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How Famine Lurked Behind Vienna Toast Where Joe Cocker Crooned
Collusion Alleged
Manmade causes helped spur the food shortages that the World Bank says left 967 million of the world’s 6.7 billion people undernourished this year. The recipe for famine included government policies, speculation in commodities markets and a failure to invest in agriculture. Now the cost of potash may help bring the world a fresh bumper crop of hunger.
In eight federal lawsuits since September, six potash producers that do business in the U.S. have been accused of colluding to raise prices and limit supply. Four of the defendants -- Potash Corp. of Saskatchewan Inc., Mosaic Co., Agrium Inc., and Uralkali -- say the cases have no merit. Silvinit said it is waiting to see which courts will hear the cases before it comments while Belaruskali said that Anatoly Makhlai, deputy director for ideology, wasn’t available to comment.
Fourfold Increase
The cases all involve class-action claims. Plaintiffs include Minn-Chem, Inc., a farm chemicals supplier based in Sanborn, Minnesota; Gage’s Fertilizer & Grain Inc. of Stanberry, Missouri; Kraft Chemical Co. of Melrose Park, Illinois; Westside Forestry Service Inc. in Novi, Michigan; Wabaunsee County, Kansas-based Feyh Farm Co.; William Coaker Jr., a farmer in Leakesville, Mississippi; Gordon Tillman, a farmer in Wildwood, Florida; Shannon Flinn, a farmer in Santa Rosa County, Florida; and Kevin Gillespie, who was described by his lawyer, Craig Essenmacher, as an “end user” based in Grand Traverse County, Michigan.
Earnings for Uralkali, based in Berezniki in central Russia, will climb fourfold this year on the higher prices and 9.3 percent in 2009, according to Merrill Lynch & Co. estimates. Competitors including Potash Corp. and Israel Chemicals Ltd. of Tel Aviv have followed suit on prices.
Producers raised fees in 2007 and 2008 as demand grew from farms in developed countries, which were trying to elevate crop yields after grain prices climbed. The cost of both food and potash kept rising, putting the nutrient out of reach for some family operators and cooperatives in developing nations.
Brazil, India, China
Farmers in Brazil, India and China had under-applied potash and depleted the soil for years by then -- further fueling demand, said Bernard Brentnall of Fertilizer & Chemical Consultancy, an advisory firm in Hampton Hill, England. Global potash production from 2005 through 2007 rose 6.1 percent, according to the U.S. Geological Survey.
“There are no substitutes for potash,” said Stephen Jasinski, a commodity specialist at the U.S. Geological Survey, the science agency for the Interior Department, in a Nov. 24 e- mail. Alternatives don’t provide the nutrient in the quantities needed “for intensive farming,” he wrote.MORE
American Agriculture companies profit at the expense of the people they are supposed to be helping
‘Behind Closed Doors’
U.S. farm and shipping lobbyists have stifled efforts to simplify aid deliveries, leaving Africans to starve when they might have been saved, said Andrew Natsios, a professor at Georgetown University in Washington who led USAID, the Agency for International Development, from 2001 to 2006.
“No one can take the high moral ground against it, so they hide behind closed doors and kill it,” he said. “It’s all done behind the scenes.”
The shortcomings of the half-century-old humanitarian program show how efforts to protect American shareholders can have unintended consequences. After approving $2.62 billion of food aid in June, Congress has since authorized 267 times that much in the $700 billion financial system bailout and begun debate on requests from U.S. automakers for billions more.
Lawmakers this year failed to pass President George W. Bush’s January proposal to buy food closer to starving people rather than shipping American produce. In May, Bush renewed his request to spend 25 percent of the program locally after food riots broke out in Africa, South Asia and the Caribbean.
Companies Benefit
Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd. accounted for 47 percent of 2007 commodities spending for aid, according to the U.S. Department of Agriculture. The program was created in the 1950s, partly to reduce domestic surpluses. The regulations require that almost all the peas, corn and other crops come from American sources, effectively steering the bulk of the business to the biggest food-trading companies.
The rules also stipulate that 75 percent of the food must be transported on U.S.-flagged vessels, benefiting ship operators, including Liberty Maritime Corp., based in Lake Success, New York, and Sealift Inc., of Oyster Bay, New York. In 2007, the program’s shipping contracts were worth $385 million, according to the USDA.
Politics isn’t the only manmade cause of the disaster that befell Ayako and his family in Ethiopia. Dozens of interviews on six continents show that the global food crisis also has roots in the failure by governments of developing countries to invest in agriculture, in a three-fold jump in fertilizer prices over two years and in speculators who doubled bets on grain futures and drove prices to records.
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ADM, the world’s largest grain processor, spent $1.78 million to lobby Congress and federal agencies though Dec. 3 this year, according to the Center for Responsive Politics, a non- partisan research group in Washington that tracks spending on campaigns and lobbying. Over the past two decades, the company’s campaign contributions amounted to $8.2 million, 91st among political donors, the center said. ADM declined to comment for this story.
Cargill, a closely held company that is the world’s largest agricultural business, spent $660,000 on lobbying this year, the center said. ADM, Cargill and Bunge lobby on other issues besides the aid programs. Cargill favors the added flexibility of local purchase, spokesman Bill Brady said in an e-mail.
Bunge, the biggest oilseed processor, devoted $395,000 to lobbying, according to the Center for Responsive Politics. The company advocates the use of U.S. crops to ensure quality, said Deb Seidel, a company spokeswoman.
‘Support Not There’
“The support is not there in the Congress” to overhaul the system, said Collin Peterson, a Minnesota Democrat who is chairman of the House Agriculture Committee.
Peterson, mentioned as a possible Agriculture Secretary under President-elect Barack Obama, received the second-most donations from crop processors and farm groups among non- presidential candidates in this election cycle, $236,500, according to the center. He ranked behind Senator Saxby Chambliss of Georgia, the top Republican on the Senate Agriculture Committee, with $304,349.
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Dec. 11th, 2008 08:38 pmVia: Shakesville
World Bank’s ‘Wrong Advice’ Left Silos Empty in Poor Countries
World Bank’s ‘Wrong Advice’ Left Silos Empty in Poor Countries
‘The Washington Consensus’
Created in 1944, the Washington-based World Bank Group spent much of its first 35 years dispensing low-interest loans, grants and development advice to poor countries with an eye toward promoting self-reliance. In 1980, the bank’s executives began attaching conditions to loans that required “structural adjustments” in the recipients’ national economies. The mandates were designed to have poor countries cut import tariffs, reduce government’s role in enterprises such as agriculture and promote cultivation of export crops to attract foreign currency.
The philosophy, which came to be known as “The Washington Consensus,” was based in part on assumptions that importing basic grains would be inexpensive and that farmers in developing nations could earn more producing exports. Food prices had fallen for years and few economists thought that would change, said Mark Cackler, manager of the bank’s Agriculture and Rural Development Department in Washington.
Exporter to Importer
In 2007 and the first half of 2008, an index of more than 60 food commodity prices compiled by the FAO rose 82 percent. While costs have since eased, they were 20 percent higher on Nov. 1 than at the end of 2006.
The increases hit hard in countries such as El Salvador, which had adopted the principles of the Washington Consensus in return for loans. El Salvador’s Central Reserve Bank said the total amount of the lending was “not available.” The Agriculture Ministry did provide this measure of their effects: The country was a net exporter of rice 20 years ago; now it imports 75 to 80 percent of what it consumes.
The World Bank has “given consistently wrong advice,” said Jose Ramos-Horta, the president of East Timor in Asia and the 1996 Nobel Peace Prize winner.
“It is their advice -- that buying externally is cheaper than producing -- that has resulted in this,” he said.MORE
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Dec. 1st, 2008 03:26 pmMalcolm Gladwell: What we can learn from spaghetti sauce
Malcolm Gladwell searches for the counterintuitive in what we all take to be the mundane: cookies, sneakers, pasta sauce. A New Yorker staff writer since 1996, he visits obscure laboratories and infomercial set kitchens as often as the hangouts of freelance cool-hunters -- a sort of pop-R&D gumshoe -- and for that has become a star lecturer and bestselling author.
Sparkling with curiosity, undaunted by difficult research (yet an eloquent, accessible writer), his work uncovers truths hidden in strange data. His always-delightful blog tackles topics from serial killers to steroids in sports, while provocative recent work in the New Yorker sheds new light on the Flynn effect -- the decades-spanning rise in I.Q. scores.
Gladwell has written two books. The Tipping Point, which began as a New Yorker piece, applies the principles of epidemiology to crime (and sneaker sales), while Blink examines the unconscious processes that allow the mind to "thin slice" reality -- and make decisions in the blink of an eye. A third book is forthcoming."Pure Gladwell: cutting through conventional wisdom to define a new way of understanding how something works."Washingtonian
