Issue 255: May 2008

 Caution: neoliberalism at work

There are two stories to be told. The cruelest story is about globalized neoliberalism, corporate profits, speculative ‘investment’ and the chaos and failure of industrial agriculture as a result. The other story is about the possible turning of the tide on the neoliberal project.

All livestock farmers are familiar with parasites, internal and external, and many are also familiar with foxes (as in the henhouse), coyotes and other predators. A vigorous animal can cope with a light infestation of parasites, but even the otherwise healthiest of animals can be brought low by a heavy parasite burden, and an animal so consumed is obviously unable to provide milk or meat. Agriculture itself has long had to deal with parasites and predators of one sort or another. Sometimes they are slick seed dealers, other times shrewd livestock drovers. Now there seem to be increasing infestations of investors and attacks by fertilizer and land predators.

In Saskatchewan, limited partnerships that can give you part ownership of a portfolio of agricultural land have moved in. These pooled investor funds use the money to buy farmland, which is then leased back to farmers. “There is potential for considerable capital gains” and the lease payments generate income that is paid out to unit holders – less any fees deducted. – GM, 21/4/08. Former provincial Minister of Agriculture Tim Carroll has also suggested the scheme to the beleaguered farmers of PEI.

According to figures compiled by commodities brokerage Gresham Investment Management, the amount of speculative money in commodities futures – that is, investors such as big funds that don’t buy or sell the physical commodity but merely bet on price movements – was less than $5-billion in 2000. Last year, it ballooned to roughly $175-billion. By some estimates, investment funds control 50% of the wheat traded on the Chicago Board of Trade and Chicago Mercantile Exchange, the world’s biggest commodity markets. – G&M, 25/4/08

At an April 22nd meeting convened by the US Commodity Futures Trading Commission, many farmers and commodity buyers suggested that it is the growing clout of financial speculators, like large index funds and hedge funds, that has generated unpredictable gyrations in the futures market. Some producers blamed these large speculators for causing a disconnect between the value of a futures contract and the underlying value of the asset [a particular commodity] it is supposed to represent. – G&M, 23/4/08

Until quite recently speculation in agricultural commodities (grains, oilseeds, pork bellies) was limited by the rules of the Commodities Futures Trading Commission in the US (see box above). Only those classed as farmers and food companies were eligible to trade in agricultural commodities. Then a couple of years ago the CFTC changed its rules to allow commodity trading by market speculators. The change meant that a mechanism that was supposed to help farmers and the food industry to ‘discover’ prices and manage risk was opened to speculators with no particular interest in the welfare of farmers or agricultural commodities.

This resulted in purely profit-seeking trading activities driving up prices, which in turn forced countries dependent on imported food staples to bid up prices even further in order to obtain their essential food imports.

“Investors fleeing Wall Street’s mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up. . . By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker US dollar, nations staged a run on the US wheat harvest. Foreign buyers, who typically seek to purchase one or two months’ supply of wheat at a time, suddenly began to stockpile. This led major domestic U.S. mills to jump into the fray with their own massive orders, fearing that there would soon be no wheat left at any price. Japan, the Philippines, [South] Korea, Taiwan – they all came in with huge orders, and no matter how high prices go, they keep on buying.”
– StarTribune, Washington Post, 28/4/08

“Has it ever been better for Cargill? Not likely. At $471,611 an hour, Cargill posts a fine quarter,” reported Cargill’s hometown newspaper, the Star-Tribune. That hourly income figure is based on the billion dollar profit the company made in the first quarter of this year ($1.03 billion to be exact).

Cargill CEO Greg Page noted that “Demand for food in developing economies and for energy worldwide is boosting demand for agricultural goods, at the same time that investment monies have streamed into commodity markets.” A Cargill spokeswoman said that food shortages have strengthened Cargill’s call for free trade: “It’s very important that food be allowed to move from places where there is a surplus to places where there is a need.”
– ST, 15/4/08

India has halted trading in futures contracts on key food items. Trading in foods such as soybean oil, potatoes and chick peas, along with rubber, is suspended for at least four months. – NYT, 08/8/08

And now for the good news:

“Business as usual is no longer an option”

The final report of the International Assessment of Agricultural Science and Technology for Development (IAASTD) was released in mid-April. The report took four years to complete and included input from 400 scientists, academics and researchers from 100 countries.

"The old paradigm of industrial, energy-intensive and toxic agriculture is a concept of the past," the IAASTD said in a news release. "The key message of the report is that small-scale farmers and agro-ecological methods provide the way forward to avert the current food crisis and meet the needs of local communities."

Fifty-seven governments approved the report. Only the now customary misguided four, the United States, Canada, Australia, and the United Kingdom have not signed on (though the UK is reported to be considering it). As might be expected, the report was also not welcomed by the agrotroxin-biotech industry and its lobby organizations. "To be quite frank we see the report as very superficial and negative," said Lorne Hepworth of CropLife Canada (which had participated in the procss but then withdrew). The report, he says, fails to recognize the yield-boosting potential of crop protection products, hybrid seeds and GM crops, which the industry
claims goes to the heart of the hunger and poverty issues. The assessment concluded that the practice of large-scale industrial monoculture agriculture is unsustainable and cannot provide food for the future.

From the Global Summary

“The International Assessment of Agricultural Science and Technology for Development (IAASTD) responds to the widespread realization that despite significant scientific and technological achievements in our ability to increase agricultural productivity, we have been less attentive to some of the unintended social and environmental consequences of our achievements. We are now in a good position to reflect on these consequences and to outline various policy options to meet the challenges ahead, perhaps best characterized as the need for food and livelihood security under increasingly constrained environmental conditions from within and outside the realm of agriculture and globalized economic systems.”

“If we do persist with business as usual, the world’s people cannot be fed over the next half-century. It will mean more environmental degradation, and the gap between the haves and have-nots will further widen. We have an opportunity now to marshal our intellectual resources to avoid that sort of future. Otherwise we face a world no one would want to inhabit.” – Professor Robert Watson, Director of the IAASTD Secretariat

“The IAASTD is unique in the history of agricultural science assessments, in that it assesses both formal science and technology (S&T) and local and traditional knowledge, addresses not only production and productivity but the multifunctionality of agriculture, and recognizes that multiple perspectives exist on the role and nature of Agricultural Knowledge, Science and Technology (AKST). For many years, agricultural science focused on delivering component technologies to increase farm-level productivity where the market and institutional arrangements put in place by the state were the primary drivers of the adoption of new technologies. The general model has been to continuously innovate, reduce farm gate prices and externalize costs. This model drove the phenomenal achievements of AKST in industrial countries after World War II and the spread of the Green Revolution beginning in the 1960s. But, given the new challenges we confront today, there is increasing recognition within formal S&T organizations that the current AKST model requires revision. Business as usual is no longer an option. This leads to rethinking the role of AKST in achieving development and sustainability goals; one that seeks more intensive engagement across diverse worldviews and possibly contradictory approaches in ways that can inform and suggest strategies for actions enabling to the multiple functions of agriculture.” –www.agassessment.org/docs/SR_Exec_Sum_210408_ Final.htm

#255: May 2008 TOC
Caution: Neoliberalism at work - futures market and its effects; and the conclusion of an international study that change is essential
Who really gets the 'food aid'? (Follow the Money, part two) - perhaps to the CEOs of the agribusiness corporations?
Who is to blame? - Robert Zoellick blames the USA (but he was one architect of their policy)
nontarget.org - a new publication from The Nature Institute on the Nontarget Effects of Genetic Manipulation
Swiss 'Dignity' Law - the law requires respect for the dignity of plants as well as animals, lawyers struggle to figure out what that means
Earnings and Inequity - Statistics Canada reports that the rich are getting richer and the poor are getting poorer and the average hasn't changed
Sweetness and Light: Candy Makers Merge - Mars and Wrigley, both family businesses, merg
Wind Power - the wind in Spain provides power to the plain
Another burst balloon - the Canadian government pays farmers to kill their sows
European Update
     - Greece expands GMO ban out of concern for bees
     - The European Commission postpones acceptance of three GMO crops
GM Crop Promiscuity, Longevity - canola is found to hybridize about 40 species;
     - scientists map biotech crops to better study gene flows;
     - GM plant seeds found in fields 10 years later