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

One corporation's power over life and death

Until now the largest and wealthiest commodities trader in the world, notorious for tax avoidance, has managed its murky business in the shadows. But it needs capital to fuel its growth, hence its launch on the London stock market today.

Most people on the planet will not have heard of Glencore, but virtually all are only too well aware of the inflationary effects of its control of a wide range of commodities. Glencore controls 60% of the world’s trade in zinc and 50% in copper.

According to the World Bank’s Food Price Watch, since June 2010, an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices. In March 2011, the food index remained 36% above its level a year earlier.

Even the notoriously right-wing Daily Mail is disturbed by Glencore’s power over life and death. A special investigation says:

“Its empire stretches from the jungles of Colombia to the plains of Australia. It makes its money from metals, minerals, oil, sugar, grain — commodities that form the very building blocks of world trade. And, armed with the best possible knowledge of global events, its traders buy these at the lowest possible price and sell at the highest possible mark-up.”

With its share issue – the biggest-ever in London – Glencore is now drawing together many more threads in the global web of capital consolidation that is driving food and fuel inflation and forcing tens of millions over the edge into starvation.

Everyone who is anyone in the exploitation of the planet and its people wants to get in on the game of building profit from starvation. Aabar, a unit of Abu Dhabi’s International Petroleum Investment Company is set to be its largest external investor, taking $1 billion. GIC, Singapore’s sovereign wealth fund, will take $400m. Fund managers BlackRock and Fidelity, are set to take $360m and $215m, respectively. Swiss banks Credit Suisse, UBS and Pictet will also take part. Zijin Mining, the Chinese group, will buy as well as several other institutional investors, including hedge funds Och Ziff, Eton Park and York Capital. The launch brings huge fees to the banks which underwrite it. The group is led by global co-ordinators Citigroup, Credit Suisse and Morgan Stanley.

Commodity speculation took off in a big way in the wake of the 2007/8 global financial meltdown. In a co-ordinated panic action, governments and central banks threw billions of every currency onto the world’s credit markets trying to stave off the inevitable recession. But with banks refusing to lend, a great deal of the money found its way into the commodity markets, driving price inflation way beyond the effects of demand and supply pressures.

In 2003, the commodities futures market amounted to just $13 billion. But when the global financial crisis hit, commodities – including food – seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. "You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture said. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was rolling the markets. From 2003 to 2008, the volume of index fund speculation increased by 1,900%.

But speculation is not the only cause of inflation in food and fuel. Severe weather vents induced by climate change, increased competition for food and land especially from China, increasing costs of production as oil reaches its peak. And the switch to bio-fuel also contributes to the underlying pressures that Glencore and the other speculators feed upon.

A small, and now declining. number of global corporations driven by profit for the benefit of shareholders, have brought the planet to the limits of its ability to support life, and its people to the limits of their ability and willingness to endure its effects.

Gerry Gold
Economics editor