A much anticipated World Bank report was released a few days ago on a controversial but important issue: foreign direct investment in land, particularly in poorer countries. Dubbed "land grabs" by the critics, a surge in investor interest in buying or leasing land abroad was one of the unexpected but dramatic responses to the surge in food prices in 2007-08. For a while, newspapers were full of stories of big but vague deals between foreign companies and governments of land in some of the world's poorest countries (as well as some not so poor countries). In the most publicized case, in Madagascar, it was a bid for nearly half the country's arable land in 2008 by a South Korean firm, Daewoo, that tipped a country already rife with political dissent into demonstrations that overthrew the government. We have commented on the phenomenon from time to time, and Alexandra Spieldoch and I wrote a chapter on the issue for a book published by the Wilson Center in D.C.
It won't be hard to find fault with the World Bank report. It's a highly politicized issue, and the World Bank has a long and controversial history of financing investment in natural resource extraction in projects that fail to meet appropriate social and environmental standards. Too often, the WB fails to meet its internal standards. The audience of NGOs, in any case, is likely to be skeptical at best.
Without jumping into that controversy here, I think it's worth underlining some of what the report has to offer. First, as the authors say themselves, this is an issue where there has been considerably more talk than action. The report estimates that only 20 percent of the proposed ventures have actually started production, for example. Other data, though some of it only goes up to 2006 and therefore predates the big explosion of interest, suggests that a significant share of the investment is actually domestic. That is, while it's clear that a lot of land has started to change hands, it seems not all of it—in some countries not more than 10 percent of it—is being signed over to foreigner entities.
Second, the report does not pull punches as to the (many) areas of concern that the investments give rise to. For example, the report says:
However, countries with poorer records of formally recognized rural land tenure also attracted greater interest, raising a real concern about the ability of local institutions to protect vulnerable groups from losing land on which they have legitimate, if not formally recognized claims.
Many of these same countries face chronic food shortages, are regular recipients of food aid from the World Food Program and have suffered from historically poor governance.
Third, the report makes a few points that need attention, with or without large-scale land deals. First, there is a significant gap between the actual and potential output of much of the world's existing farmland, especially in sub-Saharan Africa. This gap should be narrowed. Second, land rights need urgent attention and regulation in many local, national and international contexts, whether it be the struggles of indigenous peoples the world over, of women confronted with patriarchal customary laws, or of the landless, such as Brazil's landless workers (MST), forcibly occupying abandoned land in the name of their right to survive. Large-scale investments by foreign governments and companies bring attention to a much broader set of struggles for justice related to land. The World Bank report makes the point that, looking ahead, land is only going to get more valuable. In that process, the poor (and otherwise marginalized) will be dispossessed unless direct measures are taken.
There's plenty more to say on this topic, and on the report itself. For now, I think it's worth welcoming this contribution to the debate, not least for shining a carefully documented and thoughtful light on what has been and all too opaque and alarming trend.
This blog by IATP's Steve Suppan originally appeared on the Triple Crisis blog.
Wheat prices had been climbing prior to the August 5 announcement of a Russian wheat export ban. Kansas Board of Trade wheat futures contracts had gone from $4.92 a bushel on June 10 to spike at $7.95 a bushel on August 5, prompting a reporter to ask, “How could a Russian drought in the age of instant information escape the world’s notice until the country’s wheat crop was devastated?” This excellent question does not yet have a clear answer.
The wheat price crisis has led the press and even policymakers to focus almost exclusively on the traditional supply-demand fundamentals that ostensibly set prices. It’s as if the press were relieved to point to that old standby, weather, as the culprit for a 50 percent increase in wheat futures prices in a few weeks. For a change from the last three years, excessive speculation in commodities by financial institutions would not be accused of driving price volatility. Furthermore, according to the U.S. Department of Agriculture, unlike 2007-2008, global grain stocks were high enough to supply countries that could afford them. Maybe the specter of speculators increasing hunger might be eluded.
But maybe not. The Financial Times reported on August 4 that Glencore, the largest global commodities trader, had requested the Russian export ban, which was granted the following day. The ban enabled Glencore and other traders to break and “re-price” their relatively lower-price forward and futures contracts. Glencore and other major traders stand to make a killing in the new wheat price environment. So market power, usually a subject for political economy rather than orthodox economics, had a role in moving the fundamentals of price discovery and price transmission.
Glencore and other traders operate under the protection of Swiss banking secrecy laws, safe from the European Commission’s proposed revision of its Market Abuse Directive, about which we have commented. Meanwhile the U.S. Commodity Futures Trading Commission (CFTC) is deliberating how to regulate wheat and other commodity contracts. On August 5, the CFTC’s Agricultural Markets Advisory Committee (AMAC) met to discuss the now three-year old market failure when futures and cash prices for wheat failed to converge as futures contracts (generally 90 days for agricultural commodities) expired. Price convergence is what allows futures prices to be interpreted as reliable price benchmarks for forward contracting of commodities, both by commodity sellers and buyers. The pressure on the Chicago Mercantile Exchange (CME) and other U.S. wheat trading exchanges to solve the price convergence problem was made more acute with the release in June 2009 of a U.S. Senate investigation into wheat prices. The investigation concluded that commodity index fund investors had driven prices by exceeding contract position limits unenforced by the Bush administration CFTC.
CME and other exchange officials had told the CFTC at an AMAC meeting in October 2009 they would redesign the wheat contract to eliminate the price convergence problem, which they attributed to changes in transportation and storage costs and in delivery points (e.g. from Chicago to Toledo, Ohio), rather than to excessive financial speculation in commodities. At the August 5 AMAC meeting, the clearly impatient CFTC Chairman Gary Gensler pressed CME as to when the redesigned contract would finally be ready for review. Six-to-eight weeks was the answer.
The CFTC has a lot on its regulatory plate. Just to implement the Over the Counter (off-exchange, unregulated transactions) trade provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, on July 21 the CFTC announced a schedule for 30 new rules. Among the rules will be one on agricultural “swaps” (OTC contracts) that directly affects wheat futures trading.
Because OTC trades are not reported to the CFTC, e.g. by such firms as Goldman Sachs and Morgan Stanley, until well after their market influence has waned, OTC traders do not contribute price information to fulfill the Commodity Exchange Act requirement of price discovery. Regulated exchanges must report their trade data daily to the CFTC for its weekly Commitment of Traders report, a fundamental regulatory tool for estimating trade trends, including market manipulation. Nevertheless, OTC traders take advantage of exchange-traded price information. For this reason and others, former CFTC commissioner Michael Greenberger testified to the CFTC in 2009 that agricultural swaps are per se violations even of the deregulatory Commodity Futures Modernization Act. If OTC wheat trading collapses as the result of a new rule on agricultural swaps, wheat and other agricultural commodity price volatility caused by so-called dark markets will greatly diminish.
But the CFTC faces a tough fight to implement the Dodd Frank legislation, not only because of the massive Wall Street lobby against enforced regulation, but because of continued efforts to deny that financial speculation played a role in price volatility and to argue therefore that Bush administration rules suffice. The latest denialist gambit, by the Organization for Economic Cooperation and Development, to dismiss excessive financial speculation as a major commodity price driver in 2007-2008 has recently been demolished by a Better Markets Inc. study.
However, no amount of prudential regulation, however well-drafted, closely monitored and stringently enforced, will manage the longer term prospect of climate change induced agricultural supply volatility. True, relatively small infrastructure investments could protect the hundreds of thousands of tonnes of wheat that are rotting outside Indian warehouses or the 40 percent of African agricultural production that rots in the fields for want of basic post-harvest storage facilities and roads for domestic markets. But the biggest Greenhouse Gas emitting countries, financial institutions and even some NGOs are counting on carbon emissions markets to induce investments in low carbon technology. The International Emissions Trading Organization opposes limits on OTC trading, ostensibly to make the market “efficient” by increasing its liquidity. Of course, IETA members (many of the same firms that have speculated on agricultural commodities) want their chance to make a carbon killing too.
In the late 1870s, a series of droughts and famines devastated a broad swath of the globe, including what is now Pakistan. The 1876-78 drought killed 6 million people in India; in China, 12 million people died of starvation and disease. Many millions more were plunged into agonizing poverty. The story of the famines and their connection to extreme weather are the subject of a 2001 book by University of Southern California professor Mike Davis, entitled Late Victorian Holocausts: El Nino Famines and the Making of the Third World
In the late 19th century, El Nino cycles were not understood. Today, the world is witnessing the accelerating pattern of extreme weather events, like the floods that have engulfed Pakistan.
What Davis tells us is that the suffering and deaths that occurred were not caused by weather but the colonial and free trade policies of Europe, the U.S. and Japan. In the midst of mass starvation in India, basic food exports continued to flow to England. As whole communities perished, Indian peasants were taxed to pay for British wars against Afghanistan. British policies in India were predicated on the population theories of Thomas Robert Malthus, who was employed by the British East India Company—too many people, too little land, too little food—a description better suited to England.
Today, the flood victims in Pakistan were poor and hungry before the rain started to fall and the rivers and canals overflowed their banks. It is estimated that over 60 percent of the population of Pakistan lives on under $2.00 a day. For many years after partition from India, Pakistan was making strides in its development, but the combination of military dictatorships, corrupt governments and Cold War proxy wars (and now counter-terrorism campaigns) have left Pakistani peasants destitute and under siege.
What is new—and what was unknown at the end of the 19th century—was that the industrial system, then in its infancy, would lead to global warming and extreme weather events. From Katrina to the overflowing Moscow morgues, the industrial model that causes extreme weather is also responsible for exhausting the people, land and resources of the world. When the two meet the consequences are disastrous.
Farmers will harvest more corn than wheat this year in Kansas, according to Dan Piller at the Des Moines Register—a trend that's changing the state's traditional ag identity. Even crop-stressing record heat hasn't put a damper on the maize bonanza.
When I lived in Iowa, I always liked watching the crops change as I drove west. The greens of corn and soybeans would give way to golden wheat (and sunflowers, when I was lucky) as the land got drier. It wasn't real diversity, but at least it was different, a recognition that different land calls for different crops. Drought-resistant transgenes and increased irrigation—driven by demand for corn—have changed that. Of course it's not just Kansas; Nebraska and other dry-land regions have also upped their corn production.
Far be it from me to say one monoculture is better than another, but it's yet another sign that we're moving in exactly the wrong direction: toward less diversity, rather than more.
One of the best places to find fresh, healthy food is your local farmers market. Our current food stamp program uses Electronic Benefits Transfer (EBT) cards (a kind of debit card) which were designed primarily for supermarkets. As a recent Community Food Security Coalition report found, there are a number of social, economic and technological challenges to expanding EBT use at farmers markets. Fortunately, a growing number of farmers markets around the country are overcoming these hurdles.
This week, IATP along with Blue Cross and Blue Shield of Minnesota, the City of Minneapolis, Hennepin County and the Minnesota Department of Health announced a new program to expand EBT use at three of Minneapolis's largest farmers markets. Now that these farmers markets accept EBT cards, the challenge is to let EBT users know about it and take advantage of what these markets have to offer. As an added incentive, Market Bucks coupons matching the first $5 of purchases by EBT users, will be available at the markets. See more details in our press release below:
Innovative Program Provides Incentive for Low-Income Minnesotans to Shop at Three Minneapolis Farmers Markets, Eat Healthy
[MINNEAPOLIS] Recipients of food assistance can now use their EBT cards to purchase affordable, healthy and tasty food at the Midtown, Minneapolis, and Northeast Farmers Markets in Minneapolis. These markets will also encourage EBT users to eat well by offering an incentive—Market Bucks coupons, which will match the first $5 an EBT user spends on fresh produce at these markets with an additional $5 in Market Bucks. That amounts to $10 in produce for the first $5 spent.
This month's Radio Sustain is all about farmers markets, community gardens and empowerment. First, we talk with Joe Rice, director of the Na-Way-Ee Center School in south Minneapolis, about the school's garden and how it connects students with the earth, their food and their native traditions.
Next, Pastor Steve Lomen, operator of the St. Olaf Community Campus Mini Farmers Market, fills us in on his expanding vision. What used to be an empty grass plot on the campus grounds is now a 40' by 60' garden providing fresh food to the community—and he has even bigger plans.
Finally, IATP Food and Society Fellow Andy Fisher, executive director of the Community Food Security Coalition in Portland, has co-authored a new report detailing what stands between those on federal food assistance programs and the fresh produce at farmers markets.
Listen to the entire episode here (mp3) and let us know what you think: Radio Sustain Episode 28 (August 2010).
While billions of dollars are invested each year by food and agriculture companies in developing new technologies, only a small fraction is invested in ensuring food safety, writes IATP's Steve Suppan in the latest issue of the Global Food Safety Monitor.
The latest example of this unfortunate practice is the enormous investments being made in developing new food and agriculture applications for nanotechnology: the manipulation of molecular level matter. Governments and companies are developing nanotech applications in food packaging, plant production, animal breeding and food appearance, without establishing or investing in any clear system to ensure safety.
The Global Food Safety Monitor reports from this summer's NanoAgri 2010 conference in São Pedro, Brazil, where over 300 scientists and a handful of regulators and nongovernmental organizations discussed the latest nanotech applications and national and international regulatory issues.
The Monitor reports, "For governments hoping that nanotechnologies will create a new generation of jobs and wealth, product development, and not development of environmental, health and safety data about nanotechnologies, is the priority."
With 30 percent living below the poverty line, Hartford, Connecticut, is nearly the poorest city in the United States according to the 2000 Census. From 1979 until 2003, Mark Winne served as Executive Director of the Hartford Food System a grassroots nonprofit organization “dedicated to fighting hunger and improving nutrition." This experience, as well as co-founding multiple food policy organizations (including the Community Food Security Coalition) has given Winne a unique, multi-level view of food insecurity.
Our food system today is at an interesting junction: While the organic and local food movements are gaining momentum at an unprecedented rate, hunger, food insecurity and obesity are higher than ever. At IATP's event "Closing the Food Gap" last night, Winne continually returned to the central question: Where does responsibility lie? With the individual or in the food environments we have created? Winne proclaimed to have "one foot firmly planted in each camp," despite also being aware that in today's food environment—especially in low-income communities where healthy food is often scarce—one must be extremely strong, and discerning, to make healthy decisions.
So what changes are necessary to make healthy food more accessible and individuals more prepared to make the decision to eat healthy? Winne listed environmental changes as simple as building more supermarkets, altering bus routes to reach healthy foods, building farmers markets in food-scarce neighborhoods and efforts like community-owned grocery stores like People's Grocery in West Oakland.
On the individual level, Winne spoke of competing with the barrage of billboards, soda machines and television ads that children are exposed to by including more food education—cooking, preparation and nutrition—in our schools' curricula. And, on a larger scale, encouraging participation in "food democracy." As the food industry becomes more centralized, and more powerful, are we truly able to impact what food enters our communities? Yes, Winne admitted, as consumers we are able to vote with our dollars, but we are competing with powerful corporations. Low-income neighborhoods often become overrun with fast food operations while supermarkets are nowhere to be found—what good is a vote when nothing on the ballot is beneficial?
Winne's answer? Food Policy Councils. Yes, the national fight must continue through avenues like the Farm Bill and the Child Nutrition Reauthorization Act, but local change can happen now. State and local policy councils are springing up across the country thanks to Winne's model of interacting constructively with local and state government to bring about change. Justice, not charity: Individuals, taking responsibility for the environment in which they live, to help bring healthy, sustainable solutions to hunger, and diet-related illness.
For more information, check out Mark Winne's books Closing the Food Gap and the upcoming Food Rebels, Guerrilla Gardeners, and Smart-Cookin' Mamas: Fighting Back in an Age of Industrial Agriculture.
On August 16 and 17, rural community leaders in the Midwest have a unique opportunity. U.S. Department of Agriculture state rural development leaders from Minnesota, Nebraska, South Dakota, Iowa and Kansas will be in South Sioux City, Nebraska at the 2010 Midwest Rural Assembly. And they want to hear about what's working in rural communities in the Midwest.
Join some of the Midwest's leading organizations working for rural prosperity, along with state and federal government officials, at the Midwest Rural Assembly. Topics covered will include how to retain young people in rural communities, cooperative business models, sustainable energy, local food systems, green job creation, rural teacher training, microenterprise programs, integration of immigrants, rural infrastructure projects and more. Policy discussions will cover federal health care reform, farm policy and broadband policy.
Find out more in the press release below, and at the Midwest Rural Assembly website.
Midwest Rural Assembly to bring together community and government leaders
Participants talk strategies for rural prosperity
Minneapolis – Rural community leaders and government officials will gather at the 2010 Midwest Rural Assembly (MRA) to exchange ideas and strategies for rural prosperity.
The MRA will be held on August 16–17 in South Sioux City, Nebraska. Along with rural community leaders from throughout the region, participants will include U.S. Department of Agriculture state rural development directors from Minnesota, Iowa, South Dakota, Nebraska and Kansas. Keynote speakers include South Dakota state representative Kevin Killer and Iowa State professor and writer/poet Debra Marquart.
“Rural communities have been particularly hard hit by these tough economic times,” said Jim Kleinschmit, director of the Institute for Agriculture and Trade Policy’s Rural Communities program. “But there’s also a lot of innovation, energy and ideas coming out of our small towns. This is an opportunity for rural leaders and government representatives to learn about what’s working, and as importantly, how we can join together to face many of our common challenges.”
A special area of focus is to identify strategies to attract and retain young people in rural communities. Young rural leaders from Minnesota, Montana, Wisconsin and Kansas will share their priorities. Other leaders will discuss successful examples of increasing rural prosperity through cooperative business models, sustainable energy, local food systems, green job creation, rural teacher training, microenterprise programs, integration of immigrants, rural infrastructure projects and more. Policy discussions will cover federal health care reform, farm policy and broadband policy.
In addition to IATP, coordinating organizations include: Avera Rural Health Institute, Center for Rural Affairs, Center for Rural Policy and Development, Center for Rural Strategies, Dakota Rural Action, Great Plains Rural Policy Network, Heartland Center for Leadership Development, Iowa Policy Project, League of Rural Voters, Meadowlark Institute, National Rural Assembly, National Wildlife Federation, Nebraska Housing Developers Association, North Central Regional Sustainable Agriculture Research and Education, Renewing the Countryside, Rural Learning Center, Rural Policy Research Institute, South Dakota Rural Enterprise, Inc., and West Central Initiative.
The MRA will be held at the Marina Inn Conference Center in South Sioux City, Nebraska. Registrants will receive a special MRA rate if rooms are booked before August 2. To register, and read the full agenda and speakers list, go to www.midwestruralassembly.org.
The Institute for Agriculture and Trade Policy works locally and globally at the intersection of policy and practice to ensure fair and sustainable food, farm and trade systems. www.iatp.org
Two years ago, we launched an initiative with the help of the city of Minneapolis to help organize small (5 vendors or fewer) farmers markets in low-income neighborhoods without easy access to healthy food. Community organizations took the lead. IATP helped navigate the permitting process and connect with farmers. We had six markets the first year. This summer, we have 21.
The reasons why community groups are setting up these small-scale markets vary. For instance, the Streetwerks Youth Farmers Market serves a northside Minneapolis neighborhood and includes produce from a youth garden project run by Emerge Community Development. The Brian Coyle Community Center hosts a market primarily serving the Somali community on Minneapolis’ West Bank. St. Olaf Community Campus hosts a market at a senior nursing home and apartments. The new market at Children’s Hospital was launched this summer in response to employee requests. Ebenezer Park and Ebenezer Tower Markets serve two high rises that are home to seniors and disabled veterans.
Community organizations around the country aren't waiting for a new Farm Bill to change our food system, or the next big grocery supermarket to open in their neighborhood. They're teaming up with local farmers to bring healthy food to their communities right now. And they're leading the way toward a new food future.