[R-G] [BillTottenWeblog] How the rich starved the world

[Bill Totten]

World cereal stocks are at an all-time low, food-aid programmes have run
out of money and millions face starvation. Yet wealthy countries persist
with plans to use grain for petrol.

by Mark Lynas

New Statesman (April 17 2008)

The irony is extraordinary. At a time when world leaders are expressing
grave concern about diminishing food stocks and a coming global food
crisis, our government brings into force measures to increase the use of
biofuels - a policy that will further increase food prices, and further
worsen the plight of the world's poor.

What biofuels do is undeniable: they take food out of the mouths of
starving people and divert them to be burned as fuel in the car engines
of the world's rich consumers. This is, in the words of the United
Nations special rapporteur on the right to food, Jean Ziegler, nothing
less than a "crime against humanity". It is a crime the UK government
seems determined to play its part in abetting. The Renewable Transport
Fuel Obligation (RTFO), introduced on 15 April, mandates petrol
retailers to mix 2.5 per cent biofuels into fuel sold to motorists. This
will rise to 5.75 per cent by 2010, in line with European Union policy.

The message could not have been clearer if the Prime Min ister, Gordon
Brown, had personally put a torch to a pyre of corn and rice in
Parliament Square: even as you take to the streets to protest your empty
bellies and hungry children, we will burn your food in our cars. The UK
is not uniquely implicated in this scandal: the EU, the United States,
India, Brazil and China all have targets to increase biofuels use. But a
look at the raw data confirms today's dire situation. According to the
World Bank, global maize production increased by 51 million tonnes
between 2004 and 2007. During that time, biofuels use in the US alone
(mostly ethanol) rose by fifty million tonnes, soaking up almost the
entire global increase.

Next year, the use of US corn for ethanol is forecast to rise to 114
million tonnes - nearly a third of the whole projected US crop. American
cars now burn enough corn to cover all the import needs of the 82
nations classed by the UN's Food and Agriculture Organisation (FAO) as
"low-income food-deficit countries". There could scarcely be a better
way to starve the poor.

The threat posed by biofuels affects all of us. Global grain stockpiles
- on which all of humanity depends - are now perilously depleted. Cereal
stocks are at their lowest level for 25 years, according to the FAO. The
world has consumed more grain than it has produced for seven of the past
eight years, and supplies, at roughly only 54 days of consumption, are
the lowest on record.

The president of the World Bank, Robert Zoellick, has already warned
that 100 million people could be pushed deeper into poverty because of
food price rises caused directly by this imbalance between supply and
demand. Even consumers in rich countries are suffering. We now pay
higher prices for our food in order to subsidise the biofuels industry,
thanks to measures such as the renewable fuels directive.

This is not just a short-term price blip, but the beginnings of a major
structural change in the world food market. Population pressure - still
something of a taboo subject - is also certainly playing a part. With
the world population growing by 78 million a year, and expected to reach
nine billion by the middle of the century, there are simply many more
mouths to feed.

In addition, rapid economic growth in India and China has created tens
of millions of new middle-class consumers, all demanding western-style
diets high in meat and dairy products, thereby vastly increasing the
quantity of grain required for livestock production.

Weather plays a major role, too: the FAO's latest food situation brief
reports that, in 2007, "unfavourable climatic conditions devastated
crops in Australia and reduced harvests in many other countries,
particularly in Europe", while Southern Africa and the western United
States have been hit hard by severe drought. Rising oil prices also
increase the cost of food, as fossil fuels are important throughout the
agricultural process, from tractor diesel to fertiliser production.

Inconsistency

The most important structural change, however, is the increasing
interlinking of world energy and food markets. Once, food was just for
people. Now rising demand for transport fuel - particularly in rich
countries - is sucking supply away from the world food market and
increasing the upward pressure on prices. In the words of Josette
Sheeran, executive director of the UN World Food Programme (WFP): "We
are seeing food in many places in the world priced at fuel levels", with
increasing quantities of food "being bought by energy markets" for biofuels.

Rising oil prices feed back into the process. With food and fuel markets
intertwined, increases in the price of oil are shadowed by increases in
the price of grain. The real-world result from this structural shift may
be that hundreds of thousands of people starve in the next few years -
unless policies promoting biofuels are urgently reversed.

This is not to suggest that government targets on biofuels are driven by
some kind of malicious desire to starve the world's poor. Indeed, both
Brown and his Chancellor, Alistair Darling, have expressed concern about
the food supply crisis and the role of biofuels in causing it. But for
these two political leaders to voice their concerns while allowing the
increased use of biofuels in the UK to be pushed forward - all in the
same week - is nothing short of bizarre.

As Oxfam's Robert Bailey puts it: "This inconsistency at the highest
levels simply beggars belief". The aid agency calculates that the RTFO
represents a GBP 500 million annual subsidy from motorists and taxpayers
to the biofuels industry - more than double the amount the WFP is
urgently seeking from donor countries to try to mitigate the impact of
food price rises on the world's poor.

The EU, meanwhile, persists in the erroneous belief that biofuels can
help reduce greenhouse-gas emissions. The main reason for its speedy
introduction of the replacement fuel initiative was as a sop to motor
manufacturers who were lobbying hard against proposed higher fuel
economy standards. With biofuels, the EU hoped, it could cave in to the
car industry while still getting reduction in emissions.

Yet recent research suggests otherwise: two major studies published in
Science magazine in February showed clearly that once the agricultural
displacement effects of the new fuels on rainforests, peatlands and
grasslands are taken into account, emissions are many times worse than
from conventional mineral petrol. In other words, it would be better for
the climate if we just went back to fossil fuels. Biofuels are not a
"necessary but painful" way of saving the climate; they are a calamitous
mistake by almost every criterion, whether social, ethical or environmental.

Reversing the damage

The industry claims that "second-generation" biofuels, using by-products
such as corn stalks and woodchip as a feedstock, will be able to redress
the balance. But if this technological advance is achieved (and that is
by no means certain) it could usher in an even worse scenario: the
annihilation of the world's forests. If all plant life was seen as
potentially convertible for transport fuel, there would be nothing to
stop what was left of the planet's biosphere from being strip-mined to
keep rich motorists on the road. There is no simple solution. Much of
the increased biofuel demand comes from the US, where Democratic and
Republican politicians alike have talked themselves into a dead-end
search for "energy security" - with US-grown corn top of the list.

But the UK and the EU can reverse some of the damage by immediately
ditching their own biofuels policies and providing vital aid funding,
principally through the WFP, to help prevent widespread starvation in
the short term. Politicians need to realise that there is no such thing
as "sustainable biofuels", either now or in the future. As for
investors, they need to realise that pouring money into biofuels is a
bad bet: subsidies will be quickly withdrawn when policymakers face up
to the reality of their ghastly error.

In the meantime, millions face starvation and death from increasing
hunger and malnutrition. There is no time to lose.

2008: the year of food riots

Egypt - Thousands of demonstrators in Mahalla el-Kobra loot shops and
throw bricks at police during protests at rising food prices and low
salaries, as part of nationwide strike

Haiti - At least four people killed in the southern city of Les Cayes
after food prices rise fifty per cent in the past year

Côte d’Ivoire - Police injure more than ten protesters as several
hundred demonstrators demand government action to curb food prices

Cameroon - Riots last four days and result in at least forty deaths.
Unrest is due to high fuel and food prices. Worst riots in country for
fifteen years

Mozambique - At least four people killed and 100 injured following fuel
price rises

Senegal - Violent demonstrations in Dakar as prices of rice, milk and
oil soar. Senegal imports almost all its food

Yemen - Five days of rioting and a hundred arrests after the price of
wheat doubled over two months. Protesters set up roadblocks in Sana’a
and Aden

... and in Mauritania, Bolivia, Indonesia, Mexico, India, Burkina Faso,
and Uzbekistan

Research by Jax Jacobsen

http://www.newstatesman.com/200804170025
____________________________________________________________

Labour should have the courage to abandon biofuels at once

New Statesman Leader (April 17 2008)

For once, the preoccupations of the rich world coincide with those of
the poor world. The relentless rise in the price of basic foodstuffs,
which in recent weeks has been the trigger for riots in a number of
developing countries, has started to be felt by shoppers in the more
affluent western world. To some of us it means only a bit of
belt-tightening; to Britain's poorer families it means a careful
reworking of priorities; for some, it may mean impaired health as they
cut back on items such as milk, 5 pence more for a pint than this time
last year. But for the very poorest people in the developing world, the
price of staple foods may be quite simply a matter of life or death,
particularly when the UN's World Food Programme is unable to cover the
increased cost of food aid to the most needy countries from its existing
budget.

Such growing anxiety about global food stocks was the least propitious
moment imaginable for the roll-out of phase one of the government's
replacement fuels strategy. This, in short, requires that all petrol
sold on the forecourt should contain a certain percentage of biofuels
(increasing over time). But one of the main factors cited in the rising
cost of basic foods is the diversion of crops to make ethanol for biofuels.

According to the IMF, ethanol production in the United States accounts
for at least half the increase in global demand for corn. In other
words, from this month, British cars will be burning food that the poor
around the world are increasingly unable to afford, a situation that one
UN food specialist graphically describes as "a crime against humanity".

As with the abolition of the 10p income tax band, it has taken
implementation of a badly thought-through policy to lever out the very
strong arguments against it. Once a useful green soundbite for Labour,
biofuels replacement now turns out to be a scheme that enjoys the
support of nobody, not even the Prime Minister's own team. The best his
transport minister can say is that we should monitor it carefully, while
his Chancellor has called for an urgent review of the policy and is
reported to be anxious to convince fellow G7 members of its folly.

Promoting biofuels was in part a sop to the car-makers who lobbied hard
against proposed higher fuel economy standards. Yet it would not require
great bravery on the part of the government to abandon the biofuels
programme and press for those higher fuel economy standards instead (and
put its weight behind convincing our European partners to do the same).

Biofuels advocates argue that greener technologies which would not
jeopardise food security are just around the corner. But as Mark Lynas
points out on page 24, once any kind of biomatter can be used for fuel,
how long would the world's forests remain? Already the Amazon
rainforests are being razed to cultivate soya crops for fuel.

There are no quick fixes. The imperative remains, as ever, to reduce car
use and petrol dependency drastically. Biofuels cannot be the solution.
A swift acknowledgement of the error of the fuel replacement strategy
would give the British government the authority to argue this within
Europe and on a wider international stage.

The food crisis presents an even greater challenge and as riots continue
to erupt in the developing world, the urgency is clear. As a priority,
rich nations must address the scarcity through greatly increased aid.
The spiralling cost of grain has left the aid agencies with inadequate
funds to purchase sufficient amounts. They need an immediate injection
of cash from rich countries to keep food supplies flowing at planned levels.

But Iain Macwhirter points to a more intractable problem on page 25. The
giant global financial institutions, which once speculated on dotcoms
and property, are now speculating in the same reckless fashion on
commodity prices, with dire consequences for the poor.

The World Bank predicts that demand for food will double by 2030 and
that there will be shortages. The financial wolves are howling at the
door. The priority for the international community has to be to work
towards securing food supplies. A good start would be to release for
food the vast quantities of grain now being diverted into fuel tanks.

http://www.newstatesman.com/200804170001
____________________________________________________________

The trading frenzy that sent prices soaring

Why the price of basic foodstuffs rocketed, from London to Haiti

by Iain Macwhirter

New Statesman (April 17 2008)

Four people were killed in food riots in Haiti. From Bolivia to
Uzbekistan there have been violent protests against the doubling of food
prices. In Italy, mothers are marching against the price of pasta. The
World Food Programme has seized up and the World Bank on 13 April
forecast that 100 million people face starvation. It should not have
come as a surprise.

Conventional explanations for the food crisis range from climate change
to dietary change in China, from global overpopulation to the switch of
agricultural production to biofuels. These long-term factors are
important but they are not the real reasons why food prices have doubled
or why India is rationing rice or why British farmers are killing pigs
for which they can't afford feedstocks. It's the credit crisis.

This latest food emergency has developed in an incredibly short space of
time - essentially over the past eighteen months. The reason for food
"shortages" is speculation in commodity futures following the collapse
of the financial derivatives markets. Desperate for quick returns,
dealers are taking trillions of dollars out of equities and mortgage
bonds and ploughing them into food and raw materials. It's called the
"commodities super-cycle" on Wall Street, and it is likely to cause
starvation on an epic scale.

The rocketing price of wheat, soybeans, sugar, coffee - you name it - is
a direct result of debt defaults that have caused financial panic in the
west and encouraged investors to seek "stores of value". These range
from gold and oil at one end to corn, cocoa and cattle at the other;
speculators are even placing bets on water prices.

Just like the boom in house prices, commodity price inflation feeds on
itself. The more prices rise, and big profits are made, the more others
invest, hoping for big returns. Look at the financial websites: everyone
and their mother is piling into commodities. It is the great bull market
of the Noughties. The trouble is that if you are one of the 2.8 billion
people, almost half the world's population, who live on less than $2 a
day, you may pay for these profits with your life.

This speculation doesn't happen on its own, however. Commodities such as
gold and oil are favourite "hedges" against falling currencies. But this
time all manner of other commodities, such as wheat and rice, have been
swept along in the inflationary slipstream.

Investment houses, pension funds, private equity groups and banks are
driven by profit not morality, and they invest wherever they can see the
biggest return. It is not a conspiracy, but it is a conscious strategy,
backed by the central bankers of the west as they try to help Wall
Street back on its feet. Put another way, the banks are exporting our
debts to the developing world. The collapse of the dollar means that
most international commodities are more expensive for poor people to
buy. The dollar's decline is a direct result of the low interest rate
policy of the US Federal Reserve and the Bank of England, which
shockingly cut interest rates on 10 April even as inflation spiralled.

When interest rates are below the rate of inflation, investors have to
keep moving their funds from sector to sector in search of higher
returns. In the 1990s they piled into internet stocks. When that bubble
burst in the 2000 stock-market crash, they shifted into property and
complex collateralised debt dealing based on US "sub-prime" mortgages.
Now, with the collapse of the property bubble - not just in the US but
across the world - investors are on the move again, and the only place
left is commodities. It's the third bubble and it's hitting the
developing world hard.

There are other reasons for food shortages: the diversion to biofuels
because of the depletion of oil reserves, the increasing population,
changing eating habits in south-east Asia - all these are putting
long-term pressure on agricultural resources. But the efforts of
institutions such as the US Federal Reserve to revive the economy on the
back of a commodities boom have dramatically speeded up global inflation.

Will it work? Will the new "asset bubble" restore the profits of the
banks and revive the US economy? In the short term, possibly yes - but
at terrible human cost. In the end, the US may be cutting its own
throat. Once speculative prices get out of control, there is no knowing
when they will stop. Oil is now more than $100 a barrel. Resource-rich
countries such as Russia are suddenly world powers again. Hungry people
are desperate people. This might be the bubble to end all bubbles.

http://www.newstatesman.com/200804170026

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