Thanksgiving blessings

25 11 2009

I have been trying to think of a good subject for this week – one that isn’t too dire and downbeat – while we in the United States are in the midst of our national feast called Thanksgiving.   We’re living in a country where I can get a free range turkey with all the bells and whistles – or soybeans from Texas, the best orange marmelade from Scotland or fresh raspberries from Chile.  This abundance comes at a cost –  it is estimated that if United States’ consumption rates were mimicked by the entire human population,  it would take the resources of 5.3 Earths.(1)  It is this abundance that allows us to ignore what is happening in the rest of the world.  Doesn’t have a direct bearing on textiles, but the long term implications are there.

An inescapable fact in most of the developing world – and largely unnoticed in the United States except in slightly higher food prices –  is that in the past couple of years, food prices have soared.  Between the mid-1970’s and 2005,  grain supplies rose and prices fell by about a half, leading “many experts to believe that there was no limit to humanity’s capacity to feed itself.” (2)  But then in 2006, the situation reversed:  food prices rose slightly that year, then increased by about a quarter in 2007, and finally skyrocketed in 2008.  Between 2006 and 2008, average world prices for rice rose by 217%, wheat by 136% and corn by 125% (3)  These rising prices meant that many people could not afford food – and  this led to riots  in 15 countries around the world in 2008.  Countries that could produce enough food for export worried about feeding their own populations, and placed restrictions on exports.  This became a serious problem for countries which were not fully self sufficient in food production.

Susan Payne, chief executive of Emergent Asset Management, said that by 2020 they think there could be genuine food shortages in the world.   During a talk on Africa’s agricultural potential, she showed a series of slides citing chilling statistics:

  • grain stocks worldwide are at their lowest levels in 60 years
  • global warming is turning arable land into desert
  • freshwater is dwindling and China is draining its reserves
  • and the really big problem:  the world’s population is growing by 80,000,000 hungry people each year.

The United Nations Food and Agriculture Organization estimates that in order to feed the world’s projected population in 2050, we need to increase the amount of cereals in the world’s food supply to an amount equal to the total production of Australia in 2008.

Indeed, the food crisis of 2008 has put the spotlight on a new area of business potential, where the payoff could be immense: the area of agricultural investment and the newly lucrative world of food trade.  Financial firms like Goldman Sachs and BlackRock have already invested hundreds of millions of dollars in overseas agricultural projects.   Africa is the focus of their interest because in Africa land and labor come so cheaply that the risks are assumed to be worthwhile.  As a example, an Ethiopian farmer’s  yields for their wheat crops  are only about a third as much per acre as their counterparts in other parts of the world.  But with the addition of advanced implements, and improved seeds and fertilizer, these yields can be doubled.  Ethiopia, like all of Africa, is full of such opportunities.

Andrew Rice wrote an article in the November 22 New York Times Magazine in which he describes what some of the wealthy nations are doing to ensure a food supply for their people.

The nations of the Persian Gulf already import 60% of their food, and Saudi Arabia plans to phase out wheat production by 2016 in order to maintain its supply of underground freshwater.  Instead of relying on technology to increase their capacity for growing food  (along the lines of the Green Revolution of the 1960s),  these countries feel that they must control the means of production.  They want land.

The Saudi Arabian government and individual Saudi bankers and executives have said they intend to spend billions of dollars to establish plantations to produce rice and other staple crops in Africa, in nations like Mali, Senegal,  Sudan and Ethopia.  A newly formed company, Saudi Star Agricultural Development, announced it’s plans to “obtain the rights” to more than a million acres – that’s about the size of Delaware – in Ethiopia.  And in the Rift Valley of Ethiopia, farms are already growing fruits and vegetables for export to the Persian Gulf.(4)

This raises the question:  what about the people who live in Mali, Senegal, Sudan and Ethopia?  Do they benefit from these investments?  Am I the only one who thinks this spells trouble?

(1) New Economics Foundation, http://www.naturalnews.com/022890.html

(2) Rice, Andrew, “Agro-Imperialism”, New York Times Magazine, November 22, 2009

(3)  “Cyclone fuels rice price increase”, BBC News, May 7, 2008

(4) Rice, op.cit.


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