Development | ukwatch.net

The global food crisis

tim — Mon, 14 Jul 2008 15:53:42 +0000

This is not a sudden and unexpected crisis: the signs have been around for some time now. Even though international bureaucrats have been referring to the current problems in the world food situation as 'a silent tsunami', the truth is that this one could easily have been seen to be coming. Even so, its impact has been powerful and already quite devastating, as food shortages and rapidly rising prices of food have adversely affected billions of people, especially the poor in the developing world.

It is also very much a man-made crisis, resulting not so much from ineluctable forces of global supply and demand as from the market-oriented and liberalising policies adopted by choice or compulsion in almost all countries. These policies have either neglected agriculture or allowed shifts in global prices to determine both cropping patterns and the viability of farming, and also generated greater possibilities of speculative activity in food items. Cultivators in developing countries have been ravaged by the fearsome combination of exposure to import competition from highly subsidised agriculture in developed countries, removal of domestic protection of inputs and reduced access to institutional credit - to the point that even the global increase in agricultural prices after 2002 did not compensate sufficiently to alleviate the pervasive agrarian crisis in much of the developing world.

What are the symptoms of this crisis? The most immediately evident feature is the recent rise in food prices. Globally, the prices of many basic food commodities have not risen faster for more than three decades. In fact, even in recent years, food prices internationally had shown only a modest increase until early 2007. But since then they have zoomed, such that International Monetary Fund (IMF) data show a more-than-40% increase in world food prices over 2007, and even more rapid increases in the first three months of this year. The UN Food and Agriculture Organisation (FAO) food price index, which includes national prices as well as those in cross-border trade, suggests that the average index for 2007 was nearly 25% above the average for 2006. Apart from sugar, nearly every other food crop showed very significant increases in price in world trade over 2007. This trend has accelerated in the first few months of 2008.

The increase has been marked in essential food grains that are staples for most of the world's population. Global wheat prices increased by 77% in 2007 and rice prices increased by nearly 20%, which are some of the most rapid annual increases in the past half-century. Since the start of 2008, world rice prices have soared even more, increasing by nearly one-and-a-half times just in the first 100 days of the year. Wheat prices have been highly volatile in the current year, increasing by 25% in one day and then falling even more sharply in early April, but are still well above the levels of most of last year. The price of corn - another major staple especially in Latin America - has more than doubled in the past two years.

Across developing countries there is evidence of growing shortage of food in retail trade, even if not always in domestic production. Price rises for food grains have varied in intensity according to how well different governments have been able to manage the global impact and ensure domestic supply. And prices of other food items - ranging from meat and vegetables to edible oils - have also skyrocketed.

The impact of this has been felt most sharply in poor countries where most people tend to spend around half of their family budgets on food items. There have already been food riots in countries as far apart as Haiti, Guinea, Mauritania, Mexico, Morocco, Egypt, Senegal, Uzbekistan, Yemen, Bangladesh, Philippines and Indonesia. And many more countries are threatened by social unrest as rising food prices cause not merely dissatisfaction but the spread of hunger. In several countries in Asia, such as Pakistan and Thailand, troops have been deployed to guard food stocks and prevent seizure of grain from warehouses.

Even the institutions that have encouraged policies that have brought the situation to this pass have had to sit up and take notice. The World Bank President now estimates that such high food prices could cause more than 100 million people in low-income countries to be pushed back into deeper poverty.

There are many explanations being offered for the recent increase in global food prices. It has been argued that this is essentially demand-led, the result of several years of rapid economic growth and rising incomes in some of the most populous nations (particularly China and India), hence the growing demand for food. It is pointed out that as per capita incomes rise, even though people may spend a lower percentage of their income on food, the absolute amount of demand still increases. And even when they consume less food grain directly because of a change in food consumption patterns, the indirect demand for grain still increases, often more than proportionately, because of more demand for animal products, since livestock also need to be fed and some like cattle require even more grain than humans. It is estimated that each kilo of beef requires seven kilos of grain to be produced.

However, the contribution of increasing global demand, while it has a role, should not be overplayed, especially in the case of China. In fact, a study by Germany's National Office for Agricultural Produce Prices rejected the claims that growing demand in China is the main reason for the current spike in world food prices and said that China's alleged influence on markets is often exaggerated. It noted that while over the past decade Chinese domestic consumption of milk and dairy products rose by more than five times, the bulk of this increase in demand was satisfied by a simultaneous expansion in Chinese production. Currently China meets more than 90% of its needs in wheat, maize and rice, and it is aiming for producing 95% of its estimated future demand for these items.

In certain products, China's involvement in global markets has played a role in affecting prices. In 2006 and part of 2007 Chinese pork production had collapsed because of animal disease, causing higher imports of both pork and corn feed for pigs to increase domestic pork supply. Similarly, 40% of world production of soyabean is currently imported by China, largely for use as animal feed. Chinese imports of other primary products such as cotton, vegetable oils, rubber, timber and animal skins have soared. But these are not responsible for higher world prices of wheat and rice. In any case, it should be noted that this is not the first time that the world economy has witnessed increases in income of a significant portion of the population, and these previous phases were not accompanied by such sharp increases in food prices. Rather than these simplistic explanations, therefore, it is likely that there are other forces at work. Five major aspects affecting supply conditions have been crucial in changing global market conditions for food crops.

First, there is the impact of high oil prices, which affects agricultural costs directly and indirectly in a variety of ways. This is because of the growing significance of energy as an input in the cultivation process itself as well as in transporting food. Changing cultivation technology has meant ever-growing reliance on chemical fertilisers whose production costs are directly affected by oil prices. Greater mechanisation of agriculture in the form of tractors, harvesters and threshers requires more oil to run these machines. The spread of irrigation, especially ground water exploitation, requires energy in the form of diesel or electricity to run pump sets.

This rise in energy costs has had more of an impact than before because in most countries, especially in the developing world, governments have reduced protection and subsidies on agriculture. This means that high costs of energy directly translate into higher costs of cultivation, and therefore higher prices of output.

Second, there is the biofuel factor: the impact of both oil prices and government policies in the US, Europe, Brazil and elsewhere that have promoted biofuels as an alternative to petroleum. This has led to significant shifts in acreage to the cultivation of crops that can produce biofuels, and diversion of such output to fuel production. For example, in 2006 the US diverted more than 20% of its maize production to the production of ethanol, Brazil used half of its sugarcane production to make biofuel, and the European Union used the greater part of its vegetable oil seeds production as well as imported vegetable oils to make biofuel.

The US has led this shift globally. President George Bush provided an impetus to domestic ethanol production by providing large subsidies, in a desperate attempt to reduce dependence upon petroleum once it became evident that the imperialist attempt to control Middle East oil supplies had come unstuck with the failed invasion of Iraq. According to the IMF, corn ethanol production in the United States has accounted for a minimum of 50% of the increase in global corn output since 2006.

In addition to diverting corn output into non-food use, this has also reduced acreage for other crops and has naturally reduced the available land for producing food. Soyabean production has been affected by the acreage shift, and therefore oilseed prices have gone up. Meanwhile, the use of maize to make ethanol has caused corn prices to rise, and increased the price of animal feed, thereby causing increased prices of livestock and therefore meat and dairy products.

The irony is that biofuels do not even fulfil the promises of ensuring energy security or retarding the pace of global warming. Ethanol production is extremely energy-intensive, so it does not really lead to any energy saving. Even in countries like Brazil where sugarcane rather than corn is used to produce ethanol, it has been argued that the push for such production has led to large-scale deforestation of the Amazon, thereby further intensifying the problems of global warming. Indeed, recent scientific research suggests that the diversion of land to growing biofuel crops can produce an enormous 'CO2 debt' from the use of machinery and fertilisers, the release of carbon from the soil and the loss of CO2 sequestration by trees and other plants that have been cleared for cultivation. Yet, as long as government subsidies remain in the US and elsewhere, and world oil prices remain high, biofuel production is likely to continue to be encouraged despite the evident problems. And it will continue to have adverse effects on global food production and availability.

Third, the impact of policy neglect of agriculture over the past two decades is finally being felt. The prolonged agrarian crisis in many parts of the developing world has been largely a policy-determined crisis. Once again, even international officials are now admitting what has been obvious to independent observers for several years. FAO Director-General Jacques Diouf has admitted that the crisis had been building for decades: 'The situation we are in is the result of inappropriate policies over the past 20 years.'

These inappropriate policies have several aspects, but they all result from the basic neoliberal open market-oriented framework that has governed most economic policy making over the past two decades. One major element has been the lack of public investment in agriculture and in agricultural research. This has been associated with low to poor yield increases, especially in tropical agriculture, and falling productivity of land. Greater trade openness and market orientation of farmers have led to shifts in acreage from food crops to cash crops that have increasingly relied on purchased inputs. But both public provision and government regulation of input provision have been progressively reduced, leaving farmers at the mercy of large seed and fertiliser companies and input dealers and allowing input prices to increase quite sharply. There have also been attempts in most developing countries to reduce subsidies to farmers in the form of lower power and water prices, thus adding to cultivation costs.

The lack of attention to relevant agricultural research and extension by public bodies has denied farmers access to necessary knowledge. It has also been associated with other problems such as the excessive use of ground water in cultivation; inadequate attention to preserving or regenerating land and soil quality; and the over-use of chemical inputs that have long-run implications for both safety and productivity. Similarly, the ecological implications of both pollution and climate change, including desertification and loss of cultivable land, are issues that have been highlighted by analysts but largely ignored by policy makers in most countries.

Reversing these processes is possible, and of course essential, but all this will take time and also will require substantial public investment. So until then, global supply conditions are likely to remain problematic. And meanwhile, increases in global prices of food are likely to be exploited by large agribusinesses based in the North rather than benefiting farmers in low-income countries.

There are also issues related to the loss of cultivable land because of industrialisation. Predictably, this has been most rapid in recent times in fast-growing Asia, but that is also because the process was already more advanced in the more industrialised regions of Latin America. For example, in Vietnam it is estimated that around 40,000 hectares of rice paddies are lost every year to urban construction, industrial zones and roads. In Thailand, the amount of land under cultivation dropped by more than 13% between 1995 and 2005.

Fourth, there is the impact of recent climate change, which has caused poor harvests in different ways, ranging from droughts in Canada and Australia to excessive rain in parts of the US. It is projected that warmer and earlier growing seasons will increase crop susceptibility to pests and viruses, which are expected to proliferate as a direct result of rising temperatures. Some more arid regions are already more drought-prone and in danger of desertification. The rapid melting of glaciers in Asia is of huge consequence to China and India, where important rivers such as the Yangtze, Yellow and Ganges are fed by such glaciers. This will deprive the hinterland of much-needed irrigation water for wheat and rice crops during dry seasons, which is of global significance since China and India together produce more than half the world's wheat and rice. Once again, official policy has been tardy in considering such problems, much less addressing them.

Fifth, there is the impact of changes in market structure which allow for greater international speculation in commodities. It is often assumed that rising food prices automatically benefit farmers, but this is far from the case, especially as the global food trade has become more concentrated and vertically integrated. A small number of agribusiness companies worldwide increasingly control all aspects of cultivation and distribution, from supplying inputs to farmers to buying crops and even, in some cases, retail food distribution. This means that marketing margins are large and increasing, so that direct producers do not get the benefits of increases except with a time lag and even then not to the full extent. This concentration also enables greater speculation in food, with more centralised storage.

It is probably not a coincidence that this has happened over the same period that governments across the developing world in particular (with the notable exception of China) have reduced public holding of food stocks. The US Department of Agriculture estimates that global stock holding of wheat is at its lowest level in 30 years, despite substantially increased world demand. It should be noted that the same multilateral donors (the IMF and the World Bank) whose representatives are now breast-beating about the food crisis have earlier played a major role in this reduction of state involvement, by encouraging or forcing developing-country governments to reduce 'wasteful' and 'expensive' holding of food grain stocks.

This has inevitably reduced the capacity of public intervention to prevent speculative activity from dominating markets and prices. And because public food reserves necessarily take time to build, they cannot quickly be created to ensure a reduction of speculation-induced price rises. The point has been made bluntly, if belatedly, by Jose Graziano, FAO's Regional Representative for Latin America and the Caribbean: 'The crisis is a speculative attack and it will last... Speculative attacks become possible when you have low reserves.'

The point is that such speculation is not likely to dissipate any time soon. As the global financial system remains fragile with the continuing implosion of the US housing finance market, investors will continue to search for other avenues of investment to make up their losses and find new sources of profit. Commodity speculation has increasingly emerged as an important area for such financial investment. Such speculation by large banks and financial companies explains at least partly why the very recent period has seen such sharp hikes in price. Once again, government policies, especially with respect to the financial sector, are largely responsible for this, since financial deregulation has allowed many more complex forms of speculative activity that affect trade in commodities.

The role played by private traders and speculators has been especially evident in countries where aggregate domestic supply has been adequate to meet demand but there has not been enough in the hands of the public agencies. Thus in India, private trade played a role in pushing up prices of essential items even though there was no absolute shortage in aggregate terms, because the public agency had not procured enough to dampen market expectations of price rises.

So it is clear that the entire process that has led to the current food crisis has been largely policy-driven, which is probably good news because it means that policies can also reverse the process. But it is important for governments to recognise the precise role played by specific policies and think strategically on how to change them in a progressive and sustainable manner, rather than simply engage in knee-jerk reactions.

Unfortunately, though, it seems that knee-jerk responses are dominating at present. Of course, some of these are necessary to deal with the immediate crisis and ensure access to food especially for the poor. Of 58 countries whose reactions are tracked by the World Bank, 48 have imposed price controls, consumer subsidies, export restrictions or lower tariffs. But another response has been to slash import duties: at least 24 nations have reduced duties and value-added taxes on food items and allowed cheaper imports. Many countries are restricting or prohibiting exports, especially of rice or wheat. These include Egypt, Argentina, Kazakhstan, Cambodia, India and China. Meanwhile, net importers, often poor countries in Asia and Africa, are scrambling to secure supply contracts as the domestic production of food staples cannot meet consumption requirements.

Meanwhile, governments are once again turning their attention to the need to maintain public food stocks. In January, the Malaysian government announced that it would create a new agency to stock up on oil, rice and other items. Other countries in Asia are also busy stockpiling grain. The Indian government has put fresh energy into ensuring that the public agency procures enough wheat from the recent harvest to ensure more than adequate buffer stock.
Another fallout of the food crisis is the greater willingness of some governments to consider genetically modified crop production. Thus, the Mexican government, which had banned GM crops for a long time, is now considering lifting the ban on genetically modified corn. It is possible that similar bans in the European Union and some countries of Africa could also be reconsidered if the aggregate shortages continue.

In this context it is worth considering the case of countries that have managed to avoid severe crisis. Venezuela in Latin America stands out as a country where food prices have increased only marginally, largely because oil revenues have been used to subsidise essential items consumed by the poor. In Africa, Malawi has not only weathered the current storm but has achieved recent success in food production, allowing it to achieve food self-sufficiency and even export, by ignoring World Bank advice and extending substantial subsidies for fertiliser and other inputs to farmers. Even China, blamed so often for high global prices, has actually increased domestic production to meet domestic needs and also stockpiled large quantities of grain, so that rice and wheat prices have not risen much in the country despite rapid global inflation in these crops. In India, the banning of futures trading in four essential commodities last year, the recent control of trade and the ability of the government to use public procurement to feed the Public Distribution System have played some role in keeping grain price rises below the global increases.

However, in India even small increases in food prices directly impact upon the poor and adversely affect food consumption, because most workers do not get inflation-indexed incomes. In India the problem is more severe because such a large proportion of the population is already malnourished and thereby more prone to debilitating illness and inability to achieve normal growth. Even small reductions in food consumption can have devastating social effects in such a context, quite apart from the political destabilisation that can occur.

All this suggests that real solutions to the present food crisis will not be found until governments across the world seriously reconsider the neoliberal economic strategies that created the crisis in the first place.

_Jayati Ghosh is a Professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University, New Delhi._

Civil Society’s Choice at the G8 Summit

Ellie Keen — Thu, 10 Jul 2008 00:50:07 +0000

The Road of Genoa or the Road of Gleneagles?

The Group of Eight came into being in 1975 as the G7 at a time that the world was embroiled in deep economic crisis, much like today. Its main aim was to coordinate the macroeconomic policies of the rich countries at a time of stagflation as well as to forge a common strategy vis-a-vis the developing world, which had loosened its political and economic dependency on the First World during the heady days of decolonization, national liberation struggles, and the emergence of the Organization of Petroleum Exporting Countries (OPEC) as an economic power.

The G7 were not successful in coordinating their policies, with the US under Ronald Reagan aggressively pursuing a cheap dollar policy that brought on recession in Germany and Japan. They did, however, come together in a united front against the developing countries, putting their weight behind the neoliberal structural adjustment policies imposed by the World Bank and IMF on more than 90 developing and transition (post-socialist) economies. The structural adjustment programs rolled back the economic gains achieved by the South in the 1950’s and 1960’s.

In the 1990’s, the G7 became the main promoters of corporate-driven globalization, for which the road had been paved by the radical deregulation, radical liberalization, and radical privatization that took place in developing countries under structural adjustment. The G7 also provided strong support for the World Trade Organization (WTO) as the main agency for the process global trade and investment liberalization demanded by their corporations.

The late 1990’s, however, brought about, not the increasing prosperity for all promised by neoliberal, pro-market policies but rising absolute poverty, increasing inequality, and the consolidation of economic stagnation in the South. The collapse of the third ministerial of the WTO in Seattle in December 1999 marked the achievement of a critical mass by the forces of opposition created by the contradictions of globalization.

With the realities of globalization exposed, the summits of the G7—now G8 with the incorporation of Russia—became a lightning rod for the rising global opposition. At the G8 Summit in Genoa in June 2001, three hundred thousand people came together under the uncompromising program of “No to the G8.” The battle lines were clearly drawn, with the Italian police or carabineri contributing immensely to polarization by erupting in a riot that took the life of one activist and injured scores of others.

Elements within the G8 realized that the image of being a hegemonic directorate of globalization was not good for the future of the body. Led by the New Labor government of Tony Blair and Gordon Brown in Britain, the G8 underwent a facelift. A new discourse was forged, the key substantive elements of which were debt forgiveness for the poorest countries, the raising of aid levels to 0.7 per cent of the GDP of the G8 countries, a massive aid package for Africa, making trade serve development, and tackling climate change. The new watchwords when it came to process were “partnership,” “consultation,” “global social integration,” and the “millennium development goals.” The battle was for the soul of global civil society. The high point of this new look was the Gleneagles Summit in 2005, which was choreographed by an alliance between the Labor Government, entertainment superstars Bob Geldof and Bono, and influential British NGO’s. Several hundred thousand people who journeyed to Scotland found themselves manipulated into becoming a chorus for the glittering Aid for Africa concerts that were staged simultaneously in different parts of the globe.

By the time 2007 came along, the glitter was gone. The idea of global civil society partnering with the G8 had soured as none of the G8 governments reached the 0.7 of GDP target, aid to Africa fell short of the $20 billion promised at Gleneagles, the “Doha Development Round” had become a big joke, and serious action on climate was nowhere to be seen. Instead, the G8 communique at the Heiligendamm or Rostock Summit emphasized techno-fixes for climate change, lectured developing countries about not restricting investment by transnational corporations, and issued a thinly veiled warning about China getting preferential access to raw materials in Africa. Under the leadership of civil society in Germany, militant denunciation and confrontation of the G8 was the preferred civil society response, with thousands of demonstrators trying to penetrate the site of the leaders’ meeting to shut it down. With the dominant cry being “G8—Get out of the way,” the Heiligendamm protests retrieved the militant tradition of Genoa that had been suppressed at Gleneagles.

So we come to the G8 Summit here in Hokkaido, Japan. We have not only in Bush, Sarkozy, Brown, and Fukuda a group of discredited leaders with very low ratings at the polls in their own countries. We have as well a G8 that is, more than ever, lacking in legitimacy as the typhoon unleashed by the project of globalization that it has promoted is wracking the globe in the form of the simultaneous crises of skyrocketing oil prices, rising food prices, global financial collapse, and worsening climate change. Against this backdrop, Japanese and Asian social movements are faced with the choice of taking either the Road of Genoa or the Road of Gleneagles—that is, to deepen the G8’s crisis of legitimacy or, as in Gleneagles, to salvage the G8 once again. The greatest gift that the Japanese movement can give to global civil society is by leading the struggle to make the Hokkaido Summit the final summit of the G8.

Walden Bello is president of the Freedom from Debt Coalition and senior analyst of Focus on the Global South.

Ending Poverty in a Carbon Constrained World

Ellie Keen — Sun, 06 Jul 2008 13:12:07 +0000

Rapid Transition and New Development Directions

Several years ago the International Red Cross sent me on behalf the World Disasters Report to assess the early impacts of climate change on vulnerable populations. What I saw in Tuvalu, in the South Pacific, and learned from other small island states, about being resilient in the face of an unpredictable and extreme climate, may hold lessons now for how many millions more can withstand the upheaval of global warming on our small island planet. Tuvalu is living a uniquely modern paradox. It won the lottery of the internet age being awarded the domain name '.tv.' Allegedly it has a bigger delegation in Los Angeles to sell rights, than it has here at the UN to protect its political interests. But, lying just a few metres above sea level, Tuvalu is in acute danger of losing its real home, just as it benefits from its new, virtual one.

We can learn a lot from the mere fact that island communities like this survived for so long on remote shards of land, exposed to the full force and vagaries of nature To do so, first they had to respect their obvious environmental limits. Next they evolved resilient local economies that helped them cope with extreme and unpredictable weather. These were, of necessity, based on reciprocity, sharing and co-operation, and not unlimited growth fed by individualistic, beggar-thy-neighbour competition.

Today, as collectively we face and exceed the limits of the earth's bio-capacity, we are challenged at the global level to learn in a few short years, lessons that such small communities often took millennia to arrive at. Our task is enormously complicated by the intricate interdependence of the modern global economy, the unbalanced distribution of power and benefits within it, and a pace of international decision making that, until the ice started to melt so rapidly, I would have described as glacially slow. Fortunately there is much that we already do know to guide our actions, drawing on decades of experience in dozens of countries and through thousands of community based organisations around the world.

For example, the Working Group on Climate Change and Development, a coalition of leading NGOS based in the UK, that we helped to form, spelt out in a series of reports looking in detail at different global regions, how climate change, if unchecked, stands not only to block further progress on the Millennium Development Goals, but to reverse gains hard won over many years. Our conclusion was that irreversible global warming, which appears perilously close, would mean not just greater hardship for millions, but the end of development as we have understood it for the last half a century.

One severe drought in Australia has already partly triggered world-wide food shortages and high and rising prices, creating shocks that ripple from the High Street in Britain to the markets of Dhaka and Port au Prince. And the UK's official Hadley Centre for Climate Prediction and Research, recently concluded based on a moderate scenario for change, that the percentage of the Earth's land surface prone to extreme drought having already trebled to three per cent in less than a decade, will rise to fully one third by 2090, with droughts also longer in duration.

More worrying still, the edge of the climate cliff is not clearly visible. Scientists such as NASA's James Hansen believe we may already be tipping over. This means not just stabilising atmospheric greenhouse gases, but reducing them, with unimagined implications for the global economy. Oddly-named 'positive environmental feedbacks' are volatile, hard to predict and may be terrifyingly sudden. So we must act on precaution and the best estimates available.

Because the economy is a wholly owned subsidiary of the biosphere we have no choice but to act, using precaution and the best information available. An individual may recover from financial bankruptcy, but if we allow our ecological debts to bankrupt a climate conducive to human civilisation, geological history shows that it could take tens of thousands of years to be restored if, indeed, it ever is.

We already know that people living in poverty are hit first and worst by global warming. This and the challenge of reducing poverty in a carbon constrained world calls for a new development model which is climate proof and climate friendly. From now on, all decisions will need to be scrutinised for whether they will increase or decrease vulnerability to climate change. We must look through the lenses of building resilience at the community level, and reducing risk. And, it is the communities at risk who must shape our plans.

Parallel to the approach of the IPCC, the recent report of the International Assessment of Agricultural Knowledge, Science and Technology showed that a massive shift of support to small scale farmers using a diverse range of agro-ecological methods would be one of the most efficient ways to build resilience, inoculate against food crises, and insure against increasingly hostile weather patterns. Community-based coping strategies such as the use of seed banks, water management, vulnerability mapping, storm and flood protection that works with the local environment, and the conservation of forests and other ecosystems - all represent effective ways for threatened communities to adapt.

If replicated and scaled-up, small-scale renewable energy projects promoted by governments and community groups can help both to tackle poverty and reduce climate change. But this needs political commitment, significant new funds from governments and a major shift in priorities for energy lending by the World Bank and other development bodies. There is no either/or approach possible; the world must meet both its commitments to achieve the MDGs and tackle climate change. The two are inextricably linked.

Here we crash headlong into another, equally large problem. It is clear that conventional economic growth will happen in poor countries as a consequence of effective poverty reduction. But at a global level, the policies designed to pursue growth have become a mask for making the rich, richer, whilst leaving the poor with few benefits and abandoned to deal with growth's environmental consequences. During the 1980s - what was called lost decade of development - from every $100 worth of global economic growth, around $2.20 found its way to people living below the absolute poverty line. A decade later that had shrunk to just $0.60c, and the actual mean income of those living under $1 per day in Africa also fell.

There has been, in effect, a sort of 'flood-up' of wealth from poor to rich, rather than a 'trickle-down.' It means, perversely, that for the poor to get slightly less poor, the rich have to get very much richer, implying patterns of consumption which, in a world facing climate change, cannot be sustained. It now takes around $166 worth of global growth - made up of all those energy-hungry giant flat screen TVs and sports utility vehicles - to generate a single dollar of poverty reduction for people in absolute poverty, compared with just $45 dollars in the 1980s. Earnings of between $3 and $4 per day is the approximate level at which the strong link between income and life expectancy breaks down. So, let us ask what would happen if we agreed $3 per day as the minimum level of income to escape absolute poverty?

Using the ecological footprint measure, if the whole world wished to consume at the level of the United States - a consumption pattern which has been fuelled, incidentally, by the credit binge which led to the current economic crisis - we would need, conservatively, over 5 planets like earth to support them. But, under the current pattern of unequally distributed benefits from growth, to lift everyone in the world onto a modest $3 per day, would require the resources of around 15 planets like ours. Where, you might ask, will the other 14 come from?

To tackle poverty in a carbon constrained world, then, we need a new development model, based on better measures of progress, and a shift from relying on unequal global growth to serious redistribution. If we think of the planet as a cake, we can slice it differently, but we surely cannot bake a new one. Climate change is not the only reason that we have to learn to live with far fewer fossil fuels. Development must also contend with the high and rising price of oil, and the imminent global peak and long decline of oil production.

What, if any, guides do we have to surviving these multiple shocks?

One country, much maligned, provides a glimpse of a near future that many more may face. Almost like a laboratory example, positioned on the flight path of the annual Hurricane season, since 1990 Cuba has lived through the economic and environmental shocks that climate change and peak oil hold in store for the rest of the world.

The sudden loss of cheap Soviet oil and its economic isolation were so extreme at the end of the cold war, and its reaction to the shock was so contrary to orthodox approaches, and relatively successful, that it was dubbed in Washington the 'anti-model.' Then oil imports dropped by over half. The use of chemical pesticides and fertilisers dropped by 80 percent. The availability of basic food staples like wheat and other grains fell by half and, overall, the average Cuban's calorie intake fell by over one third in around five years.

But, serious and long-term investment in science, engineering, health, education, plus land redistribution, reduced inequality and research into low-input ecological farming techniques, meant the country had a strong social fabric and the capacity to act.

At the heart of the transition after 1990 was the success of small farms, and urban farms and gardens. Immediate crisis was averted by food programmes that targeted the most vulnerable people, the old, young, pregnant women and young mothers, and a rationing programme that guaranteed a minimum amount of food to everyone. Soon, half the food consumed in the capital, Havana, was grown in the city's own gardens and, overall, urban gardens provide 60 percent of the vegetables eaten in Cuba. The threat of serious food shortages was overcome within five years.

Time magazine recently called for a 'War on Climate Change,' and, interestingly, Cuba's experience echoed what America achieved in a more distant time of hardship during World War II. Then Eleanor Roosevelt led the 'victory gardening movement' to produce between 30-40 percent of vegetables for domestic consumption, and public education campaigns warned that wasting fuel was like fighting for the enemy. Cuba demonstrated it is possible to feed a population under extreme economic stress with very few fossil fuel, but there were other surprises too.

As calorie intake fell by more than one third, of necessity the proportion of physically active adults more than doubled and obesity halved. Between 1997-2002, deaths attributed to diabetes halved, coronary heart disease fell by 35 percent, and strokes and other causes by around one fifth. The approach was dubbed the 'anti-model' because it was both highly managed and led by communities, it focused on meeting domestic needs rather than exports, was largely organic and built on the success of small farms. The same countrys approach to disaster preparedness and management is also instructive.

Compared to the deaths and destruction in New Orleans following Hurricane Katrina, when Hurricane Michelle hit Cuba in 2001 only 5 lives were lost, and recovery was quick. It was due to proper planning, and a collective approach managed by government, but owned at the local level. Disasters expert Dr Ben Wisner commented on the evacuation of 700,000 of Cuba's 11 million population, 'This is quite a feat given Cuba's dilapidated fleet of vehicles, fuel shortage and poor road system.' At least one analyst suggests that the Cuban experiment, 'may hold many of the keys to the future survival of civilisation.'

Currently, according to our calculations, in a given calendar year the world as a whole goes into ecological debt around October 7th - by which time we have consumed more and produced more waste than ecosystems can deal with. The results are seen in climate change, oceans emptied of fish, and desertification. Forty years ago Robert Kennedy said that economic growth measured everything apart from that which really matters. But it is possible to assess if we are achieving human development whilst living within our environmental means.

nef's own 'Happy Planet Index', compares the relative success of nations at delivering long life expectancy and high levels of well being, compared to their size of ecological footprint. The results reveal many middle income countries performing well, with good life expectancy and well-being, and relatively low footprints. Strikingly, some of the best performers are small island states. Somehow, they have worked together to produce more convivial communities, whilst respecting environmental limits.

The UN faces huge challenges. Not least is how to recognise and protect the large and growing number of people we can expect to be displaced in a warming world. The climate refugee crisis will dwarf that of political refugees. What will happen to the nationhood and economic areas of countries that could disappear entirely, like Tuvalu? How can we change our locked-in thinking about economic development, and reorganise around the principles of resilience, social justice, sufficiency, ecological efficiency, and the capacity to adapt?

We might begin by asking, as acid tests:

Will what we do make people more or less vulnerable?
Will it move us toward truly sustainable, one-planet-living?
Will it move us fast enough to prevent irreversible, catastrophic climate change?

When the people of Tuvalu first encountered Europeans in the 19th century, they gave them the name palangi. Victorian travellers translated the word to mean "heaven bursters," a reference to their ship's guns. Now, some of our lifestyles truly threaten to burst the heavens. At the very least, to achieve poverty reduction in world threatened by climate change, we know that rich countries must radically cut their own consumption to free-up the environmental space in which others can pursue, as a first step, the Millennium Development Goals.

The good news is that we now know from the literature on human well-being, that making the rich, richer does nothing to increase their life satisfaction. On the contrary, numerous studies confirm that once your basic needs are met, you are just as likely to have high life satisfaction, whether your ecological footprint is large or small. My conclusion is that a new development model is needed as much, if not more, in countries like Britain and the US as the majority world. We have to demonstrate that good lives do not have to cost the earth.

Impassable ecological obstacles lie on the path down which we chase the shadows of over-consumption to deliver our well-being, expecting the poor to be grateful for and crumbs that fall from our plates. The good news is that another way is not only possible, as the philosopher A.C. Grayling writes, it is better, richer and more enduring.

Andrew Simms is policy director and head of the climate change programme at nef (the new economics foundation). This article is from a speech he gave to the UN ECOSOC special session on climate change and the MDGS, New York, 2 May 2008.

The Insanity of Biofuels

tim — Mon, 12 May 2008 23:47:21 +0000

There is something obscenely ironic that whilst the poor starve and struggle over soaring food prices, the rich convert food into fuel so they can carry on driving in their large gas-guzzling vehicles.

The rich world is rushing to invest in biofuels as one of the solutions to climate change. Fuels made from corn, sugar, or maize are seen as producing less carbon dioxide than conventional fuels from oil. As Western nations belatedly struggle to come to grips with the daunting challenge of radical reductions in climate changing gases, biofuels offer a theoretical solution.

What biofuels conveniently mean for America and Europe is that they can carry on driving and flying, thinking they have a clean conscience over climate change. Such is their appeal that last year the US Congress mandated a fivefold increase in their use. Europe, too, is committed to raising the share of biofuels in transport from current levels of around 2% to at least 10% by 2020.

The only problem for those who support biofuels is that despite this rush, never a week goes past without further evidence of their harmful effects. These range from rainforest destruction to being partly to blame for rising food costs.

In March, the Nobel Peace Prize winner and chair of the UN Intergovernmental Panel on Climate Change, Rajendra Pachauri was the latest in a long line of people who warned of the problems of biofuels.

Speaking at the European Parliament, he said “We should be very, very careful about coming up with biofuel solutions that have major impact on production of food grains and may have an implication for overall food security.”

Pachauri warned that the rush to convert corn to ethanol in the US was having an adverse knock-on effect on the agricultural sector. A fifth of the US’s corn crop is now used to brew ethanol for motor fuel. As farmers rush to plant corn, the acreage of other crops, particularly soybeans, has been cut. The rocketing demand for corn has also meant the price has gone up. Ironically other critics argue that the process of converting corn into ethanol actually releases more carbon dioxide per gallon than simply burning conventional fuels.

Then last month, Pachauri’s warning was followed by both the Bolivian President Evo Morales and President of Peru, Alan Garcia, who said using land for biofuels was putting food out of reach for the poor. They were responding to Brazil's President Luiz Inacio Lula da Silva who had tried to dismiss claims that biofuels are responsible for the recent rise in global food prices.

Also last month, the UN's special rapporteur on the right to food, Jean Ziegler, did not mince his words when blaming biofuels for making the poor starve. "This is silent mass murder,” he said. Last year he said biofuels were “a crime against humanity.”

As the politicians squabble over whether biofuels are to blame for rising food prices, the poor continue to starve and the price of food becomes ever more expensive. Global food prices have increased by 83 percent in the last three years, according to the World Bank. As basic food staples become too expensive to buy for millions, anger has spread rapidly. At least six people were killed in riots over food prices that contributed to the dismissal of Haiti’s prime minister last month. Millions are struggling to survive on the island after food prices have increased 45 percent since the end of 2006.

In Africa, there have been riots in Ivory Coast, and Senegal and Egypt where the military is assisting baking bread. In Mozambique some six people were killed and in Cameroon an estimated 100 killed in protests linked to the food prices. In Burkina Faso, where there were also riots in February over food, the unions have now called for a general strike. In South Africa, there have been protest marches.

Meanwhile in Asia, fifty people were injured after factory workers protested against the food rises near Dhaka. Indonesia has also seen protests, whereas Vietnam has seen panic buying. Pakistan has reintroduced some rationing, while India has banned the export of most rice. The ruling coalition in Malaysia was very nearly ousted by voters who cited food as one of their major concerns. Last week, the Philippine government said it was introducing “rice access cards” for help the poor buy grain.

In Latin America, there have been riots in Mexico, whilst farmers went on strike for three weeks in Argentina. In Peru, farmers blocked key road links. In Europe, Russia, which has seen a six per cent increase in food prices since the beginning of the year, has been forced to freeze the price of milk, bread, eggs and cooking oil.

Coupled with rising oil prices, rising food prices are creating global tension. “This is a perfect storm,” President Elías Antonio Saca of El Salvador told the World Economic Forum on Latin America in Cancún, Mexico last month. “How long can we withstand the situation? We have to feed our people, and commodities are becoming scarce. This scandalous storm might become a hurricane that could upset not only our economies but also the stability of our countries.”

Other voices agree the situation is getting critical. Earlier this month, Ban Ki-Moon, the UN Secretary General warned that the global food crisis could have grave implications for international security, economic growth and social progress. “If not handled properly, this crisis could result in a cascade of others and become a multidimensional problem affecting economic growth, social progress and even political security around the world,” Ban told a conference in Ghana.

Last week, Ban Ki-Moon went further, saying that the UN was setting up a special task-force to address the food shortages, which was designed to avert “social unrest on an unprecedented scale”. Ban said “The first and immediate priority, that we all agree, is that we must feed the hungry”.

A second priority should be to ban biofuels that could be used for food crops. The inescapable fact is that biofuels are partly to blame for the rising food costs. The International Food Policy Research Institute in Washington argues that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices. The UN Food and Agriculture Organization of the United Nations comes up with a slightly smaller figure of biofuels being responsible for between 10 to 15 percent rise in food.

So concerned was it over biofuels impacts that last month, the European Environment advisory panel urged the EU to suspend its 10 per cent goal by 2020. The panel, made up of some of Europe's most prestigious climate scientists, called the 10 percent target “overambitious” whose “unintended effects are difficult to predict and difficult to control.” Laszlo Somlyody, the panel's chairman and a professor at the Budapest University of Technology and Economics said: “The idea was that we felt we needed to slow down, to analyze the issue carefully and then come back at the problem.”

Rather than slow down, countries in the EU are speeding up. In Britain, new legislation passed last month means that all gasoline must contain at least 2.5 per cent biofuel. The same day that the legislation was passed, one of Britian’s most respected conservation charities, the Royal Society for the Protection of Birds, condemned the law as “over-hasty” and “utter folly”.

The situation is now getting even more ironic. As many simply cannot afford to eat, the rich world is now squabbling over the huge subsidies it gives its biofuel producers to produce more biofuels. Last week, European biodiesel producers triggered the prospect of a new transatlantic trade war by urging the EU to impose penalties on “unfair” biofuel subsidies from the US.

The subsidy allows US exporters to undercut European rivals by up to a quarter. The subsidy system is also being exploited by ruthless commodity traders, who are actually adding to climate change.

Known as “splash and dash” within the industry, the legal trick makes a mockery of the purpose of biofuels, which are meant to reduce emissions of carbon dioxide. The biofuel is being needlessly shipped from Europe to the US and then back again. The traders buy biodiesel on the European market and then ship it to the US. There it is “splashed” with gasoline which means that conventional gasoline is added to the biodiesel so that traders can qualify for the export subsidy. Then the cargo is “dashed” or shipped back to Europe and resold at a subsidized price which then undercuts European producers.

Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson, said "We will not under any circumstances tolerate unfair trade." The EU and US are now threatening to take their argument to the World Trade Organisation.

It is also beyond irony that as they say they will not tolerate trade that is unfair to their own industries, they seem content to tolerate the fact that millions of people are slowly dying of hunger….