Agriculture

Global agriculture between hunger and profit

Feeding a growing world population seems impossible without major investment in global agriculture. But a symposium at the Green Week food fair has found that plans to curb hunger often clash with big business.

One of the most prominent participants in the panel discussion was Jürgen Fitschen, who, with Anshu Jain, is one of the two Chief Executives of Germany's Deutsche Bank. For Europe's biggest private bank, agricultural commodities are a growth market.
Fitschen announced at the gathering that the bank's board had decided to resume trading in so-called Exchange Traded Index Funds (ETF) based on agricultural commodities, reversing a ban on food speculation imposed by the bank last year. An internal review had found no apparent link between speculative food-based financial products and fluctuating global food prices, he said.
"Although it cannot be completely ruled out that price volatility is enhanced under certain market conditions, we've found that prices also fluctuate in the absence of this type of financial product," he claimed.
Capital-intensive agriculture
In addition to dealing in financial derivatives trading in foodstuffs, Deutsche Bank, as a global player in financial markets, also offers direct investments in agriculture, food trading and production. Just recently, the bank created a new investment fund worth $135 million (101 million euros) aimed at lending money to farmers in Africa. The fund is supported by Germany's development ministry.
Capital investments in agriculture were a prerequisite for safeguarding food production in future, Fitschen noted, adding, however, that any lending to this sector needed to be based on rational facts rather than guided by emotions.
"This means that investors want to have a decent return on their capital," he said.
However, Fitschen's position was vehemently opposed by Bärbel Diekmann, President of the German non-governmental Agro-Action pressure group, who also participated in the Green Week symposium.

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Global food prices seen rising again

She argued that price spikes in critical situations had contributed to epidemic hunger in various countries, and provided ample reason to become emotional. Big investors would often fail to invest in small-scale agriculture in spite of that fact that millions of people, including many children, remained undernourished, she said.
Investment role model
Investments which expropriated the land of small farmers for the sake of export earnings, Diekmann added, wouldn't advance food production but remained a profit-driven big business. She cited Swiss-based food conglomerate Nestlé as an example of a company which was trying to do things differently. In efforts to double sales of its coffee-based products over the next decade, Nestlé was spending 500 million euros to boost the productivity of its 650,000 local coffee suppliers worldwide.
For Nestlé, business interests and the advancement of small coffee farmers went hand in hand, said Nestlé's board director Peter Brabeck-Letmathe during the discussions. Nestlé had provided farmers with about 220 million new coffee plants, which Brabeck-Letmathe described as an investment in better quality and higher yields, based on using less water.

Fitschen's bank was criticised for resuming food speculation

Nestlé's example is in line with demands made by the United Nation's Food and Agriculture Organization (FAO) for boosting investment in sustainable agriculture in developing countries. FAO estimated that about $83 billion would need to be spent on farming and rural development every year to secure food production for the 9 billion people who are expected to be living on this planet by 2050. Currently the average third-world farmer puts 114 euros a year into improving production. That's not enough and completely leaves out the costs of necessary improvements in infrastructure as well as market development, education and research into better crops.
Mozambiquestands out
The speakers at the meeting agreed that Mozambique was a remarkable example of a country which had made huge strides in agricultural development in recent years after having been dependant on food imports until about ten years ago.
"Today, Mozambique is an exporter of sugar, cotton, cashew nuts, maize and bananas," the country's agriculture minister Jose Condungua Pacheco told the symposium. Land was state-owned, he added, and foreign investors are only allowed to use arable land for a limited period of time. In addition, investors must negotiate contracts for land use with local communities and employ local workers.
"In this private-public partnership the power of local communities is strengthened because investors seeking to use farmland must negotiate with the people living there," Pacheco said.
Deutsche Bank's Jürgen Fitschen was strongly critical of such investment conditions. He said foreign investors must be allowed to hold majority stakes in farms, and that crops must be allowed to be sold on global markets if agriculture was really to move forward.

Africa 'can feed itself in a generation'

By Neil Bowdler Science reporter, BBC News

The new study says Africa could become a major exporter if leaders show political will

A new book claims Africa could feed itself within a generation, and become a major agricultural exporter.

The book, The New Harvest, by Harvard University professor Calestous Juma, calls on African leaders to make agricultural expansion central to all decision-making.

Improvements in infrastructure, mechanisation and GM crops could vastly increase production, he claims.

The findings are being presented to African leaders in Tanzania today.

The presidents of Tanzania, Kenya, Uganda, Rwanda and Burundi are holding an informal summit to discuss African food security and climate change.

Speaking to the BBC ahead of the meeting, Professor Juma said African leaders had to recognise that "agriculture and economy for Africa are one and the same".

"It is the responsibility of an African president to modernise the economy and that means essentially starting with the modernisation of agriculture," he said.
Stagnation

Continue reading the main story

“Start Quote

More African countries are going to have to think about new genomics techniques”

End Quote Professor Calestous Juma Harvard University

Global food production has rocketed in recent decades but has stagnated in many parts of Africa, despite the continent having "abundant" arable land and labour, says Professor Juma.

He estimates that while food production has grown globally by 145% over the past 40 years, African food production has fallen by 10% since 1960, which he attributes to low investment.

While 70% of Africans may be engaged in farming, those who are undernourished on the continent has risen by 100 million to 250 million since 1990, he estimates.

The professor's blueprint calls for the expansion of basic infrastructure, including new road, irrigation and energy schemes.

Farms should be mechanised, storage and processing facilities built, while biotechnology and GM crops should be used where they can bring benefits.

But what was needed above all else was the political will at the highest level.

"You can modernise agriculture in an area by simply building roads, so that you can send in seed and move out produce," he told the BBC.

"The ministers for roads are not interested in connecting rural areas, they are mostly interested in connecting urban areas. It's going to take a president to go in and say I want a link between agricultural transportation and then it will happen."

He believes there is great scope to expand crops traditionally grown in Africa, such as millet, sorghum, cassava or yams.

He sees areas where farmers will need to adapt to tackle a changing climate - cereal farmers may switch into livestock, he says, while others may chose more radical options.

"Tree crops like breadfruit, which is from the Pacific, could be introduced in Africa because trees are more resistant to climate change."

He also envisages genetic modification playing a growing role in African agriculture, with GM cotton and GM maize, which are already being grown on the continent, just the start of things to come.

"You need to be able to breed new crops and adapt them to local conditions... and that is going to force more African countries to think about new genomics techniques."
Kitchen sink
George Mukkath, director of programmes at the charity Farm Africa, welcomed the study, but said with many African states investing less than 10% of their GDP in agriculture, politicians had to "put their money where their mouths are".

"It's what we've been shouting about for several years," he said. "African productivity is low. If there's an investment then African farmers are very capable of producing enough food not only to feed themselves but also for the export market."

But Dr Steve Wiggins, a research fellow at a British think-tank, the Overseas Development Institute, said that modest practical changes were preferable to long wish-lists.

"It's perfectly possible to get Africa on a much higher growth rate but I wouldn't have such a long list of things to do, particularly if I thought it was going to pre-empt all government investment," he said. "To make a difference, you don't need to throw the kitchen sink at the problem."

He also warned that Africa's urban centres could not be ignored, not least because they provide important markets for African farmers.

Investors seeing farmland as safer bet than stocks - latimes.com

Investors seeing farmland as safer bet than stocks - latimes.com

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