The hunger boom

Ananya Mukherjee-Reed
17 October 2009

This is the first of a series of articles written exclusively for OneWorld South Asia
by Ananya Mukherjee-Reed, professor of Political Science and Development
Studies at York University in Toronto, Canada. The series will explore several
aspects of the ever-growing involvement of business in ‘development’, its effects,
responses from the various social movements, and what they tell us about the
current approaches to thinking about development.

One billion people, 1.02 billion to be precise, are hungry: we hear from the Food and
Agriculture Organisation (FAO) as it releases its Report on the State of Food Insecurity.

Accompanying this unprecedented level of hunger are lowest levels of food aid ‘in living
memory’, warned the World Food Programme (WFP), which has collaborated on the report.

According to the WFP chief, the dramatic reduction of food aid may lead to the “loss of a
generation of children.”

There is, however, a piece in the story of this enormous rise in hunger that has found no
space in these deliberations. For that you would have to turn to Fortune magazine, and its
2009 ranking of the fastest growing industry globally.

‘Food production’ ranks first by revenue and fourth by profits, led by Archer Daniel
Midlands. Of course, food production is not the only industry that affects the food situation.

In fact, vital resources for food production are increasingly getting integrated, vertically and
horizontally, at breath-taking speed, with terrible effects on the small farmer in the
developing world.

It is this corporatisation of food production, and in particular, the alarming rise of

speculation in food that several social movements in the Global South are struggling
against. Tellingly, the term ‘speculation’ finds no mention in the Food Insecurity Report;
neither does the phrase ‘food sovereignty’ which is the main concern of these movements.

As this omission indicates to us, international institutions, governments and corporations

(who are central actors in this theatre), continue to treat hunger as a problem of scarcity
and distribution – shifting focus away from the underlying processes which render hunger as
a source of private profits.

Once basic needs such as food and water emerge as a source of private profitability, then
redistributive measures, such as the minimal guarantees advocated by the MDG campaign,
are difficult to ensure.

Why? The reason is simple. Governments and policy regimes which are committed to
private control of food (and related resources) are unlikely to be equally committed to the
expansion of public control over food. These are two opposing world views. Unless a basic
need such as food is publicly controlled with guaranteed universal access, its distribution is
likely to be irregular at best – subject to electoral concerns or dependent upon public
pressure.

Reaping profits

As we see in India, the outcomes can be deeply ironic. While astute politicians reap electoral
gains by promising cheap food for a hungry nation, they go unpunished for instituting policy
regimes that engender hunger in the first place (such as the systematic contraction of the
Public Distribution System).

And globally, the same companies whose profits peaked during the food crisis, are rushing
now to profit from food aid. Several agribusiness giants have launched the Global Harvest
initiative, a business venture which “will not only bring food to millions of starving people,
but it's ultimately a lucrative source of revenue for their companies.”

In other words, the very just demands for redistribution can also become sources of political
and economic gain – unless they are coupled with more fundamental demands. This is why
major social movements, such as the Via Campesina or the Movimento dos Trabalhadores
Rurais Sem Terra (MST) in Brazil or Nayakrishi Andolan in Bangladesh seek explicitly to go
beyond the distributive approach.

Their aim is to eliminate private ownership of resources required to produce our basic needs
and establish collective/ public control over them. Only then, the movements contend, can
the power relations which allow some to profit from the basic needs of millions be altered.

Basic needs as ‘opportunity’

We already know that large corporations saw greatly increased profits as the incidence of
hunger grew, and ‘food riots’ broke out in many countries of the South. But there is a more
disturbing trend that receives even less attention in the dominant policy discourses. This
involves the rise of speculation in food (as well as water and land).

A recent article in Fortune, aptly titled Hunting for Havens suggests that “Investors looking
for safe havens should consider dipping into agricultural commodities”, because “the supply-
demand balance for agricultural products looks tight over the next five years."

Some reports suggest “investment funds now control 50–60% of the wheat traded on the
world’s biggest commodity markets... and speculative money in commodities futures –
markets where investors do not buy or sell a physical commodity, like rice or wheat, but
merely bet on price movements – has ballooned from US$5 billion in 2000 to US$175 billion
to 2007” (See Making a Killing from Hunger).

On April 30, 2008, the Wall Street Journal reported that index fund investment in corn,
soyabean, wheat cattle and hogs rose from $10 billion to an astounding $47 billion since
2006.

Note the entry of the ‘small’ investor in the hunger market. Deadly Greed, a report
published in Der Spiegel during the food crisis had the following story:

"Andreas Grünewald is a star among small investors in Germany. He launched his

Munich Investment Club (MIC), together with eight fellow students and his
grandfather, in 1989 with about €15,000 ($24,000) in initial capital. Grünewald, a
business school graduate, now manages more than €50 million ($80 million) for
the MIC's 2,500 members.

Commodities are a big issue for Grünewald. "They are the megatrend of the
decade," he says. His portfolio in this sector is already worth about €15 million
($24 million). ... Grünewald says he wants to "remain broadly invested" in water
and agricultural commodities, in particular, and "to expand those investments if
possible." His bet on wheat alone has produced a handsome profit of 93% to date.

... Scruples are in short supply in Grünewald's investment club. "Most of our
members tend to be passive and profit-oriented," he admits. At MIC's national
events, few people bring up the social consequences of his investment tips. Riots
because of exploding rice prices? Aid organisations in a state of high alert? None
of this matters much to the preferred suppliers and apostles of profit in the small
investor community.

The finance industry regularly introduces new investment "products" for every
sexy sector, no matter how questionable (emphasis mine, Der Spiegel, April 23,
2008)."

Note that Grunewald is a ‘small’ investor, a university student. The money he ‘manages’ is
also the savings of ‘small’ investors – i.e. the savings of working people, invested often
through small private avenues or through pension fund managers who promise lucrative
returns (ABN Amro was able to offer 20%). As jobs in the North become scarce, futures
become uncertain, the ‘small’ investor may well choose such option, and become
participants in the perpetuation of hunger.

The same process is evident in water. Visit Waterthenextoil.com, an investment portal. Its
estimate for the Indian water market, for example, is about $287 billion with a projected
growth rate of 40% annually. Companies such as Shell, GE, Siemens, XsunX, Inc., and
Hendrx Corp are aggressively pursuing these markets:

"The sheer scarcity of water makes it more valuable than oil TODAY. Long under
priced, the cost of water should continue to climb as sources diminish and usage
increases. Already certain forms of potable water are more than oil.

Bottled water sells for roughly $1.50 a liter at the gas station right now, while
gasoline sells for around $2.50 a gallon. With 3.78 liters in a gallon, bottled water
would be selling for $5.67 a gallon—twice the price of gasoline. While we teeter on
the brink of a looming global crisis, the fact remains that water is virtually
inelastic — as prices rise, consumption does not decrease.

... We are strong proponents of the belief that water will likely be bought and sold
in much the same ways as other commodities (waterthenextoil.com)."

The latest in this line of ‘investments’ is farm land, a key resource for the production of
food. Buy hedge stocks in farm land, urge the experts:

"This hedge can outperform gold. In Britain, the farmer outpaced the gold owner.
Expanding land values rode up 115% since 1983, versus gold at 81%. ... If you’re
worried about the dollar, the economy, or any other problem, buy farmland today.
This is hard to do directly through the stock market, so I encourage you to
consider a private deal. You can play agriculture through companies that
manufacture irrigation equipment, produce fertiliser, or operate grain-handling
facilities (See, ‘This asset is like gold, only better’)."

Not surprisingly, G8 governments have immediately risen to the task of institutionalising the
necessary policy regimes which will protect ‘investors’ rights’ on farmland. Reportedly, “15-
20 million hectares of land in poor countries were sold or are under negotiations for sale to
foreign buyers” since 2006. The trend is accelerating at breakneck speed.

Does this disease have a cure?

It is in this context of the ever-deepening impetus for privatization, speculation and

corporate control of resources that we must assess the efficacy of the redistributive policies.
To reiterate, this is not to diminish the struggles for redistribution, particularly those which
demand that distributive regimes be enshrined in policy instruments which governments
would find difficult to reverse.

However, several key development policy institutions and discourses (such as the
Millennium Campaign) call for voluntary action and moral imperatives for ensuring
distribution. The World Food Programme, for instance, has just warned that reduced food
aid may lead to the ‘loss of a generation of children’. The US alone has cut its aid by $800
million in 2008 (while paying $340,984,504,000 in corporate bailouts).

At issue here are profoundly problematic understandings of accountability and justice (On
notions of justice and development see my recent book Human Development and Social
Power: Perspectives from South Asia).
Redressing this kind of imbalance requires something more fundamental, as movements like
Via Campesina or Naya Krishi in Bangladesh (or the ‘water warriors’ in Bolivia) argue.

Food ‘security’ they say, can only be ensured by ensuring the security of the food-producing
households. In fact, ‘security’ is not their goal; neither is ‘aid’. Their goal rather is
‘sovereignty’, deriving from the ownership of resources required to produce food. As
Jahanara Begum, a Nayakrishi farmer in Bangladesh told her fellow farmers, “Sisters, keep
seeds in your hands”.

Our greatest challenge, at this moment, is to bring Jahanara’s voice to policy processes
which are increasingly dominated by interests which seek to do exactly what she fears:
wrest control of her ‘seeds’, to be understood in the broadest sense – as a metaphor of all
that should be inalienable.

Ananya Mukherjee-Reed can be reached at ananya@yorku.ca

http://southasia.oneworld.net/weekend/the-hunger-boom