A spike in food prices in 2008 pushed the number of hungry people in the world past the one billion mark. It was not a temporary phenomenon. Those record prices are now back on international markets.
Most of today’s hunger happens in the countryside. About 80 percent of those without enough food to eat are the people who produce food – farmers and rural labourers. People are not starving because of a global shortage of food, but rather because they do not have the money to buy the food they need or have access to the resources they need to produce it for themselves – land, water, animals, fish, etc.
And things are set to get much worse. By 2080, under a business as usual scenario, climate change is predicted to reduce global agricultural yields by a staggering 16 percent, while the population continues to grow. The worst effects will be felt in the South, in countries like Senegal. Already beset by high population growth and severe food insecurity, Senegal is predicted to see a 50 percent decline in agriculture productivity before the end of the century. To this we have to add an increase in extreme weather, such as droughts and typhoons that will severely disrupt agricultural production and leave twice as many people living in highly water-stressed environments.
In this context, the world desperately needs a food system that can ensure that food is distributed to everyone, according to need. The food crisis of 2008 should have driven home the message. But the governments and corporations that manage the dominant food order have refused to change course. So, three years later, things have gone from bad to worse for the poor while the rich pursue a ruthless grab to turn the food crisis into a profit bonanza.
Making a killing from hunger
The ugly truth of the 2008 food crisis was that the corporations that control the global food system made a killing. Farmers saw little change in their income, but the largest grain traders, the seed and pesticide companies, and the fertilizer corporations made record profits (see Chart at the top of page). Decades of structural adjustment, neo-liberal trade and investment policies and green revolution programs had provided these corporations with immense power in the food system, and they used their positions to hold the world hostage to their price demands. In April 2008, when the food crisis was at its peak, Cargill, the biggest agribusiness company in the world, was making nearly US$500 thousand profit an hour.
The boom times are still on. This year’s numbers for the grain traders and input suppliers are breaking the 2008 records. US-based ADM’s 3rd quarter profits for 2011 were up 37 percent from the year before, at $578 million, while Cargill tripled its second quarter profits this year, pulling in a hefty $1.5 billion.
Such profits have attracted the sharks from Wall Street, Bay Street, London City, Singapore, Dubai and other financial centres. Over the past decade they started making big bets on speculation in agricultural commodities, as have pension funds and other institutional investors. In 2000 around US$5 billion were involved in speculation on the trade of commodities but by 2007 it surged to US$175 billion dollars. The huge influx of cash, nearly all of it going into futures or “long” positions, creates a bubble-like phenomenon, encouraging overall upward price movements and periodic bursts. The result is a grain market that is both completely out of sync with supply and demand dynamics, with grain price movements now following the price curves of non-food commodities like copper. The volatility makes life miserable for farmers who crave stability but it’s ideal for speculators, who profit from price movements, especially since some of the biggest speculators are in fact the transnational grain merchants, able to use their global information systems to bet on price swings, as the Swiss company Glencore did just before Russia imposed on wheat export ban last summer.
The financial sector is also investing directly in agribusiness corporations, which then use these cash injections to buy up smaller firms, expand production and take over new markets. These inflows, combined with support from home governments, have led to the emergence of a new crop of agribusiness giants based in the South. The world’s largest meat company, JBS, is Brazilian. The largest agribusiness company is the Malaysian palm oil and rubber corporation Sime Darby. China, India, Singapore, Thailand, and the Gulf States also have their own emerging agribusiness transnationals. The agribusiness push is no longer just North-South.
The global land grab
Perhaps the most brutal expression of this new corporate food order is the rush for farmland that was triggered by the food and financial crises of 2008. According to the World Bank, from the start of 2008 to the end of 2009, foreign investors acquired, either through purchase or long-term lease, over 56 million hectares of farmland. The International Land Commission now puts that number at 80 million hectares. GRAIN* has been tracking the global farmland grab since it began in 2008 and we estimate that over 100 billion dollars has been mobilized by investors to purchase farmlands overseas for the production of foods for export.
Two types of actors are essentially driving this land grab. On the one hand, there are cash-rich but food poor countries, like Saudi Arabia and South Korea, who were badly burned by the food crisis and lost faith in the global market to provide for their food needs. Their strategy: bypass the Cargills and Glencores by acquiring farmland overseas to produce food and ship it back home.
The other key actors are from the financial sector. Reeling from the financial crisis of 2008, hedge funds, pension managers and the other financial players starting looking for a safe and profitable refuge from the crumbling stock market. The argument for farmland was pretty clear: population is going up, people need to eat, and the global farmland area is pretty much at its limit already. A large number of farmland funds were launched that year and their numbers continue to swell. In October 2009, GRAIN identified 120 of them, and each week a new one seems to come on the scene. Some of the more recognizable players include the Carlyle Group (buying oil palm and sugarcane plantations in Latin America), Goldman Sachs (investing in hog farms in China), AIG (taking over farmlands in Brazil), George Soros (acquiring rice, soybean and cattle operations in the Southern Cone of Latin America), Cargill (buying dairy farms in China), and the Alberta Investment Management Co, manager of the province’s largest pension funds (scoping out agricultural land in Australia).
Africa is a main target for these land grabs. Sudan and Ethiopia have given foreign investors over a million hectares each, typically for less than $10/hectare. Hundreds of thousands of hectares occupied by peasants and pastoralists have been handed out in Mali, Tanzania, Zambia, the Congo, Gabon, the list goes on. But the land grabs are also happening in Latin America, especially in the Southern Cone, and in Asian countries, like Indonesia, Cambodia, Laos and Papua New Guinea. Australia and Russia and Eastern Europe are also big targets. Canada is also on the radar.
Canada is one of those countries that is both a source and a target of foreign farmland investors. While Chinese investors have been looking at canola production in Saskatchewan and hog farms in Quebec, Bay Street investors like Sprott Resources and Lawrence Asset Management have been buying into farmland in Uruguay and the Democratic Republic of the Congo, as well as on the Canadian prairies.
Governments play a big role in all of this. The Governments of India, China, South Korea, Libya, Singapore, the Gulf States, and even Bangladesh are all actively backing plans for foreign investment in overseas farmland. They work out investment agreements with the host countries and supply part or all of the necessary capital to their private sector companies. But it is the private sector that runs the show. To give an example, the Mauritian government negotiated for 20,000 hectares of land in Mozambique, as part of a plan to ensure its own food security, but those lands were then signed over to a Singaporean company, operating out of Mauritius, that intends to use them to produce rice for export.
There’s another piece to this emerging picture of corporate control that needs to be mentioned. Since the 1990s, supermarkets have been expanding rapidly into the South and Central Europe – places where they were hardly present before. Their growth in these areas, made possible by free trade and investment agreements, is occurring five times as fast as it did in North America and Western Europe.
Mexican food markets were essentially local ten years ago – controlled by small grocery stores, street vendors and farmers. But today, three out of every 10 pesos spent on food in Mexico is spent at a Walmex (owned by Walmart). The impacts are obvious for the small-scale vendors but are equally severe for food producers. Walmart only buys from preferred suppliers that ensure that the food is produced according to the standards set by Walmart. Walmart dictates the exact shape of the fruit, the seeds that are used, even the number of toilets each farm operation must have, while the grower pays for all the costs of certification and compliance. The Walmarts of this world are thus completely inaccessible to small growers.
So as Walmart and other retailers expand into the South, farmers lose access to markets, while the big suppliers move to set up their own farms and consolidate exclusive contracts with a few large-scale producers.
Supermarket expansion, land grabs, and financial speculation: it all adds up to a huge expansion of the agribusiness frontier and a massive transfer of lands (and water!) from peasants and pastoralists to the rich. In the process, the small-scale sustainable agriculture that supplies local food markets is displaced by large-scale industrial plantations that supply food to global markets controlled by corporations. None of this is about producing more food or feeding more people; it’s all about who gets to control and profit from the production of food and who gets to eat.
Time for a food revolution
Despite the alarming expansion of the corporate food order, there is every reason to believe that we can turn things around. It is now crystal clear that the dominant model is bankrupt – it cannot fulfill the most basic function of feeding people and it is doing a miserable job of providing for people’s livelihoods. Governments and corporations have no palatable solutions on offer either.
Change has to come from us. And there is a growing global movement pushing back on the corporate food system and building the foundations for an alternative model, what many call food sovereignty.
Across the planet, food has become a central issue for social movements and a source of inspiration. In Korea, for instance, millions of people occupied the streets two years ago in protest against the free trade agreement with the US. The focus of their rage was the removal of restrictions on US beef protecting Koreans from BSE. It wasn’t so much a fear of mad cow disease that united and mobilized Koreans as it was a rejection of a model of factory farming and food culture that most Koreans strongly oppose. We have many examples that show how food systems work when they are in the hands of local communities. With dairy, for instance, 80 percent of the milk consumed in the developing world is provided by the “informal sector,” by people heading deep into the countryside on bicycles and motorbikes to collect milk from farmers with one or two cows and bring this into small towns and major urban centres. The milk generates livelihoods for millions of people (farmers, vendors, cheese makers, etc) and provides fresh, nutritious food to billions of poor consumers at a fraction of the cost of the pasteurized milk sold in tetrapaks at the supermarkets. The safety of the milk is assured through relations of trust and knowledge on the part of both consumers and producers about how to handle it.
People are fighting to protect such systems from corporate take-over. In Colombia, about 2 million people earn a living supplying leche popular to around 20 million Colombians. But looming free trade agreements with the EU and the US will open up the country to the dumping of powdered milk imports that companies like Nestle will use to undercut local milk production. And the government is pursuing legislation to prohibit the sale of pasteurized milk in urban centres, saying that the country’s dairy sector must be modernized to meet its WTO obligations and compete in the global market. But Colombians are resisting. They have taken to the streets and organized sophisticated campaigns that have blocked the government’s attempts to enact the legislation on several occasions.
Here in Canada, we now have a People’s Food Policy to serve as a reference point for activism and new visions for our food and agricultural system. Broad, collective visions are crucial if we are going to successfully work together on such disparate but intimately connected struggles as those for the rights of migrant farm workers, for the maintenance of the Wheat Board, for the banning of GMO crops or for the reduction in type-2 diabetes among First Nations communities.
We can also link the struggle for food sovereignty to the struggle against climate change to build movements. At least half of all greenhouse gas emissions come one way or another from the current food system. We can turn this around to make agriculture a carbon sink. Industrial agriculture has depleted around 1-2 percent of the world’s soil organic matter over the past 50 years. We can easily rebuild that soil organic matter, by moving to ecological practices that enhance soil fertility (mixed cropping, composting, livestock integration, etc). In doing so we could capture over a third of the current excess CO2 in the atmosphere. And we could continue building up the organic matter from there. But that kind of shift can only happen when we have farmers doing the farming and local markets that support dynamic rural communities and biodiverse farming.
The solutions to the food crisis are thus deeply intertwined with solutions to the climate crisis and the larger question of global poverty. The steps to get there are not so complex: genuine agrarian reform, local markets, biodiversity, a decentralization of decision-making, all things that social movements have been demanding for decades. There are no technical hurdles standing in the way, only political ones.
Devlin Kuyek is a researcher with GRAIN, a small international organization based in Barcelona, Spain
This article appeared in the May/June 2011 issue of Canadian Dimension (Precarious labour: a special issue).