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Food Crisis

June 22, 2011

Spotlight G-20: Agriculture Ministers should strengthen government role in volatile markets

Grain Tomorrow the first ever summit of G-20 Agriculture Ministers will take place in Paris. The French government is to be commended for the initiative. Concerned by the evident disarray in government responses to the food price crisis of 2007-08, the French government moved quickly and deliberately to consider how best to respond. One of their investments, one that might be overlooked in the drama of a G-20 summit, has been in research to understand what kinds of tools governments have used to respond to price spikes and volatility, and how effective those tools have been, particularly in developing countries, and particularly with an eye on reducing poverty and vulnerability to hunger. The results of that investment is informing the debate at many levels, and is a welcome addition to a literature that is otherwise rather too orthodox.

One of the main contributors to this research is Franck Galtier, who works with part of the French agricultural research institution CIRAD. Galtier makes the point that countries are each quite different and need their own distinct mix of policies to respond to the specificities of their situation. Galtier has built a typology of responses to price volatility with four categories: measures to prevent (or mitigate) volatility and measures to cope with it, crossed with measures that are designed to leave the private sector in charge versus measures that require the state to intervene. One of his important conclusions is that, by far, the largest share of international policy advice (and money) for the last twenty years has focused on policies and programs that use public funds either to build infrastructure and open borders, or to manage risk and facilitate participation in commodities markets. Public interventions to mitigate volatility—to keep prices stable—have been widely neglected. Yet common sense and long experience suggest they might be the best use of money.

 A number of governments (notably the U.S., Canada, U.K. and Australia) remain firmly committed to this lopsided policy agenda. We can expect the neglect of important public policy tools to regulate markets to be evident in the summit outcomes, even though a number of G-20 countries intervene heavily in their domestic agricultural markets, and to great effect, successfully limiting the incidence of hunger in their countries (for instance in China and Indonesia). The report prepared for this meeting at the G-20’s behest by ten international institutions (and discussed on this blog by Jennifer Clapp last week) also betrays an allergy to public regulation of markets.

 It is ironic that many of the countries so averse to public policies that interfere in markets have biofuel policies that illustrate the worst kinds of market distortion. The U.S. even dares describe its biofuel sector as an “infant industry”! Demand from the biofuel industry, propped by billions of dollars worth of public subsidy and minimum use mandates, has exacerbated price spikes and increased the vulnerability of populations whose food supply is in some measure dependent on imports from international markets. Another example of market distortion is the role of excess speculation in financial markets. In 2009, the G-20 Heads of State set themselves the task of improving the governance of commodity futures markets, acknowledging their role in causing price volatility: “We have agreed to improve the regulation, functioning and transparency of financial and commodity markets to address excessive commodity price volatility.” Yet on this question, too, the U.S., Canada and others continue to block action (see here for a commentary on U.S. efforts to block reform).

One of the most obvious ways to intervene to reduce the likelihood of excessive price volatility is to manage a public stock. The international organization report was dismissive of the tool as expensive and ineffectual and made no recommendations for any stocks policy beyond an emergency reserve to be operated by the World Food Program. Even this is too much for the U.S. and—U.S. officials claim—some others in the G-20; this small but important step is now the only issue still not agreed ahead of the summit. The U.S. suggests a feasibility study is needed ahead of the pilot project now in discussion. This is nonsense, of course. The point of the pilot is to see if the idea can work; there is more than enough experience—and need—to move on this question without holding things up with time-wasting exercises.

In practice, the question is not whether or not to hold stocks—countries mostly have stocks—but how best to use them. The international community is letting developing countries down, especially the poorest developing countries, by refusing to acknowledge the political necessity of stockholding and applying themselves to ensure they are managed as well as possible. The U.S., Canada, Australia and others are firmly set against anything that might “interfere” in the market (unless it’s a biofuel mandate). They argue public stocks crowd out the private sector, which is no doubt true, but is Cargill holding stocks for the same reason a government might? How much might they hold? Would they tell anyone what they hold? Will they release stock to ease pressure on prices, or might they be tempted to hold stock to nudge prices higher? Is it reasonable to depend on the handful of global grain traders to handle something as politically sensitive as supply to international food markets? Remember, no one actually knows the exact numbers, but a 2003 estimate from the Boston Consulting Group claimed only four grain traders controlled 73 percent of global grain trade. Competition has definitely not improved since then.

Over the last twenty years, developing countries have shifted from net food exporters to net food importers and are more dependent than ever on international markets. Richer countries are managing things their way: China is not going to stop stockholding. Russia is not going to allow a prohibition on export bans. Yet the U.S. is all but refusing to allow a discussion of stocks, even though high levels of price volatility are closely correlated to low levels of reserves.

Meanwhile, G-20 Agriculture Ministers might want to think about who it is they hope to export their surplus grain to. Unless agricultural exporters are willing to give meaningful assurance to importers that there is plenty of supply in international markets, importers are going to look for other solutions. Indeed, they already are. And while much greater investment and support for local food production is essential, trade is a useful and important part of most countries’ food security strategies. Stocks provide a limited but essential tool in this mix; they provide a necessary level of comfort that the market will deliver. As such, they deserve more space on the G-20 agenda—too late for tomorrow’s summit, maybe, but it’s time to look again at that neglected quadrant of tools called public regulation to curb the likelihood of excessive volatility. It’s time for political pragmatism to prevail.

—Sophia Murphy, IATP's senior advisor on trade, food security and global governance issues. This post also appears on the Triple Crisis blog. 

Ben Lilliston

June 09, 2011

More evidence on speculators and food prices

Chart The G-20 agriculture ministers will meet on June 22–23 in France to discuss how to address the major challenges facing agriculture. A report issued this week by a U.N. agency on the growing influence of financial speculators on commodity markets, including agriculture prices, should be required reading.

"The 'financialization' of commodity markets has changed trading behaviour and significantly affects the prices of such basic goods as staple foods," reported the U.N. Conference on Trade and Development (UNCTAD) on Monday. The UNCTAD report documented the new forces of financialization in commodity markets beginning in 2004—and its role in steadily rising prices, accompanied by increasing volatility.

The study's findings, backed by interviews with physical traders and financial investors, determined that the rise of the commodity derivatives market had encouraged herding behavior to the point where financial investment, rather than market fundaments like supply and demand, increasingly influences prices. The report's findings concluded that acting against the majority of investors, even if justified by market fundamentals, may result in large losses. "It may therefore be rational for market participants to ignore their own information and follow the trend."

UNCTAD recommends greater transparency in commodity trading, internationally coordinated regulation of commodity exchanges, and direct intervention by market authorities to deflate price bubbles.

The UNCTAD report is consistent with a 2008 report by IATP on the damaging role of speculators in commodity markets, as well as a reader we published earlier this year, offering a variety of perspectives on this increasingly urgent problem.

Fortunately, stronger regulation of commodity futures markets is on the G-20 agenda. While agriculture ministers will discuss proposals to improve financial regulations later this month, G-20 finance ministers will make the final decision on those proposals. IATP outlined its concerns about the G-20 approach to commodity market reform in a comment to UNCTAD earlier this week.

As agriculture markets become increasingly volatile, it's becoming harder and harder to deny the deep and destructive influence that financial investors are having on the global agricultural economy. The G-20 agriculture ministers have an opportunity later this month to advocate for new, tough rules for commodity futures markets that will benefit both farmers and consumers.

Ben Lilliston

June 04, 2011

Agroecology comes to Capitol Hill

Staff from congressional offices, development agencies and family farm organizations jammed into a crowded briefing room on Capitol Hill on Thursday to hear more about new approaches to food security that help farmers feed their communities while working with nature. The briefing was sponsored by IATP and the Interfaith Working Group on Global Hunger and Food Security, and hosted by Rep. Jim McGovern. 

Deschutter Olivier de Schutter, U.N. Special Rapporteur on the right to food (see right with Cheryl Morden), led off the event with a bold assertion: we’re not actually facing a hunger crisis, but really three interlocking crises: a poverty crisis, an environmental crisis and a nutrition crisis. In many cases, the volume of food available isn’t really the issue. Poor people can’t afford the food that is available, and they can’t influence agricultural prices and policies. Unsustainable farming practices that rely on agrochemicals derived from petroleum products mean that farmers can’t afford the inputs, and that the land becomes degraded. And, many countries are facing a new nutrition crisis, with obesity rates in some communities increasing at the same time as hunger persists in others.

There is no magic bullet to solve these problems, he said, but there hasn’t been nearly enough attention paid to agroecological approaches that have huge potential to address the three crises. Agroforestry, for example, can help retain moisture in the soil, reduce dependency on chemical inputs and lower costs for farmers. More diverse farming systems mean more diversity on plates too, i.e., better nutrition. He called for more investment in public goods, sharing local knowledge, and farmers’ organizations with a strong focus on gender. Rather than relying on global supply chains, he said, we need to re-localize food systems that prioritize linkages between rural producers and urban consumers.

Susan Bradley from USAID spoke next on Feed the Future, the Obama administration’s signature initiative on food security. She emphasized the need to better integrate environmental and economic resilience in very vulnerable households. They are trying to improve analysis of the constraints facing women farmers across value chains, so that they take women’s positions of power into account, and increase their access to extension and financial services.

Cheryl Morden from the International Fund for Agricultural Development (a multilateral agency focused on small-scale farmers and rural poverty) spoke about the need for an “evergreen” revolution. It’s simply not possible to intensify agricultural production using the same old technologies; It won’t work, and there are serious environmental consequences. Some 70 percent of IFAD’s projects are on degraded lands, so they’re looking at how to increase productivity in perpetuity with sound natural resource management and livelihood security, recognizing that all of these approaches must be site specific. She said the hallmark of their programs is community empowerment and capacity building, as political and economic marginalization is at the heart of the problem.

Timi Gerson from American Jewish World Service concluded the event with the story of Ruth, a landless and migrant widow who only survives because she is able to use the tradition of "gleaning" food left from the harvest in the fields. The story emphasizes that caring for the poor is an obligation, not an option. She emphasized the faith community’s commitment to foreign assistance programs that support local communities’ efforts to claim their right to food.

Karen Hansen-Kuhn

May 17, 2011

G-20 struggles to face up to agriculture price volatility

Last week, a background paper for the G-20 Summit of Agricultural Ministers on price volatility from eight international organizations appeared [1]. The paper, dated May 2, was presented last week to the sherpas who are preparing for the summit, to be held in Paris on June 23.  

The analysis treats the failures of international markets seriously. It provides a clear and useful explanation for why price volatility, so useful at low levels in the movement of goods, becomes a serious problem when price swings are too large. Yet the paper is fundamentally dissatisfying.

The start and end points of the recommendations (more so than the analysis) is how to ensure open market liberalization works. And even at that, ends up compromised by the politics of free trade, in which poorer countries can be held to a much higher standard than the richer countries that fund the international agencies providing the advice. So on the one hand, developing countries should further increase their dependence on international markets, while relying on finance (including loans) from the international system—finance that has a poor track record to date, both for timeliness and adequacy. On the other hand, the G-20 countries themselves can continue to disrupt those same international markets, asked only to moderate their public subsidies and mandates for biofuels.

The authors of the report do not question whether the emergence of high levels of volatility in international markets, at a time when international markets are more important to more countries’ food security than ever before, warrants a more fundamental rethink from the governments that are so central to agricultural trade (most of the them G-20 members). Given the mix of agencies involved in drafting the paper, and the critiques some of those organizations have provided of globalization, especially since the food price and financial crises in 2008, this is a pity.

New elements—fundamentally important elements—have been introduced into this final version of the paper, which is the third version to have circulated. For instance, the paper now discusses how to tackle very high levels of food waste, which plagues rich and poor countries alike, though for quite different reasons. Some of the more questionable claims (such as the need to increase food production by 100 percent by 2050) have been toned down, though they remain problematic (the final version suggests a 70-percent increase is needed).

Yet the recommendations are anything but bold. Volatility in international agricultural commodity markets is a problem that is both hurting G-20 interests and that G-20 member states could largely remedy. Instead of promising money to other countries, and thinking of new ways to manage risk, the G-20 need to look to their own policies to consider how to mitigate the causes of uncertainty that are feeding current levels of volatility.

The G-20 includes most of the major exporters of food. Most of the members continue to push for market access for their products—even those, such as China and India, that carefully control their domestic agricultural markets. The G-20 (and the companies they host) have a lot at stake in ensuring international markets function in ways that meet importers’ interests. G-20 members, such as Argentina and India, exacerbated the 2008 food crisis by taxing or banning certain food exports. Others, such as the United States, Canada and European Union persisted in biofuel subsidies that created pressure on demand, and raised prices, at a time when a number of countries were facing food riots. The implications of what the food exporting countries did were not lost on poor net food importing countries (known by the acronym NFIDCs), which are now looking with significantly renewed interest at the possibility of increased food self-sufficiency.

With hindsight, the failure of net food exporters to accept the legitimacy of NFIDC demands for safeguards to protect their access to food, while at the same time insisting on their right to distort international markets with domestic preoccupations was probably the last straw for the Doha negotiations. There is no sign, unfortunately, that the international organizations who authored the report have been given (nor yet taken) the leeway to comment on this crisis in the consensus that has shaped international trade policy since the early 1990s.

Members of the G-20 house the world’s largest agribusinesses, the commodity exchanges that set commodity futures prices, produce most of the grain-fed livestock and provide the subsidies and mandates that prop up the industrial biofuel industry. While the NFIDCs turn to diversifying their food security strategies to encompass more than increasingly unreliable international markets, the G-20 has it within its power to lessen the likelihood and the degree of volatility itself. They have a significant interest in using that power. Unfortunately, there is far too little in the IO contribution to the G-20 Agricultural Ministers’ Summit to help them achieve this realization.

[1] FAO, IFAD, UN HLTF, UNCTAD, and WFP, together with the World Bank, IMF, WTO and the OECD.

Sophia Murphy

April 29, 2011

New primer on excessive speculation in agricultural commodity markets

Specreader IATP has just released a first-of-its-kind collection of writings about excessive speculation in commodity markets and the toll it has taken on agricultural prices. Excessive Speculation in Agricultural Commodity Markets: Selected Writings from 2008–2011 includes a total of 19 different pieces covering everything from the basics of what speculation in commodity markets looks like to why such speculation is responsible for the agricultural price crisis, as well as information on regulating excessive speculation.

In the foreward, IATP's Steve Suppan writes:

As former National Director of Intelligence Dennis Blair told a stunned U.S. Senate Select Committee on Intelligence on February 12, 2009, the global economic crisis, triggered by financial and commodity market deregulation, has replaced Al-Qaeda as the number one U.S. national security threat. Blair’s intelligence agencies forecast widespread regime destabilization if the economic crisis continued to fester without major policy and political reform within two years. His agencies did not specify what reforms were needed nor advocate for their enforcement. That is up to us.

Among others, the extensive list of authors includes Olivier De Schutter, the U.N. Special Rapporteur on the right to food, Michael W. Masters and Adam K. White, Daryll E. Ray, Harwood D. Schaffer, David Frenk and IATP's own Steve Suppan.

Download the full text, or each section individually:

Full Text: Excessive Speculation in Commodity Markets: Selected Writings from 2008–2011

Table of Contents and Foreword

Section I. Overview

Section II. Excessive Speculation and the Agricultural Price Crisis

Section III. Regulating Excessive Speculation 

Andrew Ranallo

April 19, 2011

Agriculture in rural India: How will it cope with free trade?

IATP's Shefali Sharma is part of a delegation visiting rural areas in India to assess the human rights impacts of the country's trade and investment policies.You can view her previous post here.

New Delhi – Last I wrote, I was embarking on a journey into some of the most rural villages of Southern India. Over a four-day period, our team met with groups of farmers—men and women—in the State of Andhra Pradesh. We travelled from west to east across Chittoor District and then took an overnight train to the Northern district of Medak, covering hundreds of kilometers.

Our difficult task was to understand what small farmers in India grow, how much they keep for eating and how much they sell to the market. We wanted to understand if they can continue to sustain themselves and their consumption needs through growing food alone and whether they have access not just to food, but adequate nutrition all year long. 

We also wanted to understand whether a European Union–India Free Trade Agreement (FTA), currently under negotiation, would have an impact on their livelihoods. In particular, what role does dairy and poultry play for their income and food security and what would liberalizing investment with the European Union do to land access and natural resources for local farmers. Historically, the European Union has a habit of dumping both dairy products and poultry parts in developing countries, decimating small-scale dairy and poultry producers in the process. For example, Ghana’s poultry sector was wiped out when frozen poultry parts flooded Ghanian markets and the EU-India FTA is likely to include an “asset”-based definition of investment, including both “movable and immovable property.”

Photo 1 In the village of Yalakallu, we met both with small producers and landless agricultural wage workers (all photos here by Harneet Singh). Often the small farmers were also wage laborers because they did not have income all year from growing food and were forced to work for daily wages as income. A small farmer in the Indian context means ownership of as little as .5 to 5 acres of land. The farmers with whom we met owned on average only one to three acres of land. The bulk of their growing sustains food consumption for their families and any surpluses are sold to the local market. Water, however, is an acute problem in the village and most of the agriculture is rainfed. Increasingly erratic weather means heavy rains at unwanted times and drought in other parts of the growing season. These farmers have two growing seasons. They grow crops like rice, finger millet and vegetables in the rainy season (July to October), and grow lentils like red gram and green gram in the dry season (November to May or June). Some are also growing tomatoes and cabbage to sell to wholesale retailers, but because the prices of tomatoes had recently crashed, many of the tomato growers said they would be watching their tomatoes wither in the fields this year. 

Photo 3 For these farmers, dairy plays an important role because they receive payments every two weeks from cows and buffalo they raise on the farm while feeding them with crop residues from their own fields. Most of the farmers we talked with owned one or two cows that deliver 2–4 litres of milk a day. But a system of small traders delivers this milk to the local dairy. For decades, India has invested in developing a cooperative dairy sector that has been increasingly privatized over the past decade. Cheap imports of skim milk powder from Europe to make cheap reconstituted milk would certainly impact these small farmers.

Photo 2 It was immediately evident that their ability to withstand even a little risk was very small. Some farmers we talked with have tried ventures like small poultry operations (from 1000 to 5000 chicks) to supply to domestic chains, but when the chicks die or get diseases, the company they sell to can abruptly terminate the contract. These risky business arrangements can involve loans and indebtedness—a common feature amongst all of these farmers. Rising food prices haven't necessarily helped these farmers yet because the wholesalers and retailers have retained most of those gains. In other parts of the same district, farmers with up to five acres of land are contracting with domestic broiler chicken firms. They are raising up to 5000 chicks, taking out loans to do the initial investment in setting up these farms. At the end of the year, they earn about 100,000 Indian rupees—spending 50,000 INR on loan repayment, keeping the rest for themselves. The profit margins are low to minimal and debts pass over from year to year. Water for the chickens competes with water for their farms.

Our visit to the next neighborhood in Yalakallu was with landless Dalits (the lowest caste in India’s extremely hierarchical caste system). The women and men depend on wage labor and forest produce for feeding their families. Thanks to India’s public food distribution system, they are able to procure rice and sometimes lentils from government-subsidized ration shops at prices as low as 2 rupees per kilon but rising food prices mean their income brings less and less food. During these times, they compromise on food security—eating rice or finger millet with a watery juice of tamarind. In better times, their diet is supplemented with leafy vegetables and lentils, a key source of protein in these villages.

Owning livestock is difficult. Without land, farmers cannot supplement their income and nutrition through dairy or goats, though many of them keep raise poultry, feeding them with kitchen waste, and local chicken varieties are much hardier than chickens produced for the broiler industry.

It quickly became evident that these small farmers and landless laborers are facing obstacles when it comes to accessing land. Urbanization, real estate developers and industrial operations are increasingly fencing these people out of grazing land. Access to land is critical. Those who own land, even a small plot, can feed their families through most of the year, and have a much better chance at nutrition and healthier lives than their counterparts who live on wage labor alone.

The EU and India’s investment provisions will mean more demand for land and natural resources as EU investors look to extract minerals in India and set up mechanized processing plants. This has already been the case with Indian companies taking over land in the countryside. It also means greater competition for scarce water and electricity.    

We heard numerous stories over the last few days about the tradeoffs and choices these small food growers and agricultural laborers are making, even now. More difficult choices may not be far off.

Ben Lilliston

April 14, 2011

Free trade and human rights: a voyage into India's countryside

IATP's Shefali Sharma is part of a delegation visiting rural areas in India to assess the human rights impacts of the country's trade and investment policies.

I am in Bangalore tonight—a key metropolis for India’s economic growth story. In Bangalore reside many of India’s premier IT companies and back-end offices for multinational companies, be it for telecommunications or travel. But I won’t be staying in the silicon valley of India for long. Tomorrow, a team of us—from an Indian NGO called Anthra, a German development organization called Misereor, the Heinrich Boell Foundation, a photographer and I—will be waking up at the crack of dawn and driving three hours from the South Indian state of Karnataka to another southern state called Andhra Pradesh.

Over the next four days, we'll visit the districts of Chittoor and Medak and talk to people in the villages of Yallakulu, Raipedu and Chennapur. Our purpose? To understand how changes in India’s international trade and investment policies are likely to affect dairy farmers and food growers in some of the most rural areas of India.

India is negotiating a free trade agreement with the European Union and talking about possibilities of a future trade deal with the United States. While such deals often take place behind closed doors between governments and their industrial lobbies, such agreements can have drastic impacts on environmental and other public interest laws and regulations. Trade and investment policies also have a lot to say about who will continue to eke out a living while facing increased competition. Under these agreements, the most powerful and the least powerful must be treated “alike” under the free trade concept of nondiscrimination.

Human rights law, on the other hand, stresses the need to discriminate in favor of the marginalized and vulnerable populations and claims supremacy over all other international law. This principle sets the stage for our next few days where we will be learning about the lives of people dependant on dairy production (something the European Union wants to import into India with much greater ease) and growing other agriculture commodities. In particular, based on the stories they will tell us, we will analyze to what extent the right to food—the “physical and economic access at all times to adequate food or the means to its procurement”—is being respected under the liberalization policies the Indian government has steadily been adopting. And how a Free Trade Agreement (FTA) with the EU may strengthen or undermine this critical right.

We begin this journey after an intensive, two-day consultation in New Delhi on building a Human Rights Impact Assessment of key areas of the FTA that are likely to impact small food producers in India. These consultations provided us with data and information we needed to understand the changes that are taking place in the dairy, poultry, food retail, India’s public food distribution system and in land-based investments. Now, we go to the field to see how these changes are playing out in the lives of vulnerable people themselves. Stay tuned.

Ben Lilliston

March 02, 2011

Eyes on London for global food aid

Talks are taking place this week on an obscure but important piece of the multilateral system: the Food Aid Convention (FAC). Housed at the International Grains Council in London's architectural homage to financial services, Canary Wharf, the FAC involves just a handful of countries: Argentina, Australia, Canada, the European Union and its member States, Japan, Norway, Switzerland and the United States. These are donors (see this nice graphic from the Globe and Mail, part of a larger story, on who contributes global food aid). The convention is meant to provide a framework for negotiations on what counts as food aid, how much food aid each country will commit to humanitarian responses that year, and how to make sure nobody cheats, for example, by promoting exports under the guise of humanitarian aid.

Why is the FAC important? As we enter an era of declining aid dollars, disappearing agriculture surpluses, volatile markets and a rising rate of natural disasters, food aid—or, more properly, food assistance—is a small but vital piece of the web that can prevent death and maldevelopment linked to inadequate nutrition, while contributing to the bigger overall objective of strengthening food security through rural development.

The FAC is the place where a multilateral conversation can take place to make sure food assistance works. But the convention is hardly a perfect forum. For one, the lack of recipient countries as members skews the forum and its debates. Second, historically, member states have used the convention to set a minimum threshold for their food aid donations: actual donations can be far greater. Amounts over and above the food aid convention commitments are not bound by the rules. Third, the convention uses an increasingly obsolete measure to assess contributions: tons of wheat equivalent. Historically, food aid was dealt with by a committee on surplus food disposal—it was about solving an unwanted stock overflow for food exporters, not about responding to the universal human right to food. Today, most countries' food aid programs are more sophisticated and better calibrated to local realities. Most, though not all. The U.S. Congress continues to hold-out against significant reform of its much criticized food aid. (See our 2005 report on U.S. Food Aid).

None of these problems means a multilateral convention is not needed—nor that the FAC cannot be reformed and improved. But it is going to take more political will than has been on display recently. The last iteration of the convention was signed in 1999. The update was scheduled for 2004. Six years later, the convention has still not been renewed. Europe is threatening to walk away. And the U.S. refuses to accept the reforms that every other food aid donor has already made: to make food aid more responsive to need, and more careful not to disrupt food production and trade in the regions to where crisis strikes.

In part, governments say they are waiting for their trade negotiating counterparts to conclude the Doha Round, where some new parameters for what should count as food aid are due to be decided. This never made much sense: Why give a trade forum dedicated to facilitating global commerce the power to set terms for humanitarian responses? In any case, the WTO has had no more success than the FAC in bringing countries to agreement on multilateral treaties. 

A group of NGOs monitoring the talks, the TransAtlantic Food Assistance Dialogue, has a background paper that sets out what is at stake and what reforms should be undertaken. Broadly, the need is for transparency, flexibility, a commitment to food volumes to protect capacity to deliver from volatile prices, a wider understanding of just what comprises food aid, and a role for recipient countries and the organizations engaged in food aid delivery in the treaty's governance. One of the pieces that IATP is watching especially closely is the proposal that countries' contributions to regional emergency reserves should count towards FAC commitments, a proposal outlined by Stuart Clark of the Canadian Foodgrains Bank. IATP is convinced that physical reserves of grain are an important tool for protecting food security. 

So, all eyes are on London. In the heart of the city that, perhaps as much as Wall Street, epitomizes global finance and global wealth, let's push our governments to take some simple, effective steps to do something for the millions who depend on food aid so they can survive and build for a better day. 

Sophia Murphy

February 28, 2011

Commodity market reform: Wall street vs. the regulators

In contrast to the rapidity with which governments moved to use taxpayer funds to rescue the “too big to fail" banks in 2008, the pace of financial and commodity market reform since then has been agonizingly slow. One factor frustrating re-regulation is financial industry resistance to reform, aided in the United States by Republican Party efforts to reimburse the financiers of their November 2010 electoral victory with initiatives to defund the regulatory agencies responsible for implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Before dawn on February 19, the House of Representatives voted to slash the budget of the Commodity Futures Trading Commission (CFTC) by a third. “There would essentially be no cop on the beat,” CFTC Commission Michael Dunn said at a February 23 Senate hearing. CFTC Chairman Gary Gensler had told a House finance committee hearing that such a cut would not only cripple the CFTC’s ability to implement Dodd-Frank reforms, but would prevent his agency from investigating Ponzi schemes and market manipulation. The U.S. Senate is unlikely to support the House Republican assault on regulation, but the Obama administration’s proposal to levy a transaction fee to finance CFTC implementation and enforcement is facing stiff opposition.

However, budgetary sabotage of market regulation is not limited to the United States. IATP, in comments submitted on the revision of the European Commission’s Markets in Financial Instruments Directive (MiFID), noted that the European Securities Markets Authority could not coordinate information among the 27 EU member state market authorities with a staff of just 55, for both financial and commodity markets. The EU’s revised financial and commodity markets legislation cannot meet the Dodd-Frank requirement for a comparably rigorous regulatory system in order for foreign traders to access U.S. markets. On the other hand, if the Republicans and the financial services industry succeed in killing Dodd-Frank, EU traders will be able to access U.S. markets under the self-regulation standards of the Bush administration.

Later on February 19, the Group of 20 financial ministers issued a communiqué, which included calls for several more studies from international agencies, including the International Organization of Securities Commissions, the Organization of Petroleum Exporting States and the International Energy Agency, to determine the causes of “potential excessive price volatility” in commodity markets. The ministers called on their deputies to investigate the “underlying drivers” of that volatility and report to them at their next meeting, April 14–15 in Washington, DC. Noting the effect of “this volatility on food security,” the ministers called for greater investment in agricultural production. President Nicholas Sarkozy had announced that commodity market regulation and food security would be one of three top priorities of the French G-20 presidency in 2011.

Responding to U.S., Canadian and Brazilian opposition to President Sarkozy’s declaration on excessive speculation in agricultural commodities and the need to regulate that speculation, the communiqué delicately stated that its agreement on “indicative guidelines” of trade and financial “imbalances” would take into account the circumstances of “large commodity producers.” On February 14, an international group of nongovernmental organizations, including IATP, wrote to Brazilian Finance Minister Guido Mantega to urge him to discuss with French officials their proposal to the European Commission for an EU commodity regulatory authority. The NGOs argued that it was in the interest of all G-20 members that excessive speculation in commodities be regulated to prevent the speculative bubbles that have been destructive for food and energy security. The French proposal, if implemented, would help prevent such bubbles in EU commodity markets.

On February 16, another group of NGOs wrote to U.S. Treasury Secretary Timothy Geithner to urge U.S. leadership to prevent excessive speculation in agricultural commodity markets. The NGOs supported the G-20 commitment to make the trading of “standardized derivatives” more transparent, but stated that the exemptions sought for “customized derivatives” by the financial services industry would make a mockery of that commitment. Noting the 32-percent increase in the United Nations Food and Agriculture Organization Food Price Index in 2010, the NGO letter stated that the food insecurity and political instability that resulted from food price increases in developing countries was one component of a national security threat to the United States. Commodity market regulation could reduce that threat level. (See previous Triple Crisis posts on speculation and the food crisis.)

The CFTC draft proposed rule on position limits to prevent excessive speculation on commodity markets is open for comment until March 28. The comment deadline on a draft proposed rule on agricultural swaps (currently unregulated, off-exchange trades) is April 4. Both rules, if implemented, would significantly reduce the damage to food security from excessive speculation.

This blog by IATP's Steve Suppan also appeared on the Triple Crisis blog

Ben Lilliston

February 17, 2011

Is famine the new normal?

A version of this commentary appeared in Policy Innovations, a publication of the Carnegie Council.

When global food prices spiked in 2007-08, a hundred million people were added to the ranks of the world’s hungry, pushing the total number over 1 billion for the first time in history. Now, just two years later, we are seeing another food price hike, and more famine is likely to follow.

Earlier this month, the United Nations Food and Agriculture Organization (FAO) published its global food price index for January 2011. The agency’s index was at its highest level (both in real and nominal terms) since the FAO started measuring food prices in 1990. Food riots have already begun in Algeria. As history repeats itself and the second major global food crisis in two years takes shape, it is vital that we learn the lessons of the first crisis, and address its fundamental causes.

Food security depends on stable and predictable weather and markets, and access to resources—all of which have been knocked dangerously off balance in just the past few decades. Since the 1970s, human-caused climate change has brought more frequent extreme weather events worldwide. Farmers used to dealing with the prospect of a lost harvest every ten seasons now experience flood, drought or major pest infestations every second or third year. In 2010 and early this year, Australia, Argentina. China, Russia and Pakistan have all seen extreme weather events disrupt their agricultural production.

The second source of instability is an increasingly chaotic marketplace. In the name of free trade, the U.S. government and World Bank have spent the past three decades forcing the markets of developing countries to open to cheap imports, which undermined local food production. In a cruel irony, poor countries were also pressured to cut support for their own farm sectors, and even forced to sell off emergency food reserves, under the rationale that it would be more efficient to simply buy food on international markets. By 2006, more than two-thirds of the world’s poorest nations were dependent on food imports. Then came the wave of financial deregulation over the past decade, unleashing speculators onto commodity markets, and creating index funds that tied together commodity market prices for food, oil and metals like never before. But the leveraging, bundling and “innovative instruments” that were supposed to reduce risk in these markets had the opposite effect. The result has been a wildly volatile global food market, in which factors unrelated to actual supply and demand often drive prices.

This global double whammy of climate and financial instability has not hurt everyone. Volatility is good for the biggest players in any market. Many agribusiness companies are experiencing record profits now, as they did during the last food crisis. Some African countries will not be hit as hard this time precisely because they insisted on boosting local production instead of relying on global markets. But for the most part, poor farmers are struggling in this changed and hostile climate. No wonder famine has become the new normal.

If we consider world hunger an abomination, and not an investment opportunity, we need to make some big changes. Nearly everyone from the World Bank to the U.N. to the G-20 recognizes that investment is urgently needed to support small-scale farmers, particularly women, in countries facing hunger. Globally, 70 percent of the world’s food is grown on farms less than two hectares (4 acres) in size, tended in large part by women. Increased support should help farmers utilize sustainable practices that reduce costly inputs, produce higher yields and increase farm incomes. Food production for meeting domestic needs must take priority over cash cropping for export.

But there is much more to do. Funding to assist developing-country farmers in adapting to climate change is woefully inadequate. Countries and regions struggling with hunger need greater policy space to protect domestic food production and stabilize supplies. Food reserves should be reexamined as a key tool for addressing shortages, as well as stabilizing food supplies and prices for farmers and consumers. Governments need to get serious about implementing rules to curb excess speculation.

The destabilization of the global food supply, which took decades to achieve, can be undone. But it cannot happen if we fail to learn from the past and support new approaches that would bring greater stability and resilience to farming, markets and food systems.

Jim Harkness

February 09, 2011

Women at the center of climate-friendly approaches to agriculture and water

Extreme weather events consistent with climate change are already playing havoc with the livelihoods and food security of much of the world’s poor. This is particularly true for arid and semi-arid areas of the global South. Yet, most proposals for agriculture being discussed at the U.N. global climate talks and elsewhere focus on new technological developments, like genetically engineered crops. But these approaches are based on still unproven claims and do not fully consider their impact on the natural world.

In a new paper, IATP’s Shiney Varghese examines proven agricultural practices that reduce greenhouse gas emissions and strengthen resilience to climate change through a case study of the Tamilnadu Women’s Collective in India. The collective, a federation of village-level women’s groups with over 150,000 members—the majority of which belong to the lowest caste—follow three principles for food security: 1.) empowerment of women; 2.) democratic local governance; and 3.) multifunctional agriculture.

Shiney will present her findings at the United Nations in New York on February 22 as part of a workshop, titled “Climate Adaptation Challenges from a Gender Perspective.” The workshop is expected to contribute towards the fifty-fifth session of the U.N.’s Commission on the Status of Women. You can learn more about how the Tamilnadu Women’s Collective is using traditional knowledge and practices to increase food security and climate resilience by reading the full paper here and at www.iatp.org.

Ben Lilliston

February 08, 2011

Have your say on land grabs and food price volatility

Back in October, I blogged on the recently constituted High-level Panel of Experts (HLPE) associated with the U.N.'s recently revamped Committee on Food Security (CFS), which brings together the three U.N. food agencies (the Food and Agriculture Organization (FAO), the International Fund for Agriculture and Development (IFAD), and the World Food Program (WFP)). The HLPE is tasked by the CFS to write reports and more generally to provide the benefit of independent advice and thinking. 

Following a meeting of the HLPE in December, the experts have chosen to focus on two (huge) topics. A process of consultation and writing is underway. The topics are land tenure and international investment in agriculture and price volatility. Comments are open to the public—send your comment to the moderator, or register at the forum and you can post (you will have to be approved by the moderator to proceed). The deadline is February 10.

From there, the HLPE is to develop a draft paper on each topic, which will then be posted for a second round of comments. So go ahead—these are some of the biggest issues of our time. Have your say!

And send us your thoughts on IATP's contribution.

 

Sophia Murphy

February 02, 2011

An ounce of prevention...

Press attention has again focused this past month on rising food prices. As Financial Times journalist Javier Blas tells us, panic buying has now reared its head, completing the already present factors of crop failures, export restrictions and food riots that were the trademarks of the 2007-08 food price crisis. Last week, Algeria added 800,000 tons to its January imports, bringing the monthly total to 1.7 million tons—that is already roughly a third of the normal annual purchases for a country that is one of the world's biggest wheat importers. Saudi Arabia has announced it will double its wheat purchases in 2011, to create a stockpile equivalent to a year's demand.

Wheat was already on the food crisis watch list—it's a heavily traded commodity (around 18 percent of the world's wheat crosses an international border) that's in relatively short supply after some bad harvests in some of the regions that supply world markets. Rice is the other big food crop. There, the market is much thinner (about 7 percent of total production is traded internationally). Rice is in relatively plentiful supply, but prices are also rising because importers such as Indonesia and Bangladesh have placed much larger orders than usual on the world market.

Needless to say, such unusually big purchases are only going to drive prices higher. But it is not Saudi Arabia that will worry about the cost. No, that concern is going to fall on much poorer countries, whose governments buy a lot less grain but whose treasuries can much less well afford it.

For all the talk and pledged money to help the world's hungry after the last food crisis, it seems the world is poised for another food crisis. 

Yet the issue is on the global policy agenda, and on the overseas aid agenda as well. The discussion on price volatility is focused on several issues: the need for greater regulation of commodity and futures exchanges; the need for greater transparency of information regarding stock levels; the proposal to ban or curtail export controls; and, the possibility of creating strategic food reserves at regional and global levels to curb short-term price fluctuations. All of these are important. None are solutions to chronic hunger. But the uncertainty in commodity markets is doing nobody a favor, except the firms poised to profit from their superior information and deeper pockets.

The public interest needs prices high enough to ensure natural resources are sustainably managed, while farmers and farm laborers earn a decent income for their work. This is wholly compatible with food at prices people can afford. Tackling the causes of unwanted volatility in world food markets is a central part of the solution. Not sufficient on its own but absolutely necessary.

 

Sophia Murphy

January 25, 2011

Will Obama's trade agenda undermine global food security?

During tonight's State of the Union address, President Barack Obama is expected to tout an expanded trade liberalization agenda as part of his plan to generate more U.S. jobs. But does this push to open up markets square with the Administration's plan to address global food security?

President Obama’s Feed the Future initiative promotes ending global hunger by bolstering food production by small-scale farmers—especially women, through programs led by developing countries. While the U.S. development agenda emphasizes increasing local food production in developing countries, the trade agenda pushes in the opposite direction, aiming to double U.S. exports in the next five years. In a new paper, IATP’s Karen Hansen-Kuhn documents how the Obama Administration’s agricultural trade policy is very much a continuation of past policies—policies that have undermined small-scale farmers and global food security. The paper identifies much needed reforms in U.S. trade policy to recognize current challenges associated with food security and climate disruptions. You can read the full paper here.

Ben Lilliston

December 16, 2010

More ideas for improving cereal markets in West Africa

After my fascinating meeting last week on a West African food security reserve, my second meeting in Ghana was also about cereals. It was a capacity-building workshop for the region entitled, Enhancing the Functioning of Cereals Markets in West Africa. The meeting was called by UNCTAD's Special Unit on Commodities, in partnership with ECOWAS, ROPPA (the association of West African farmers' organizations), and CILSS. The meeting considered two issues: warehouse receipts/warrantage (I'll explain in a moment!) and commodity exchanges. The meeting was rich in content and highly educational. It was fascinating—even though I was unable to stay for the last half day of meetings, and even though some tropical bug found it's way into my system so as to make the last 24 hours tiring and uncomfortable. 

So, first warehouse receipts and warrantage. Warrantage certainly sounds French, and if you look online, it seems the French use the word more, and are the only ones with online definitions. But I think the word must be from the English word "warrant," which in one of its several definitions means a written order from person A that instructs person B to pay a specified recipient a specific amount of money or goods at a specific time. In effect, warrantage refers to the system of using grain as collateral for loans. A financier (in most cases in West Africa, the money comes from a micro-finance institution) lends money to a farmer against grain that the farmer puts into a depot as collateral. In the simplest form, as practiced in Niger, the depot is locked with two padlocks—the farmer has one key and the creditor has another. The system was widely used in the U.S. and Europe in the 19th century. A warehouse receipt works in a similar way: the receipt entitles the bearer to a given amount of money in exchange for the grain stored in an agreed facility. Farmers are able to avoid selling their crop right at harvest time, when prices are low.

Warrantage is found all over the region, and judging from the presentations made by the conference, has seen plenty of success (see here for an account of how it has worked in Niger). The practice remains piecemeal, and there are plenty of questions including coverage, legal protections, ensuring standards and grades, and reforming the finance side to better reflect the constraints and opportunities of grain as collateral. Nonetheless, the conference presentations provided a heartening look at how to get credit into remote rural areas and meet a critical need in the struggle to strengthen food security.

The second topic was commodity exchanges. I have to say, I was far less convinced about the importance of such exchanges during the presentations I heard during the meeting. Commodity exchanges are expensive (it costs tens of millions of dollars to establish one). They require significant administrative oversight and capacity—not something available in abundance in many of the countries in the region. They work at very high levels of aggregation (the Nigerian exchange works with half-tonne minimums, which is a fraction of the minimum used in any of the export commodity exchanges, even within Africa). Aggregation on this scale immediately creates the need for intermediaries—possibly several—between farmers and the exchange. And then, I cannot see how the markets for food grains in West Africa need such a mechanism. The volumes of cereals moving around within the region just do not justify it, and there is no export of food grains to speak of from the region (unlike cotton and cocoa).  

I left before the end, so am hoping to see some kind of concluding report emerge of what others thought. The presenters on the commodity exchanges believed in what they were offering, I am sure. But I encountered more than one skeptic in my conversations around the breakfast table and over coffee. Overall, though, my take-away impression was of a big room full of people who are serious about the business of trading food in West Africa. The network of farmers organizations in the region, ROPPA, was not only present, it was a central pillar of the organization and execution of the meeting. It was heartening to see, and highly educational to listen to.

Sophia Murphy

December 14, 2010

West Africa takes action on the food crisis

While the world's governments gathered in Cancún, ultimately failing to reach a meaningful multilateral commitment to reduce greenhouse gas emissions to help save the planet, I was across the Atlantic in a different tropical country: Ghana. I was in Accra for a meeting organized by the Sahel and West Africa Club: a group of West African countries that meets under the auspices of the OECD.

The meeting was entitled Regional solidarity to address food crises. The discussion was focused on a single proposal, one already adopted in principle by West African governments under the auspices of ECOWAS (the Economic Community of West African States—the whole visit in Ghana was a veritable acronym soup, compounded by the use of two languages, English and French, so that the acronyms kept getting reshuffled in translation). The proposal is that the countries in the region sign an agreement by which any country in the group that faces a food emergency could call upon a regional food security reserve to help alleviate the crisis. The initial proposal is that countries earmark 5 percent of their grain reserves to be on call for emergencies anywhere in the region.

I was invited to chair the working session entitled, "Policy coherence and institutional arrangements at the regional and international levels." I was also a rapporteur, invited to provide a concluding summary of the outcomes of the 1.5 day meeting, together with Ousmane Djibo of the New Partnership for Africa's Development (NEPAD).

The idea seems simple. The grain reserves exist—a number of the cereal boards were represented in Accra—but not every country has one. The need exists (the region suffers from shortfalls on a regular basis, but it's not always the same countries and regions in need). The governments have acted spontaneously to share food in the recent past (with Niger, in 2008). Indeed, the governments have agreed they want this reserve to happen. There is money—both with ECOWAS, and in NEPAD's food security budget (which is 35 percent of its total program budget).

And yet, somehow, the idea has yet to find a champion. A country that is determined to knock the right heads together to move from aspiration to action. CILSS (a forum on desertification that provides technical support to ECOWAS), has done some important intellectual legwork but now we need a project document and a working plan for 2011. The meeting in Accra came up with plenty of elements for such a plan—in fact, an entire series of proposed next steps that would allow the idea to take concrete shape, if put in place. They include mapping the existing warehouses where stocks are held, creating a mechanism for regular information exchange on both stock and overall production levels in the region, and organizing a program of formal exchanges among the cereal boards within the region, so that the staff can start to learn how the different boards work. Finally, a pilot proposal and budget are needed so that the idea can start to be tested in practice. A summary report will be made available on the conference website soon.

Unfortunately, it is less clear whether the people able to make those steps happen are ready to act. 

Let's hope they are. If 2008 was the year of the food crisis that forced a rethink of food insecurity and how to tackle it, I'd like 2011 to the year governments transformed their policy and made changes that really make a difference. Right now the policy world is in love with technology fixes to raise productivity. We've been there before. It matters, but it is not enough. We also need to rethink how the state, farmers and the private sector interact. Done right, food stocks offer a powerful tool. I'll write soon about further meetings in Ghana on two other possibilities: warehouse receipts/warrantage systems and commodity exchanges.

Sophia Murphy

November 16, 2010

Learning from China's food system

China faces the challenge of feeding 22 percent of the world's population on 9 percent of its arable land. What does this really mean for China's farmers, the environment and the world? And what can we learn from China's experience as we grapple with challenges of development, environment and hunger?

IATP President Jim Harkness, who lived and worked in China for 16 years, will examine the challenge of feeding China and explain why, despite two decades of dire warnings, China’s growing appetite has not brought famine to the rest of the world...yet.

Jim’s talk is part of the University of Minnesota’s Institute on the Environment’s fall 2010 Frontiers lecture series, scheduled for noon to 1 p.m., Nov. 17, at 380 VoTech Building, 1954 Buford Avenue, St. Paul.

You can watch the live webcast of his talk starting at noon central time here. Or watch it later at the Frontiers lecture series archive.

Find out more about IATP’s China Initiative here.

 

Ben Lilliston

November 03, 2010

Don't forget the carbon speculators

This week, the World Bank, the U.N. Food and Agriculture Organization and a number of governments are meeting in the Hague at the Global Conference on Agriculture, Food Security and Climate Change. The original goal was to develop a Roadmap for Agriculture that would feed into the global climate change negotiations at the United Nations.

One of the key obstacles to developing a joint approach on agriculture and climate change is financing: finding money to help farmers and communities adapt to the effects of climate change while reducing agriculture's contribution to climate change. Carbon markets have been one of dominant proposals for financing agriculture-related projects on climate change.

IATP's Shefali Sharma is in the Hague and delivered the below statement to conference participants on the risks carbon markets pose to food security and greenhouse gas reduction goals.

Between 2007 and the spring of 2008, the food price index shot up by 85 percent, then in a few months, agriculture commodity prices fell by 60 percent. The massive price spike and drop was devastating for developing countries, particularly net-food importers. The food price crisis drove another 150 million people into hunger. According to UNCTAD, the extent of price volatility during the food crisis cannot be attributed to supply and demand alone. There is now a wide consensus that speculation on commodity markets by financial traders had a significant role to play in creating the crisis.

In our discussions in the Hague on food security, climate change and “innovative finance," the discussion on speculation in carbon markets and their impact on agriculture commodities is glaringly missing. 

Carbon and commodity markets are tied together through futures markets. And carbon trading is essentially derivatives trading. Unregulated derivatives trading, starting with mortgage-backed securities, was a major source of the current global financial crisis. This crisis is the reason most developed countries claim they have inadequate public funds for climate finance. Yet, carbon trading, to the scale at which it is being proposed, would create a large secondary market of carbon derivatives that has thus far been poorly regulated. When bundled with other commodities, such as maize, wheat  or oil, carbon derivatives have a large potential to destabilize agriculture prices. A second way that carbon derivatives can destabilize markets is through over-the-counter trading: a preferred mechanism of financial speculators who can make unlimited bets in commodity markets through this window. In 2008, 44 percent of carbon traded on the European Emissions Trading Scheme was through over-the-counter trades. As a result the carbon price in the ETS has been highly volatile and low.

Land-based offsets included in carbon markets therefore have significant implications on land tenure, food sovereignty, biodiversity and the right to food. These linkages need to be carefully examined and have thus far been neglected as a topic of discussion in this conference.

Industrialized countries and their industries have a legal and historical responsibility under the UNFCCC to mitigate climate change. They should not pass this responsibility to countries who have had little to do with creating the problem, but who nonetheless will bear the largest impacts. 

Reliable, predictable and public finance needs to fund adaptation needs in developing countries and there are several proposals including carbon, transport and financial transaction taxes that are on the table that should be considered.

Ben Lilliston

Reporting on the roadmap at the global conference on ag and climate

IATP's Shefali Sharma is reporting from the Global Conference on Agriculture, Food Security and Climate Change at The Hague.

It is the fourth evening of this six-day long conference, which promises to deliver a “roadmap” of concrete actions on agriculture, food security and climate change through a participatory process. This evening, a draft copy of the roadmap is supposed to be made available at the conference center with the announcement that this was “not going to be a negotiated text” and that only a “chairman’s summary” would be produced as the outcome of the meeting.

For three days now, the meetings have continued nonstop from 10 a.m. to 8 p.m. with plenaries morphing into working groups, morphing into numerous side events and an investment fair in the evening.  Participants have complained about not having any breaks or enough time to engage on the numerous topics. The conference has been dominated by panels and confusion has reigned with regards to the objectives of such a “roadmap” that will simply be delivered onto the participants in a top down manner.  Certainly, the chairmen’s summaries of what happened in working groups the day before illustrates that the conference is not meant to necessarily capture the diversity of views (and there are many, with little consensus on anything!), but steadily drive towards a planned outline of a “roadmap.”

Such a shell of an outline was handed to participants today with the headings such as: “Shared Understanding of the Challenges,” “Shared understanding of the Solutions,” “Urgent Need for Action,” and  “A Roadmap for Action.” This latter heading is further divided into “Policies and Strategies” for the catch phrase of the conference: “climate-smart agriculture,” “Tools and Technologies for Climate-Smart Agriculture” and “Financing for Transformational Change.” And yet the working groups have not necessarily been addressing these issues in any meaningful way, nor has there been adequate governmental and civil-society participation in the debates or time to merit a “shared understanding.”

The conference appears to be dominated by agribusiness interests and those promoting opportunities for carbon-related offsets and market-based approaches to solve the climate crisis in agriculture sector in the Global South. The words “mitigation” and “adaptation” have been used interchangeably, particularly by representatives from industrialized countries such as the U.S. and New Zealand, raising concerns that this so-called “roadmap” of the chair of the conference will simply ignore the legal obligations of industrialized countries who are party to the UNFCCC to reduce their own carbon footprint and greenhouse gases domestically and to set the stage for carbon offsets in agriculture.

In response to the proceedings of the conference, Bolivia and Nicaragua on behalf of the ALBA group of countries (Bolivia, Cuba, Ecuador, Nicaragua and Venezuela) made 13 recommendations to the conference organizers regarding the chairman’s summary as the outcome document of the conference. 
They noted that “a process that genuinely seeks to draw together the linkages between agriculture, food security and climate change should involve government delegates from both the agriculture and climate change sectors in order to support fair and effective solutions to the agriculture and climate crises.“ 

They called on the chair to “honor the commitments” under the UNFCCC on mitigation, adaptation and financing. They said, “Developed countries should not shift the burden of reducing their emission to developing countries through the carbon market and offsetting […]” Instead, they called for a “holistic framework” that also includes water management, biodiversity, agricultural prices, commodities markets, livelihoods, employment, salaries, womens’ and indigenous rights and poverty reduction.”

The ALBA group also supported the findings of the International Assessment on Agriculture Science Technology and Development (IAASTD) and referenced the World People's Conference on Climate Change and the Rights of Mother Earth held in Cochabamba on April 2010. They stressed that ecological agriculture “is the route to food security and adaptation to climate change” and as such adaptation should be the main priority of the conference. They noted that a market-based approach will lead to carbon speculation “and inevitably a carbon bubble. On the contrary, we need to get non-sector speculators out of food futures markets. Speculation in food security that leads to mass malnutrition is immoral and should be illegal,“ they said.

They concluded by emphasizing the Adaptation Fund of the Kyoto protocol as the appropriate channel for financing and stressed that further funding could also be obtained through Special Drawing Rights at the International Monetary Fund.

Tomorrow begins the ministerial roundtable to deliberate on the chair’s summary.

Ben Lilliston

November 01, 2010

Fairness in food from farm to [every] plate: November's Radio Sustain

This month's Radio Sustain podcast is all about food security and farmworker justice: Why does exploitation of farmworkers and modern-day slavery still exist in the United States, and why do some (both domestically and internationally) go hungry while others have more than enough? 

First, IATP Food and Society Fellow Sean Sellers discusses the shocking modern-day farmworker exploitation that takes place throughout the country. In a new campaign, he and IATP Food and Society Fellow Shalini Kantayya have created a video with the Coalition of Immokalee Workers to ask for One Penny More for farmworkers.

Domestically, hunger remains—unsurprisingly—concentrated in low-income urban areas. Mark Winne, author of Closing the Food Gap, is a veteran food security and anti-hunger advocate. He's founded multiple food security organizations, including the Community Food Security Coaltion (CFSC). Winne talks about his ideas on where the food gap comes from and shares his insights on what steps must be taken to close it.

Finally, IATP's Sophia Murphy discusses the state of international food security, and why food reserves hold promise as a tool for stabilizing volatility in agriculture markets that devastates farmers and poor consumers around the globe.

Listen to the latest Radio Sustain (mp3) and check our archives for past podcasts.

Andrew Ranallo