By Stephen Leahy
(Editor’s Note: A newly seceded state in America will not have the agricultural subsidies that now entirely distort the American farming industry. That includes the corn subsidies paid by Washington to prop up the ethanol fuel industry, which cannot support itself in the free market. Here is yet another outstanding reason to secede from the United States.)
UXBRIDGE, Canada, Jan 13, 2011 (IPS) – Famine-hollowed farmers watch trucks loaded with grain grown on their ancestral lands heading for the nearest port, destined to fill richer bellies in foreign lands. This scene has become all too common since the 2008 food crisis.
Food prices are even higher now in many countries, sparking another cycle of hunger riots in the Middle East and South Asia last weekend. While bad weather gets the blame for rising prices, the instant price hikes of recent times are largely due to market speculation in a corrupt global food system.
The 2008 food crisis awoke much of the world’s investment community to the profitable reality that hungry people will do almost anything, even sell their own children, in order to eat. And with the global financial crisis, food and farmland became the “new gold” for some of the biggest investors, experts agree.
In 2010, wheat futures rose 47 percent, U.S. corn was up more than 50 percent, and soybeans rose 34 percent.
On Wednesday, U.S.-based Cargill, the world’s largest agricultural commodities trader, announced a tripling of profits. The firm generated $1.49 billion dollars in three months between September and November 2010.
Meanwhile, U.S. Treasury Bills pay a return of less than one percent.
“We have set up a global food system that supports speculation. And with [such] markets, we can’t get speculators out of the food business,” said Lester Brown, an agricultural policy expert and founder of the Washington- based Earth Policy Institute.
“Farmland is better gold than gold for speculators,” Brown told IPS.
Growing concern over access to food is also creating a new geopolitics around food security, with many countries buying up farmland and banning the export of food, he said.
“World leaders have utterly failed to address the simple fact that while there is enough food, a billion people, living in every country in the world, simply can’t afford to buy it,” said Anuradha Mittal of the Oakland Institute, a U.S.-based policy think tank on social, economic and environmental issues.
“Why were a billion [people] hungry with a record wheat harvest in 2008?” Mittal told IPS. “And how is it there are one billion people who are overweight, with 300 million of those considered medically obese?”
“The global food system is designed to generate profits not feed people, and nothing has changed since 2008,” she said. “There has been no focus on how to achieve food security or on regulating the food trade,” Mittal noted.
Instead, the World Bank, World Trade Organisation and other multilateral organisations are pushing for more production and more trade liberalisation, she said. That approach is exactly how Africa became unable to feed itself after being previously food secure.
“Africans have become share-croppers, exporting coffee, cotton, flowers and now food while going hungry,” Mittal said.
Under the guise of investing in agriculture, huge amounts of money are being offered to debt-ridden countries in exchange for long-term leases to their foodlands. “Our research shows that the most fertile lands are being secured. There are huge issues around governance and corruption in this land grabbing,” said Mittal.
More than 100 billion dollars has been invested in buying farmland since 2008, mainly in Africa by foreign companies and foreign-state owned industries, according to GRAIN, a small international non-profit organisation that works to support small farmers.
This massive investment hasn’t yet translated into more food availability, says Lester Brown. Often times, buying land is just the first step. Major investments are also needed in farming infrastructure like roads, vehicles, storage capacity, mechanical services for equipment, irrigation and so on.
“I haven’t seen a big increase in grain production anywhere. Right now it looks like a lot of land speculation,” he said.
Brown has long documented the fact that yields of rice, wheat and other grains have not been increasing in many countries while demand has escalated. China, he notes, now imports 70 percent of its soy and is expected to begin to use its plentiful cash reserves to buy large quantities of wheat and corn in the near future.
And with the U.S. converting 30 percent of its corn crop into ethanol to ‘feed’ its cars and trucks, food supplies will be tight for some years, he predicts.
With the decline in traditional equity stocks along with collapse of housing and commercial real estate markets, billions of investment dollars are being mobilised to buy farmland and food commodities. It’s not just Wall Street looking for big returns, it’s also private and public pension funds in Europe and North America as well, said Devlin Kuyek of GRAIN.
Investors from Saudi Arabia have leased large tracts in land in Ethiopia, Senegal, Mali and other African countries amounting to several hundred thousand hectares. “How can African countries hope to have food security by signing long-term leases to foreign interests?” Kuyek told IPS.
When South Korea’s Daewoo Logistics tried to buy 1.3 million hectares, or one-third, of Madagascar’s farmland in 2008, violent protests erupted and the government was toppled. South Korea still has at least a million hectares in long-term leases elsewhere and China 2.1 million ha, mainly in Southeast Asia.
Some of the leases are for 99 years at a one dollar a hectare, but local people “are not eligible for the deals being promoted in countries where millions of people remain dependent on food aid”, said Howard Buffett, a U.S. farmer and philanthropist whose father is Warren Buffett, the well- known billionaire investor.
Howard Buffet reports being offered land deals where African governments promise to provide 70 percent of the financing, all utilities, and a 98-year lease requiring no payments for four years.
The last thing Africa needs are policies that “enable foreign investors to grow and export food for their own people to the detriment of the local population” writes Buffet in the introduction to the 2010 Oakland Institute report, “(Mis)investment in Agriculture”.
Buffet’s foundation has a research farm in South Africa and says investments are needed, but in terms of seeds, inputs, improved extension services, education on conservation techniques and generally assisting local farmers. Investing in land grabs will simply fuel conflict over land and water, he concluded.
Shockingly, about 70 percent of the billion hungry people in the world are farmers, herders and other food producers who could feed themselves if they had access to land, markets and a little bit of credit, said GRAIN’s Kuyek.
“That well-understood reality has been ignored for years,” he said. “These land grabs are just wrong: morally and socially wrong.”
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