Biofuels land grab a 'recipe for mass hunger'

A few months ago, representatives of nine villages in Madagascar held a press conference in the city of Antananarivo to denounce the Italian company Tozzi Renewable Energy for taking away their lands as part of a 100,000 hectare jatropha plantation that the company is building.

"We small peasants are forced to leave because men armed with guns have come to throw us off our lands," they told reporters. In Sierra Leona, Zainab Kamara is one of several thousand farmers in whose lands have been taken over by the Swiss company Addax Bioenergy for a 10,000 hectare sugar cane plantation to produce ethanol.

"Now I don’t have a farm. Starvation is killing people. We have to buy rice to survive because we don't grow our own now," she says. This one sugar cane project will use 26% percent of Sierra Leone’s largest river flow during the driest months, February to April. In neighbouring Guinea, the government has sold 700,000 hectares to another European firm to grow jatropha. It’s a story repeated in South America, especially in Brazil.

These are just some examples of the havoc wreaked by an unprecedented land grab with the purpose of producing biofuels from raw materials. Europe is one of the centres of this monstrous trade, with purpose-built facilities in the port of Rotterdam part of a frenzy that resembles the ruthless colonialism of the 19th century.

Neste Oil, the state-owned Finnish oil company, has a renewable diesel plant in Rotterdam that will churn out over 900 million litres a year, using palm oil for at least 50% of its raw materials. The firm owns the world’s largest plant in Singapore, which also converts palm oil to diesel for export to Europe.

Next door to Neste Oil's Rotterdam operation is a massive ethanol plant owned by the Spanish energy company Abengoa. Swiss-based Glencore, Europe's second largest agricultural commodities trading house, owns two biodiesel plants in Rotterdam, with a combined capacity of 740 million litres per year

According to a new report from GRAIN, Europe's biofuel companies are increasingly looking for full control over production, right down to the crops. “Shell and BP, for instance, have spent hundreds of millions of euros buying up sugar cane plantations and mills in Brazil to produce ethanol. French commodities giant Louis Dreyfus is also buying up farmland and sugar plantations in South America to feed its ethanol and biodiesel plants.”

European companies are responsible for a third of all the biofuel land grabs that have been reported since 2002, with over 290 seizures totalling 19 million hectares. The forecast is that the global demand for biofuels will more than double by 2020. The additional land required is equivalent to about 80% of the total land mass of Spain.

GRAIN acknowledges that campaigns, negotiations and criticism of the European Union-driven biofuels mania have had little effect. Recent changes to its policy of encouraging biofuels are minimal. “The EU has made only symbolic gestures to add a green veneer to the brutal global land grab that has resulted,” the sustainable farming campaign says

Of the three major markets for biofuels – the US and Brazil are the others - the EU is the only one that relies heavily on imports, both for feedstock (the crops used for biofuel production) and for food to replace European crops diverted to biofuel production. Biofuels eat up over a third of coarse grain production in the US, the world’s largest exporter.

The United Nations Food and Agriculture Organisation (FAO) calls biofuels “the largest source of new demand for agricultural production in the past decade” and says that they represent a new “market fundamental” affecting prices for all cereals”. In plain language, the market says that biofuels is more profitable than food, while the prices of basic necessities soar.

Add in the growing impact of climate change and the separate land grab by sovereign wealth funds to produce food in poor countries for export, you have what GRAIN calls a “a recipe for mass hunger”. As the campaign points out: “These communities and the food systems they sustain are not renewable.”

Paul Feldman

Communications editor

Supermarkets cash in as food prices soar

Food price inflation is running at a faster rate in Britain than in the rest of Europe – and supermarkets, which control around three quarters of grocery sales, are accused of driving prices up faster than is justified by rising costs, to protect their profits.

According to the Organisation for Economic Co-operation and Development, food prices rose 6.3% in the year to the end of January, compared with an average of 2.8% for the EU and 2.6% across the 34 countries that make up the OECD.

Strangely enough, investment bank UBS says said UK consumers are suffering most from the pressures of food inflation. "Prices are rising in excess of justifiable cost increases," said Paul Donovan and Larry Hatheway, co-authors of a recent report. "The UK stands out as having the broadest range of food price increases."

World prices are also soaring. The UN Food and Agriculture Organisation's (FAO's) food price index averaged 236 points in February, a record, up 2.2% from January and rising for the eighth month in a row. The index highlights how food prices have taken off in alarming fashion in the last three years. In 2000 the index stood at 90 and did not break through 100 until 2004.

As one analyst put it: “What is extraordinary about this trend is that for more than two decades before 2008, there were no spikes of this magnitude. To be entering a second such spike within three years suggests that something has fundamentally changed in the global food situation.”

It was a more than doubling in the price of bread that put food beyond reach for many that helped trigger the wave of revolts in the Middle East and North Africa. Fearful that they will spread, governments around the world are assessing the likely political impact of food prices.

Campaigning organisations like the World Development Movement have joined the simplistic “blame the bankers” chorus, accusing them and hedge funds of speculating in food. But this is just one of the many interacting factors involved in the global crisis which can be summarised as peak soil and peak oil:

- thirty years of credit-financed rapid growth of global corporations have transformed much of agriculture into a destructive industrial process. Land, seed, machinery, oil-based fertilisers and pesticides are now subject to transnational corporate ownership and control

- exhaustion of the soil intensifies the demand for fossil-fuel based inputs and has accelerated the depletion of resources

- rapid depletion of the world’s supply of oil combined with concerns for the climate change it has produced has increased demand for alternatives. Profits from the production of biofuels now outcompetes the production of food

- Crop losses associated with weather extremes are increasing because of climate change

- the constant demand for consumption to absorb the products of economic growth has increased the standard of living in places like India and China

- capital’s need for unlimited quantities of cheap labour has driven population levels to rise to an estimated 9 billion in 2050-60.

The FAO is organising a series of seminars in an attempt to keep the lid on the rising anger. “FAO feels it is essential that countries consider their policy options and steer away from decisions that might exacerbate the situation," said deputy director-general Changchui He. "During the last food crisis, the situation was aggravated when some countries imposed export restrictions or engaged in panic buying."

But their solution is for more of the same. "Governments should focus on mitigating the impact of high food prices on the poor and at the same time need to take steps that favour investment in agriculture," he added. But the present framework is clearly unsustainable. A global network of farmers, processors, and distributors, planning the sustainable production of food according to the needs of the population and not profit has to be the way forward.

Gerry Gold

Economics editor

Market driving hunger crisis

The world is facing a hunger crisis unlike anything it has seen in more than 50 years. Some 925 million people don’t have enough to eat and almost 16,000 children die from hunger-related causes each day.

That’s the stark reality facing almost one in seven of the world’s population. With food prices reaching a new high, the head of the UN Food and Agricultural Organisation (FAO), Jacques Diouf, has called for “urgent structural change” to solve global hunger. The rapid increase in hunger and malnourishment since the food crisis of 2008 reveals the inadequacy of the present global food system, he said.

The World Bank estimates that the spike in global food prices in 2008, followed by the global economic recession in 2009 and 2010 has pushed between 100-150 million people into poverty.

But all Diouf’s talk of safety nets and social protection programmes, investment and support for small-scale farming is pie in the sky at a time when the market is driving land and food production in entirely the opposite direction.

In Africa, the main development activity at present is not land redistribution, or even food aid, but an enthusiastic entry into the world of global speculation in land and food production. The dramatic weather changes caused by global warming, which governments refuse to address, is also pushing up food prices.

The role of the market in buying and selling commodity futures is a further crucial factor in driving up prices. Last year, US wheat futures prices rose 47 per cent, corn rose more than 50 per cent and soybeans jumped 34 per cent.


Catherine Flax, investment bank JP Morgan's CEO for commodities, admitted that the financial crisis and fears of inflation have made investors suspicious of banks and financial services: "I do think investors are increasingly looking at physical assets, whether agricultural assets or infrastructure type assets, in part because of the expectations of inflation but also I don't think investors are entirely over the insecurity of the financial crisis."

Rising demand in Asia is a major issue. China’s food imports are soaring, as its own agricultural development is neglected, in favour of land privatisation and industrialisation.

There is no will on the part of governments to interfere in this unbridled operation of the market. In fact, there is an increasing tendency to end subsidies and to let inflation rip.

This policy is meeting resistance, especially in North Africa. The Algerian government rapidly cut import duties when food riots threatened its own survival. The price of basic goods rose by 30 per cent in less than a month in Algeria and a popular uprising led to the arrest of more than 1,000 people, many of them minors.

In neighbouring Tunisia dozens of people have been killed in clashes between protesters and security forces in clashes centred on unemployment and rising food prices. Bureaucrats in China also fear unrest, with inflation currently running at 5 per cent per year according to official figures, but in reality as much as double that.

Food prices in Australia are likely to soar in the coming months as a result of the Queensland floods, with 50 per cent of crops having been affected and 20 per cent wiped out entirely.

In reality it is THE MARKET in food that is in crisis, not the SUPPLY of food. There is food enough in the world – the rich never go hungry. The operation of the market is preventing people from either growing or purchasing what they need.

The structural change required is more fundamental than that proposed by the FAO. We must rapidly move away from the spoliation of agricultural land by market-driven farming systems. We need a commonwealth in land and a system of food production based on co-operation and the assumption that adequate food is a human right for all.

Penny Cole
Environment editor

Capitalism feeding off hunger

A capitalist perfect storm has ended all progress in reducing world hunger, and one billion people are now undernourished – 925 million more than before the economic crisis began. In every country, prices are soaring, including in the UK where food prices have risen by 22% in the last three years.

The crisis has been caused by the cumulative effects of:
• An expansion of commodity speculation in food products and land, including the poisonous hedgers and futures traders
• A year of extreme weather, from drought to floods
• Loss of agricultural land to bio-fuels, and urbanisation
• The collapse in purchasing power of the poorest people due to the economic slump.

Commodity speculators have moved strongly into food, betting on shortages and pushing up prices in a world where the food supply is increasingly globalised.

True, the wheat crop will be 30m tonnes lower than last year – a 5.5% decrease, due to drought in China, the heat wave in Russia and the floods in Pakistan. But stocks are not so low that prices could not be kept at a reasonable level. However that would assume a rational economic and trade system – and we are a million miles away from that. The market price of wheat and maize soared by 30% in just a few weeks.

In Russia, the price of buckwheat – a popular staple – has tripled. World meat prices – dependent on grain prices – are at a 20-year high. Egyptians can no longer afford their own basic diet of bread, cheese, tomatoes. Sugar and rice prices are at an all-time high.

According to the UN food price indicator (a figure based on a statistical analysis of 6 key commodities) prices have not reached the 2008 high of 199 – when there were food riots across the world – but they are heading in that direction at 188. The figure increased 14 points in 2010.

Governments across the world are preparing for social uprisings – already 12 people died last month in riots in Mozambique. But those same governments have facilitated the system that has led to the food crisis.

UN special rapporteur on the right to food, Olivier de Schutter, says a combination of environmental degradation, urbanisation and large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.

According to the World Bank, more than one-third of large-scale land acquisitions are intended to produce agro fuels. It is this loss of local agriculture that causes shortages – and not population increases.

Meeting in Rome, the UN’s Food and Agricultural Organisation’s committee on world food security (CFS) established a panel of experts to look at the “causes and consequences of food price volatility, including market distorting practices and links to financial markets, and appropriate and coherent policies, actions, tools and institutions to manage the risks linked to excessive price volatility in agriculture."

This panel will have as much success in changing the system as the International Panel on Climate Change has had in persuading governments to reduce greenhouse gas emissions; or experts working with the Convention on Bio-diversity have had in stopping the corporations destroying the planet’s eco-system.

The unsustainability of capitalism itself is the real problem, and the food crisis is a systemic, not a sporadic crisis. If we allow a system driven by profit and speculation to keep control of the world’s land use and agriculture, we will face famine on a scale not seen before.

Rioting and looting could well result as food prices rise out of reach. But these are not solutions. The real need is for a transformation in the ownership of land, the way food markets operate, the development of local food and the sharing of expertise and knowledge in a not-for-profit framework. That means grasping the opportunities offered by capitalist crisis to go beyond protest to democratising ownership, production and the political system itself.

Penny Cole
Environment editor

Profit and food are a deadly mix

Capitalism’s inability to feed the world, in spite of increased production and a slowdown in population growth, is underlined by a report which predicts that food prices will rise by 40% over the next decade.

Prices have remained high since the price spike of 2008, which led to food riots in many areas of Africa and Asia. High prices combined with the economic crisis have left about 1 billion people undernourished, says the annual report from the UN Food and Agriculture Organisation (FAO).

The price of grain is set to rise by between 15% and 40% in real terms, once adjusted for inflation, over the next decade. Vegetable oils will be 40% dearer will the cost of dairy food could rise between 16-45%.

Although the review suggests production can increase to meet demand, it warns that many people will not be able to afford the prices. It assumes that high energy prices will continue, and increase the cost of production and chemical inputs. This will have an impact on supplies and prices, and will increase the demand for bio-fuels. More areas will move out of food production and into oil crops.

The report explains that the extent to which world prices are reflected in domestic prices varies markedly by country. “The transmission of international prices to domestic markets can be impeded by border measures, domestic price supports and infrastructure weaknesses,” the FAC acknowledges.

Let’s unpack this bland statement. In a world of globalised unfairness the rich capitalist economies keep agricultural subsidies and hidden price subsidies in place, whilst the least developed countries are bullied into allowing market forces free rein in their home markets. Industrial agriculture enterprises continue to export food, while people living on their doorstep starve.

The FAO itself is entirely wedded to the free-market capitalist model, claiming that “there is a need for greater assurance of unimpeded access to global supplies” in order to “improve confidence in market functioning”. It unreservedly praises the trend towards the establishment of organised Commodity Exchanges in developing countries as a “welcome institutional development and a sign of market deepening”.

Yet Commodity Exchanges are at the centre of a great deal of reckless speculation, contributing to the economic crisis, and invariably at the expense of the smallest producers and poorest consumers. For the FAO, Commodity Exchanges are “useful and time-tested price discovery and hedging institutions, if they are regulated properly and attract sufficient volume to avoid monopolistic practices”.

Now that’s a very big “if”. More realistically, if there are increased profits to be made from food – which for capitalism is simply another commodity – then there will be increased speculation and market distortion. The outcome will be more hunger, the elimination of small farmers and further global land-grabbing by global investors and sovereign wealth funds.

This new form of rentiér capitalism will lead to further impoverishment of the soil as intensive farming methods are extended. New areas of marginal land cleared of scrub trees for bio-fuel production will add to global warming. The drive to clear virgin forest for palm oil plantations will increase – and at the climate summit in Cancun in December this activity will be given status as a carbon offset scheme. That’s the actual “time-tested” functioning of commodity markets in action.

The point is that capitalism is capable of extending the market in commodities into any area, but not of getting them to the people that need them in a fair, affordable way. In the case of training shoes or flat-screen TVs, that’s not the end of the world. When it comes to food, it is a life or death question for millions of hungry people. More than in any other area, food production is crying out for a new approach – ecologically sustainable, just and based on common ownership of land and global co-operation. Profit and food is a poisonous combination.

Penny Cole

Environment editor

Policies for the global food crisis

The food crisis may have slipped from the headlines, but almost a billion people face starvation in 2009. Drought and high prices, along with a diversion to bio-fuels and higher costs in the West, will reduce production in most of the world's major grain producers.

A report from the UN Food and Agricultural Organisation (FAO) this week warns that food shortages are growing. In Eastern and Southern Africa, almost 30 million people face hunger due to three years of drought caused by global warming, combined with political conflict and the market system imposed by corporate globalisation.

Half of China's winter wheat harvest has been hit by drought and India is experiencing low rainfall. In Argentina, a year-long drought has killed nearly one million animals and destroyed half the grain. It is the same in Paraguay and in Uruguay average rainfall fell by more than third in the last twelve months.

The FAO report says that not only are the poor getting poorer, but formerly better off people are eating less. They are cutting back on education and health costs to buy food, and selling the assets they rely on for the future, such as land, tools, livestock.

Richer countries are not immune. In Australia, the coastal areas where agriculture thrived are now marginal for production, due to drought. In California a third year of drought is adding to an economic crisis that has Governor Schwarzenegger trying to balance the books with a tax increase, which the state legislature won’t pass.

California has the highest increase in unemployment and the largest number of home repossessions in the US. Things can only get worse – the melt water which is the basis of its agriculture, is coming to an end as rapid melting shrinks the mountain glaciers.

Meanwhile, the global chemical corporations continue their programme of trapping every farmer – large and small – in their net. The UN is desperately trying to win support for a new legal regime that stops patenting of crop varieties, but the powerful elites will ensure they don’t succeed.

And while drought resistant varieties are urgently needed, if developed in the current profit-driven system only the largest industrial farms will benefit. Small and medium sized farms will disappear.

However, there is another way forward. Here are some proposals:

• The whole chain of food production is taken out of the hands of profit-driven corporations – both agri-business and supermarket chains.
• Working democratically, farmers, distributors and consumers develop a holistic, sustainable, not-for-profit system that feeds everybody. 
• Land is brought into common ownership and producers are supported with fair prices.
• To counter the immediate crisis, drought resistant varieties are developed with public money diverted from weapons production.
• A new system of fertilisation is introduced, with composting carbon waste a legal requirement. Crop rotation is reinstated and a focus on local food reduces the need for mono-culture.
• Farmers in very marginal farming areas are helped to sustainably grow bio-fuels, to power their own homes, schools, hospitals and earn a livelihood.
  

What does everybody think? For years the system of “aid to poor countries” has failed and under the impact of global warming is collapsing altogether. The poorest in every country – even in California – are facing hunger in 2009. We have a chance to prevent it – but we need to act now.

Penny Cole
Environment editor