in the second half of 20th century. This was abetted by the building of massive water systems including dams, reservoirs, aqueducts, pipelines and canals that brought water to otherwise water scarce regions.

This growth in irrigated agriculture is part of an unprecedented expansion of chemical intensive agriculture that was originally sold as a way to feed the world and also to increase export earnings through commodity-based trade. The pursuit of export-led growth in agriculture has also been dependent on intensive use of fossil fuel-based chemical inputs, contributing greatly to climate change.

In addition, the transport of agricultural commodities around the world and intensive agricultural practices (such as confined animal feedlots and indiscriminate fertilizer-use) also contributes to greenhouse gas (GHG) emissions. According to the World Bank’s 2008 report on agriculture, intensive agriculture directly contributes about half of the global emissions of two of the most potent non-carbon dioxide GHGs: “Nitrous oxide emissions from soils (from fertilizer application and manures) and methane from enteric fermentation in livestock production.”

Each account for about one-third of the farm sector’s total non-carbon dioxide emissions and are projected to rise with increased meat consumption becoming a norm in emerging economies.

Agricultural practices geared towards growing export-oriented monoculture crops are chemical intensive and have resulted in high levels of pollution in local water systems. In addition, nitrogen used in fertilizers leaches into water courses increasing the indirect nitrous oxide emissions downstream. This model of production has intensified water use, both in terms of the water going into the growing of the commodities themselves, but also in terms of inter-basin water transfers.

Protecting our waters in local watersheds and wetlands and using them judiciously in support of local agricultural systems and livelihood practices, rather than continuing with the current strategy of promoting export-oriented, monoculture, industrial, water-guzzling agricultural systems, is key to reducing the water sector’s direct contributions to climate change. Moreover local practices that conserve and enhance local water availability to ensure resilience of rain-fed agricultural systems are necessary as an adaptation mechanism, to meet climate challenges and to help meet food security goals, two of the biggest challenges for developing countries today.

It is time to reevaluate our agricultural policies that promote water and energy intensive agriculture. We will have to make some major changes in our agriculture systems to address some of the upcoming climate challenges. Doing so will help us cope with extreme changes in the hydrological cycle and resultant food and water crises many communities and nations are sure to face. Effective and sustainable water management in agriculture in support of healthy food systems needs to be part of the climate solution.

*Shiney Varghese is a Senior Policy Analyst at the Institute for Agriculture and Trade Policy.

How to manufacture a global food crisis: lessons from the World Bank, IMF, and WTO

 

How “free trade” is destroying Third World agriculture-and who’s fighting back.

By Walden Bello, The Nation. May 16, 2008

The global rise in food prices is not only a consequence of using food crops to produce biofuels, but of the “free trade” policies promoted by international financial institutions. Now peasant organisations are leading the opposition to a capitalist industrial agriculture.

When tens of thousands of people staged demonstrations in Mexico last year to protest a 60 percent increase in the price of tortillas, many analysts pointed to biofuel as the culprit. Because of US government subsidies, American farmers were devoting more and more acreage to corn for ethanol than for food, which sparked a steep rise in corn prices. The diversion of corn from tortillas to biofuel was certainly one cause of skyrocketing prices, though speculation on biofuel demand by transnational middlemen may have played a bigger role. However, an intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was domesticated, become dependent on US imports in the first place? 

Eroding Mexican Agriculture 

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by “free market” policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as “unprecedented thoroughgoing interventionism” designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency. 

Interest payments rose from 19 percent of total government expenditures in 1982 to 57 percent in 1988, while capital expenditures dropped from an already low 19.3 percent to 4.4 percent. The contraction of government spending translated into the dismantling of state credit, government-subsidized agricultural inputs, price supports, state marketing boards and extension services. Unilateral liberalization of agricultural trade pushed by the IMF and World Bank also contributed to the destabilization of peasant producers. 

This blow to peasant agriculture was followed by an even larger one in 1994, when the North American Free Trade Agreement went into effect. Although NAFTA had a fifteen-year phaseout of tariff protection for agricultural products, including corn, highly subsidized US corn quickly flooded in, reducing prices by half and plunging the corn sector into chronic crisis. Largely as a result of this agreement, Mexico’s status as a net food importer has now been firmly established. 

With the shutting down of the state marketing agency for corn, distribution of US corn imports and Mexican grain has come to be monopolized by a few transnational traders, like US-owned Cargill and partly US-owned Maseca, operating on both sides of the border. This has given them tremendous power to speculate on trade trends, so that movements in biofuel demand can be manipulated and magnified many times over. At the same time, monopoly control of domestic trade has ensured that a rise in international corn prices does not translate into significantly higher prices paid to small producers. 

It has become increasingly difficult for Mexican corn farmers to avoid the fate of many of their fellow corn cultivators and other smallholders in sectors such as rice, beef, poultry and pork, who have gone under because of the advantages conferred by NAFTA on subsidized US producers. According to a 2003 Carnegie Endowment report, imports of US agricultural products threw at least 1.3 million farmers out of work–many of whom have since found their way to the United States. 

Prospects are not good, since the Mexican government continues to be controlled by neoliberals who are systematically dismantling the peasant support system, a key legacy of the Mexican Revolution. As Food First executive director Eric Holt-Gimenez sees it, “It will take time and effort to recover smallholder capacity, and there does not appear to be any political will for this–to say nothing of the fact that NAFTA would have to be renegotiated.” 

Creating a Rice Crisis in the Philippines 

That the global food crisis stems mainly from free-market restructuring of agriculture is clearer in the case of rice. Unlike corn, less than 10 percent of world rice production is traded. Moreover, there has been no diversion of rice from food consumption to biofuels. Yet this year alone, prices nearly tripled, from $380 a ton in January to more than $1,000 in April. Undoubtedly the inflation stems partly from speculation by wholesaler cartels at a time of tightening supplies. However, as with Mexico and corn, the big puzzle is why a number of formerly self-sufficient rice-consuming countries have become severely dependent on imports. 

The Philippines provides a grim example of how neoliberal economic restructuring transforms a country from a net food exporter to a net food importer. The Philippines is the world’s largest importer of rice. Manila’s desperate effort to secure supplies at any price has become front-page news, and pictures of soldiers providing security for rice distribution in poor communities have become emblematic of the global crisis. 

The broad contours of the Philippines story are similar to those of Mexico. Dictator Ferdinand Marcos was guilty of many crimes and misdeeds, including failure to follow through on land reform, but one thing he cannot be accused of is starving the agricultural sector of government funds. To head off peasant discontent, the regime provided farmers with subsidized fertilizer and seeds, launched credit schemes, and built rural infrastructure. During the 14 years of the dictatorship, it was only during one year, 1973, that rice had to be imported owing to widespread damage wrought by typhoons. When Marcos fled the country in 1986, there were reported to be 900,000 metric tons of rice in government warehouses. 

Paradoxically, the next few years under the new democratic dispensation saw the gutting of government investment capacity. As in Mexico the World Bank and IMF, working on behalf of international creditors, pressured the Corazon Aquino administration to make repayment of the $26 billion foreign debt a priority. Aquino acquiesced, though she was warned by the country’s top economists that the “search for a recovery program that is consistent with a debt repayment schedule determined by our creditors is a futile one.” 

Between 1986 and 1993 8 percent to 10 percent of GDP left the Philippines yearly in debt-service payments–roughly the same proportion as in Mexico. Interest payments as a percentage of expenditures rose from 7 percent in 1980 to 28 percent in 1994;capital expenditures plunged from 26 percent to 16 percent. In short, debt servicing became the national budgetary priority. 

Spending on agriculture fell by more than half. The World Bank and its local acolytes were not worried, however, since one purpose of the belt-tightening was to get the private sector to energize the countryside. But agricultural capacity quickly eroded. Irrigation stagnated, and by the end of the 1990s only 17 percent of the Philippines’ road network was paved, compared with 82 percent in Thailand and 75 percent in Malaysia. Crop yields were generally anemic, with the average rice yield in rice of 2.8 metric tons per hectare way below those in China, Vietnam and Thailand, where governments actively promoted rural production. The post-Marcos agrarian reform program shriveled, deprived of funding for support services, which had been the key to successful reforms in Taiwan and South Korea. 

As in Mexico Filipino peasants were confronted with full-scale retreat of the state as provider of comprehensive support-a role they had come to depend on. 

And the cutback in agricultural programs was followed by trade liberalization, with the Philippines’ 1995 entry into the World Trade Organization having the same effect as Mexico’s joining NAFTA. WTO membership required the Philippines to eliminate quotas on all agricultural imports except rice and allow a certain amount of each commodity to enter at low tariff rates. While the country was allowed to maintain a quota on rice imports, it nevertheless had to admit the equivalent of 1 to 4 percent of domestic consumption over the next ten years. In fact, because of gravely weakened production resulting from lack of state support, the government imported much more than that to make up for possible shortfalls. These imports, which rose from 263,000 metric tons in 1995 to 2.1 million tons in 1998, depressed the price of rice, discouraging farmers and keeping growth in production at a rate far below that of the country’s two top suppliers, Thailand and Vietnam. 

The consequences of the Philippines’ joining the WTO barreled through the rest of its agriculture like a super-typhoon. Swamped by cheap corn imports–much of it subsidized US grain–farmers reduced land devoted to corn from 3.1 million hectares in 1993 to 2.5 million in 2000. Massive importation of chicken parts nearly killed that industry, while surges in imports destabilized the poultry, hog and vegetable industries. 

During the 1994 campaign to ratify WTO membership, government economists, coached by their World Bank handlers, promised that losses in corn and other traditional crops would be more than compensated for by the new export industry of “high-value-added” crops like cut flowers, asparagus and broccoli. Little of this materialized. Nor did many of the 500,000 agricultural jobs that were supposed to be created yearly by the magic of the market; instead, agricultural employment dropped from 11.2 million in 1994 to 10.8 million in 2001. 

The one-two punch of IMF-imposed adjustment and WTO-imposed trade liberalization swiftly transformed a largely self-sufficient agricultural economy into an import-dependent one as it steadily marginalized farmers. It was a wrenching process, the pain of which was captured by a Filipino government negotiator during a WTO session in Geneva. “Our small producers,” he said, “are being slaughtered by the gross unfairness of the international trading environment.” 

The Great Transformation 

The experience of Mexico and the Philippines was paralleled in one country after another subjected to the ministrations of the IMF and the WTO. A study of fourteen countries by the UN’s Food and Agricultural Organization found that the levels of food imports in 1995-98 exceeded those in 1990-94. This was not surprising, since 

one of the main goals of the WTO’s Agreement on Agriculture was to open up markets in developing countries so they could absorb surplus production in the North. As then-US Agriculture Secretary John Block put it in 1986, “The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available in most cases at lower cost.” 

What Block did not say was that the lower cost of US products stemmed from subsidies, which became more massive with each passing year despite the fact that the WTO was supposed to phase them out. From $367 billion in 1995, the total amount of agricultural subsidies provided by developed-country governments rose to $388 billion in 2004. Since the late 1990s subsidies have accounted for 40 percent of the value of agricultural production in the European Union and 25 percent in the United States. 

The apostles of the free market and the defenders of dumping may seem to be at different ends of the spectrum, but the policies they advocate are bringing about the same result: a globalized capitalist industrial agriculture. Developing countries are being integrated into a system where export-oriented production of meat and grain is dominated by large industrial farms like those run by the Thai multinational CP and where technology is continually upgraded by advances in genetic engineering from firms like Monsanto. And the elimination of tariff and nontariff barriers is facilitating a global agricultural supermarket of elite and middle-class consumers serviced by grain-trading corporations like Cargill and Archer Daniels Midland and transnational food retailers like the British-owned Tesco and the French-owned Carrefour. 

There is little room for the hundreds of millions of rural and urban poor in this integrated global market. They are confined to giant suburban favelas, where they contend with food prices that are often much higher than the supermarket prices, or to rural reservations, where they are trapped in marginal agricultural activities and increasingly vulnerable to hunger. Indeed, within the same country, famine in the marginalized sector sometimes coexists with prosperity in the globalized sector. 

This is not simply the erosion of national food self-sufficiency or food security but what Africanist Deborah Bryce-son of Oxford calls “de-peasantization”-the phasing out of a mode of production to make the countryside a more congenial site for intensive capital accumulation. This transformation is a traumatic one for hundreds of millions of people, since peasant production is not simply an economic activity. It is an ancient way of life, a culture, which is one reason displaced or marginalized peasants in India have taken to committing suicide. In the state of Andhra Pradesh, farmer suicides rose from 233 in 1998 to 2,600 in 2002; in Maharashtra, suicides more than tripled, from 1,083 in 1995 to 3,926 in 2005. One estimate is that some 150,000 Indian farmers have taken their lives. Collapse of prices from trade liberalization and loss of control over seeds to biotech firms is part of a comprehensive problem, says global justice activist Vandana Shiva: “Under globalization, the farmer is losing her/his social, cultural, economic identity as a producer. A farmer is now a ‘consumer’ of costly seeds and costly chemicals sold by powerful global corporations through powerful landlords and money lenders locally.” 

African Agriculture: From Compliance to Defiance 

De-peasantization is at an advanced state in Latin America and Asia. And if the World Bank has its way, Africa will travel in the same direction. As Bryceson and her colleagues correctly point out in a recent article, the World Development Report for 2008, which touches extensively on agriculture in Africa, is practically a blueprint for the transformation of the continent’s peasant-based agriculture into large-scale commercial farming. However, as in many other places today, the Bank’s wards are moving from sullen resentment to outright defiance. 

At the time of decolonization, in the 1960s, Africa was actually a net food exporter. Today the continent imports 25 percent of its food; almost every country is a net importer. Hunger and famine have become recurrent phenomena, with the past three years alone seeing food emergencies break out in the Horn of Africa, the Sahel, and Southern and Central Africa. 

Agriculture in Africa is in deep crisis, and the causes range from wars to bad governance, lack of agricultural technology and the spread of HIV/AIDS. However, as in Mexico and the Philippines, an important part of the explanation is the phasing out of government controls and support mechanisms under the IMF and World Bank structural adjustment programs imposed as the price for assistance in servicing external debt. 

Structural adjustment brought about declining investment, increased unemployment, reduced social spending, reduced consumption and low output. Lifting price controls on fertilizers while simultaneously cutting back on agricultural credit systems simply led to reduced fertilizer use, lower yields and lower investment. Moreover, reality refused to conform to the doctrinal expectation that withdrawal of the state would pave the way for the market to dynamize agriculture. 

Instead, the private sector, which correctly saw reduced state expenditures as creating more risk, failed to step into the breach. In country after country, the departure of the state “crowded out” rather than “crowded in” private investment. Where private traders did replace the state, noted an Oxfam report, “they have sometimes done so on highly unfavorable terms for poor farmers,” leaving “farmers more food insecure, and governments reliant on unpredictable international aid flows.” The usually pro-private sector Economist agreed, admitting that “many of the private firms brought in to replace state researchers turned out to be rent-seeking monopolists.” 

The support that African governments were allowed to muster was channeled by the World Bank toward export agriculture to generate foreign exchange, which states needed to service debt. But, as in Ethiopia during the 1980s famine, this led to the dedication of good land to export crops, with food crops forced into less suitable soil, thus exacerbating food insecurity. Moreover, the World Bank’s encouragement of several economies to focus on the same export crops often led to overproduction, triggering price collapses in international markets. For instance, the very success of Ghana’s expansion of cocoa production triggered a 48 percent drop in the international price between 1986 and 1989. In 2002-03 a collapse in coffee prices contributed to another food emergency in Ethiopia. 

As in Mexico and the Philippines, structural adjustment in Africa was not simply about underinvestment but state divestment. But there was one major difference. In Africa the World Bank and IMF micromanaged, making decisions on how fast subsidies should be phased out, how many civil servants had to be fired and even, as in the case of Malawi, how much of the country’s grain reserve should be sold and to whom. In other words, Bank and IMF resident proconsuls reached to the very innards of the state’s involvement in the agricultural economy to rip it up. 

Compounding the negative impact of adjustment were unfair EU and US trade practices. Liberalization allowed subsidized EU beef to drive many West African and South African cattle raisers to ruin. With their subsidies legitimized by the WTO, US growers offloaded cotton on world markets at 20 per-cent to 55 percent of production cost, thereby bankrupting West and Central African farmers. 

According to Oxfam, the number of sub-Saharan Africans living on less than a dollar a day almost doubled, to 313 million, between 1981 and 2001-46 percent of the whole continent. The role of structural adjustment in creating poverty was hard to deny. As the World Bank’s chief economist for Africa admitted, “We did not think that the human costs of these programs could be so great, and the economic gains would be so slow in coming.” 

Malawi is representative of the African tragedy spawned by the IMF and the World Bank. In 1999 the government of Malawi initiated a program to give each smallholder family a starter pack of free fertilizers and seeds. The result was a national surplus of corn. What came after is a story that should be enshrined as a classic case study of one of the greatest blunders of neoliberal economics. 

The World Bank and other aid donors forced the scaling down and eventual scrapping of the program, arguing that the subsidy distorted trade. Without the free packs, output plummeted. In the meantime, the IMF insisted that the government sell off a large portion of its grain reserves to enable the food reserve agency to settle its commercial debts. The government complied. When the food crisis turned into a famine in 2001-02, there were hardly any reserves left. About 1,500 people perished. The IMF was unrepentant; in fact, it suspended its disbursements on an adjustment program on the grounds that “the parastatal sector will continue to pose risks to the successful implementation of the 2002/03 budget. Government interventions in the food and other agricultural markets…[are] crowding out more productive spending.” 

By the time an even worse food crisis developed in 2005, the government had had enough of World Bank/IMF stupidity. A new president reintroduced the fertilizer subsidy, enabling 2 million households to buy it at a third of the retail price and seeds at a discount. The result: bumper harvests for two years, a million-ton maize surplus and the country transformed into a supplier of corn to Southern Africa. 

Malawi’s defiance of the World Bank would probably have been an act of heroic but futile resistance a decade ago. The environment is different today, since structural adjustment has been discredited throughout Africa. Even some donor governments and NGOs that used to subscribe to it have distanced themselves from the Bank. Perhaps the motivation is to prevent their influence in the continent from being further eroded by association with a failed approach and unpopular institutions when Chinese aid is emerging as an alternative to World Bank, IMF and Western government aid programs. 

Food Sovereignty: An Alternative Paradigm? 

It is not only defiance from governments like Malawi and dissent from their erstwhile allies that are undermining the IMF and the World Bank. Peasant organizations around the world have become increasingly militant in their resistance to the globalization of industrial agriculture. Indeed, it is because of pressure from farmers’ groups that the governments of the South have refused to grant wider access to their agricultural markets and demanded a massive slashing of US and EU agricultural subsidies, which brought the WTO’s Doha Round of negotiations to a standstill. 

Farmers’ groups have networked internationally; one of the most dynamic to emerge is Via Campesina (Peasant’s Path). Via not only seeks to get “WTO out of agriculture” and opposes the paradigm of a globalized capitalist industrial agriculture; it also proposes an alternative-food sovereignty. Food sovereignty means, first of all, the right of a country to determine its production and consumption of food and the exemption of agriculture from global trade regimes like that of the WTO. It also means consolidation of a smallholder-centered agriculture via protection of the domestic market from low-priced imports; remunerative prices for farmers and fisherfolk; abolition of all direct and indirect export subsidies; and the phasing out of domestic subsidies that promote unsustainable agriculture. Via’s platform also calls for an end to the Trade Related Intellectual Property Rights regime, or TRIPs, which allows corporations to patent plant seeds; opposes agro-technology based on genetic engineering; and demands land reform. In contrast to an integrated global monoculture, Via offers the vision of an international agricultural economy composed of diverse national agricultural economies trading with one another but focused primarily on domestic production. 

Once regarded as relics of the pre-industrial era, peasants are now leading the opposition to a capitalist industrial agriculture that would consign them to the dustbin of history. They have become what Karl Marx described as a politically conscious “class for itself,”contradicting his predictions about their demise. With the global food crisis, they are moving to center stage-and they have allies and supporters. For as peasants refuse to go gently into that good night and fight de-peasantization, developments in the twenty-first century are revealing the panacea of globalized capitalist industrial agriculture to be a nightmare. With environmental crises multiplying, the social dysfunctions of urban-industrial life piling up and industrialized agriculture creating greater food insecurity, the farmers’ movement increasingly has relevance not only to peasants but to everyone threatened by the catastrophic consequences of global capital’s vision for organizing production, community and life itself.

(This article appears in the June 2, 2008, edition of The Nation [New York].)