Agribusiness Meets Reality

I recently said that the words of those who criticize Laudato Si’ have no substance. Now I’ll try to be more specific.

My concerns about the environment are based on an undeniable fact: Regardless of whether we manage to slow the birthrate, the human population will reach 9 billion people by 2050. The world has never had this many people before and since we can’t see the future we have to plan according to the facts we do have. If our goal is to support the projected number of people, our first priority should be food and water.

Currently, we don’t have enough farm land to feed 9 billion people. It is estimated that we need to increase agricultural land by 65-85 million hectares over the next decade. This is 160-210 million acres—equivalent to approximately 50% of all U.S. cropland. Compared to the total area currently being farmed globally, (1,410 million hectares) this may not seem like much, but keep in mind that we are losing 10-12 million hectares each year to urbanization and desertification, and that over the last 20 years global acreage has been holding steady.In other words, the land we do have is in danger. Why? Much of it is due to agricultural policies.

We are currently operating on an agribusiness model for agriculture established in the U.S. after World War II. Those who imposed this model on the United States, which include Secretary of Agriculture and Mormon apostle, Ezra Benson, wanted to drive young men off of farms and into low-paying industrial jobs in the North, leaving the business of agriculture to a few big players. To this end, they tore down FDR’s New Deal protections for farmers. One result of their efforts was the disappearance of parity, which assured farmers a living wage. Under the policy of parity, the U.S. government bought excess crops for a fair price and waited for a shortage, or higher prices. Then the government would sell the excess. This provided a living wage to farmers and also resulted in a profit for the taxpayer. Instead of parity, today we have subsidies, courtesy of the taxpayer. We also have shortages. (Hauter, Wenonah, Foodopoly: The Battle Over the Future of Food and Farming in America. The New Press, 2012.) Could some of the shortages be due to these policies?

According to AEW Capital Management, from 1975 to 2005, major agricultural commodity prices were stable, based on the marginal cost of production. In the event of a poor crop in a particular commodity, buffer inventories could meet demand. In that event a year or two of average crops would replenish inventories. This changed in 2005.

“In the face of rapid demand growth, global stocks of key crops have been depleted to the point where there is no longer any practical buffer. Globally, stocks of coarse grains and oilseeds have been at historically low levels for the past five to six years. After 2005, if there was a poor crop (or even just an average one), someone somewhere in the world simply did not obtain that commodity. In short, in order to balance supply and demand, demand has to be rationed, and the only way this occurs is through pricing.”

The effects of harmful policies on U.S. farmers are now being felt by farmers around the world. This is a problem for many reasons. Small farms improve the land and protect the ecosystem. Agribusiness, on the other hand, depletes the land and by establishing monocultures it invites new types of pests and diseases. It also destroys the jobs associated with small farms. In addition, agribusiness can be a violent business.

The fight over agricultural land is acknowledged as a major motivation for the conflict in Ukraine. Unfortunately for would-be policy makers, the culprits aren’t limited to U.S. companies. Germany is in on it, as is Finland and China, and their questionable activities are promoted by the World Bank and the IMF.

A Reuter’s article implies that military turmoil dictates that governments open farmland to foreign investment:

“Ukraine, known as Europe’s bread basket, has the eighth largest agricultural area in use globally and is the world’s third largest exporter of corn and sixth largest grain grower, potentially making it a prime target for foreign investment.

“But the government has been wary of allowing foreign land sales, fearing rural unrest, and the value of its 32 million hectares (79 million acres) of farmland has been limited by its division into small plots with relatively low productivity.

“However economic turmoil emanating from the conflict between pro-Russia rebels and government forces in the east has intensified the need for change, said Heinz Strubenhoff, agribusiness investment manager for the World Bank’s International Finance Corporation in Ukraine.

“Opening the farm sector, a key driver of the economy, to outside investors has long been backed by the World Bank and International Monetary Fund (IMF), and Strubenhoff believes changes will now happen sooner rather than later.

“’It’s time to think about privatization. They need to prepare everything to allow for farm land sales (to foreign and domestic investors) in three to four years,’ Strubenhoff told the Thomson Reuters Foundation.

“Currently, farm land cannot be bought or sold in Ukraine, but companies can sign onto long-term leases with small holders.”

However, others have identified the corporate drive for foreign farmland as a motivation for conflict rather than an outcome of it. The Oakland Institute  recently reported that German lawmakers are calling the conflict in Ukraine a smokescreen for the seizure of high-quality cropland by foreign firms funded by the World Bank and the European Bank for Reconstruction and Development. Birgit Bock-Luna, who heads the office of Niema Movassat, a deputy for the opposition Left faction in the German parliament, told RIA Novosti (Sputnik News) that “a group of faction representatives had officially inquired with the German government on the actions of the country’s state-run banking group Bankengruppe KfW that they said is behind the seizure of Ukraine’s arable lands, some of the best in Europe.”

Ukraine has a temporary ban prohibiting the sale of farmlands to foreign entities until January 2016. But German agricultural concerns – AGRARIUS AG, germanagrar CEE GmbH, KTG Agrar SE, Agroton and Alfred C. Toepfer International (ADM) – seize land using leasing schemes and generous loans from German and global money lenders.

Bock-Luna said the Ukrainian government that came to power in Kiev after the coup has been actively giving away farmland in return for loans from international creditors.

“The previous Ukrainian administration was opposed to further relaxation of agricultural laws, but this changed after the coup, with the help of the World Bank and the European Bank for Reconstruction and Development,” she added.

There is growing interest in farmland in other parts of the world as well. A 2011 Aljazeera article cites a 2008 report by Grain, an international non-governmental organization working on behalf of small rural food producers that has been warning policymakers about these trends. According to Grain, China, Egypt, Japan, South Korea, Saudi Arabia, India, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates are all buying or leasing fertile land in other countries where food is not always abundant.

“Cambodia, which receives aid from the World Food Program, has leased rice fields to Qatar and Kuwait, while Uganda has granted concessions on its wheat and maize fields to Egypt, and interested parties from Saudi Arabia and the United Arab Emirates are making approaches to the Philippines.”

In addition, some land purchases in Ukraine, Senegal, Nigeria, Russia, Brazil and Paraguay, by banks and financial institutions, are of a speculative nature.

When you consider all of these things, it is shocking that instead of a discussion about the implications of these practices for the future, the critics of Laudato Si’ give us warmed-over economic theory. They would like us to believe that they merely object to the degree of change that has been suggested, but it’s obvious that their goal is to head off change completely. Unfortunately for the rest of us, this isn’t merely about ideology. This is about 9 billion people by 2050. My fear is that unless we establish policies that are lean and smart, we won’t make it.

I think it’s clear that the corporate model as we know it won’t work—it is inefficient, destructive, overindulged, irresponsible, disorganized and stupid. For example, agribusiness is so focused on profit it has created a self-serving loop of cheap commodities for processed food and animal feed, in which it produces crops overseas for its own use. Agribusiness helps no one but itself.

Agribusiness not only destroys jobs, communities and the land, it pollutes water. If the rivers and oceans are further degraded, we won’t be any better off regardless of the additional crops we are able to grow. Further, putting increased acreage into crops will only increase the possibility of environment degradation.

Finally, if the livelihood of millions of people disappears through agribusiness technology and automation, they will starve regardless of corporate schemes to increase yield. Yet the critics’ endless, monotonous protestations aim to block any change at all. You’d think they would be worried, but they are not.

President Obama recently suggested that Americans should eat less meat. This is the kind of change we need. Livestock competes with humans by consuming a large percentage of the crops they produce. If everyone ate as much meat as Americans, we would need several earths to support everyone. Instead, the global consumption of meat is increasing due to higher standards of living in developing countries. Of course, the Republicans objected to Obama’s suggestion. Unfortunately, the Democrats aren’t doing much better.

Hilary Clinton is considered the frontrunner in the upcoming presidential election, but the Clintons have a poor record in the areas that will be the most sensitive in the future: Bill Clinton signed off on NAFTA and the WTO, and currently the relationship between Hilary Clinton and Monsanto is too close for comfort. Finally, foreign agribusiness concerns that support the Clinton foundation are displacing African farmers. (Pearce, Fred, The Land Grabbers:The New Fight Over Who Owns the Earth, Beacon Press, Boston, 2012) I never planned to use this blog for political strategy, but I have to say we can’t afford eight more years of these policies.

On this issue alone I think Bernie Sanders is our best best. For example, he not only supports family farms, he supports fair wages for American farm workers, he’s defending Vermont’s family farms against agribusiness giants such as Dean foods, and he opposes free trade agreements.

The next 30 years will demonstrate what the human race is made of. So far the only course of action our business leaders can think of is to take us to war. Apparently their plan is to fight each other to the death for the last scrap of land. We can do better than that. We need planning based on the facts and with the aim of finding a civilized way to cope with a serious problem.

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