Global demand trumps shrinking food supply
By Bob Collins
Food and agriculture will define 2008. Globally, a new paradigm is emerging. Finite and increasingly costly energy, climate change, and expanding dietary expectations in China and India are combining into a “perfect storm” scenario for global food production.
Food prices are soaring all over the world. The World Bank estimates food prices have risen 80 per cent in the past three years. According to the Scotiabank commodity price index, Canada No. 1 wheat is now worth $798 a tonne, three times what it was over the past two years. Food costs in Sierra Leone have risen 300 per cent in the past year. There are food riots happening on every continent.
Oil pushing $120 per barrel at press time will almost certainly bring the “green revolution” as we have known it to an end. Lugging cheap food commodities to markets half way around the planet is a thing of the past.
A recently released UNESCO report insists “business as usual is no longer an option” as rising food prices threaten to plunge millions of people in the third world into poverty. The UNESCO report calls for more natural and ecological farming techniques and says these should include reducing the distance between production and the consumer.
At apparent odds with UNESCO’s report are the views of Don Cayo. Cayo is a Vancouver Sun columnist and the former head of the Atlantic Institute for Market Studies, a business think-tank based in Halifax.
In an April 4 column (Mass poverty has its roots in developing nation farms), Cayo contends agricultural protectionism is preventing farmers in the world’s poorest nations from abandoning their traditional crops, joining the green revolution, and growing commodity crops that can be traded globally for the foreign currency that will lift them out of poverty. Two of the countries that Mr. Cayo names as examples are Burkina Faso and Haiti.
What he fails to explain is how small impoverished farmers in two of the world’s poorest nations will be able to embrace green-revolution style commodity crop production. (Corn, wheat, rice and soybeans are the big four.)
The average annual income in Burkina Faso won’t pay for half a tonne of 18-18-18 fertilizer. The cheap energy that powered the green revolution is over. A wholesale move to these crops would require:
Land reforms that would amalgamate small farms into viable production units
Mechanization that would replace the inefficient small holders and
Infrastructure to store and ship the resulting production to those high price global markets.
Such change would have to be driven by foreign investment and foreign technology and would ultimately be conducted for the financial benefit of those supplying that capital and technology.
It would be a brave new world for the Haitians and Burkinabé. Most of those small farmers would be forced off of the land and into the city.
Liberated from their livelihoods, they would become part of a desperate pool of cheap labour – labour that could be utilized by foreign investors to make ... stuff. Stuff that could be shipped to dollar stores all over the industrialized world.
It has the potential to be a win-win story. Corn grown on the new farms is exported to the U.S. or Europe where it is turned into ethanol to provide the energy to ship in the stuff and fuel the cars that consumers will be driving to the stores where they will buy the stuff.
The money earned from making the stuff would then be available to buy imported food from those same multi-national agri-businesses who are exporting food from their former farms. A free trade, globalization fairy-tale come true.
Unfortunately, there are a few flies in this ointment.
Firstly, it assumes the developed nations have an endless appetite or need for stuff and that the Haitians and Burkinabé will be able to wrestle a share of the “stuff” market away from China, India and the others who already have their own stuff firmly ensconced in the world marketplace.
They might have a chance by utilizing their natural advantage which, in this case, will be cheap labour, for in the world of free trade and globalization, he who works the cheapest gets to make the stuff. Maybe.
There will be one very pressing question on the minds of Haitians and Burkinabé while they wait for this economic miracle to unfold: What are we going to eat? In fact, it is already the pressing question in both nations. And in more than 30 others around the world.
Food riots have already resulted in the removal of Haitian Prime Minister Jacques Edouard Alexis. The average annual income in Haiti is $270 U.S.
Rice prices have doubled since December and many Haitians are starving.
Haitian agriculture has been in ruin since the 1980’s when a U.S. backed military government slashed import duties on rice and devastated Haitian growers.
The plan was to utilize Haiti’s abundant cheap labour and transform the largely rural nation into an economic powerhouse: the “Taiwan of the Americas.”
The reality is that Haiti has little industry, little agriculture beyond rural subsistence and the lowest income in the western hemisphere. With these meagre tools, it must now cope with soaring global food costs.
Things are little better in Burkina Faso where recent food riots have forced the government to ban food exports.
Cayo will no doubt be appalled at such a blatant attack on free trade and globalization. Cayo envisions an end to third world poverty through agricultural reform and industrialization – catching the “globalization wave.”
It doesn’t seem to have worked well in Haiti and the Burkinabé might want to think twice before they set off on the same path.
Wealth is a relative thing. When it comes right down to it, starvation is the ultimate poverty, and the surest defence against it is a secure supply of affordable locally grown food. Preferably within walking distance.
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