GLOBAL FOOD CRISIS

1. GLOBAL FOOD CRISIS Presentation by: Angela Wauye (Action Aid Kenya) At Global Education Workshop, YMCA, NAIROBI

2. GLOBAL FOOD CRISIS • Over 1 billion people are chronically hungry. This is around 1 in 6 people in the world – or over 15% and is more than the populations of USA, Canada and the European Union combined. • This means since 2008 the numbers who are now chronically hungry has grown by about 275,000 people every single day. • According to figures released by the FAO on 19th June 2009, the total of undernourished people has risen to 1020 million, an increase of 100 million since 2008. • Malnutrition is the direct cause of five million child deaths every year, or more than one in three of all children who die before their fifth birthday. Those who survive suffer irreparable harm.

3. Global Food Crisis….(2) • Some 470 million farms - 85% measuring less than two hectares - produce 80% of the world's food and in many cases their share of global production is growing. • Resource-poor smallholder families make up 75% of the world's poor, half of the world's undernourished, 75% of Africa’s malnourished children, and the majority of people living in absolute poverty.

4. Global Food Crisis…(3) • Between 2006 and 2009, some 15-20 million hectares of land in developing countries – an area the size of France - has been taken over by foreign food exporters. • In 2006, donor spending of $3.9 billion was almost half the level of spending of $7.6 billion in 1980 (in constant dollars). This was a fivefold reduction over this period. • Bail-outs in the US and Europe has seen US $15.6 trillion pumped in a rescue strategy to salvage big private sector firms & banks from economic crisis. • How about the case of poor smallholder farmers and remotest rural communities rendered bankrupt by food, fuel, water, climate and economic crisis?

5. Low food stock & volatility on food markets • The low global grain stocks make the world, and importing countries extremely vulnerable to any shock in supplies. As a result of demand and supply influences, the 2007/8 year end world stocks fell to their lowest levels in 30 years. The US department for Agriculture reported the lowest levels of wheat stocks in 50years against a growing demand. Major grain producers, such as India and Pakistan, resorted to export restrictions to secure domestic supply, further exacerbating rising prices.

6. Global stock market trends • A shift in the investment strategy of many hedge funds and mutual funds towards commodity future markets in the past year is also having an effect on prices. When futures prices bumped up a year ago, the low dollar encouraged large fund managers to invest in agricultural markets, thus further raising prices. It is estimated that investors have poured billions of USDs into the commodity markets, causing the prices for products to swing wildly.

7. Growing demand for animal feeds • High economic growth in populous countries including China and India is contributing to a significant and sustained increase in global consumption of meat and dairy products. As a result, animal feeds now account for a larger proportion of grain utilization than direct human consumption.

8. Fluctuations in energy markets • High crude oil prices and growing demand for bio fuels combined with speculation. Crude Oil prices rose from USD 80 per barrel in October 2007 to over USD 115 per barrel in April 2008. Rising energy costs affected the entire value chain of food production, from fertilizers to harvesting to storage and delivery. The rising crude oil prices have, thus, led to increasing interest in and demand for bio-fuel produced from carbohydrate rich crops such as sugarcane, wheat and maize.

9. Summary of Causes of Global Food Crisis • Low investment (both public and donor aid) in agriculture and food security (esp smallholder agricultural production systems); • Low food stocks and volatility of food markets; • Global stock market trends; • Fluctuations in energy markets & high cost of crude fossil fuel/energy (depleted resource) • Focus on Bio-fuel production • Climate change induced effects; • Growing demand for animal feeds.

11. TAKE A PAUSE

12. Extracts from Articles • Kenya expects $500 million (€389.4 million) worth of foreign investments in biofuel crop production over the next two years, a government official has announced. • Romano Kiome, permanent secretary in the agriculture ministry, says five multinational firms from the US, Japan, and the UK had applied to be considered in a government land-lease scheme.

13. Extracts from Articles • Crops such as jatropha, croton, sweet sorghum and sugar will be planted, creating jobs and eventually lowering energy costs in east Africa's biggest economy. • 'We are taking the production of biofuels in the country very seriously. We believe that if we link up with the private sector, we will benefit in terms of jobs creation and production of diesel,' Kiome comments.

14. Extracts from Articles…2 • Under the arrangement, firms like Japan's Biofuels International will lease land in various parts of the country. 'We will give them a lease for a given period of time depending on the investment. We shall look at the internal rates of return of those projects,' Kiome adds. • Approximately 500,000 acres have been earmarked for the companies and Kiome estimated over 100,000 jobs would be created as a result of the initiative, including farmers who will be outgrowers.

15. Extracts from Articles…..3 • The companies will sell the fuel locally or export it, although the government is still fine-tuning laws governing that area. 'We still have to finalize the bio-fuels policy with the ministry of energy so that we know how it will be marketed,' Kiome remarks.

16. The land deals...(1) • Madagascar was poised to sign a 99-year agreement to rent 1.3 million hectares of land to South Korea's Daewoo Logistics Corporation to plant maize and palm oil for export; • Food-importing countries with little arable land, mainly in Asia and the Middle East, are increasingly looking overseas to secure food supplies after the prices of staple foods rocketed last year.

17. The Land deals..(2) • But the practice has drawn criticism that it harks back to colonial-era "plantation agriculture" where rich outsiders force subsistence farmers off fertile land to grow export crops. • Now the Daewoo plan, the largest in Africa covering an area of roughly half of Madagascar's current arable land, has been put on hold after the Malagasy people protested that it would make them a "South Korean colony".

18. The Land deals...(3) • "We are in big trouble with the government of Madagascar," said Shin Dong-hyun, the general manager of planning and finance at Daewoo Logistics Corporation. • "The process was ongoing, but it has suddenly been stopped because of media reports. Those reports have made Madagascan people very angry because it makes them ashamed for being a part of what they say is a neo-colonial system."

19. The Land deals....(4) • The company had planned to grow maize and palm oil on vast commercial farms for export either back to South Korea or to sell at international markets to raise funds to buy other food for its domestic market. • Kenya, Sudan, Ethiopia and now Madagascar have all recently offered vast tracts of farmland for lease, hoping to cash in on a growing trend whereby developing countries from Ukraine to Cambodia offer fertile land to the highest bidder.

20. The Land deals...(5) • Qatar plans to lease 40,000 hectares along Kenya's coast to grow fruit and vegetables for its own citizens, in return for building a £2.4 billion port close to the Indian Ocean tourist island of Lamu. • Abu Dhabi announced discussions with Sudan to rent 30,000 hectares of land watered by the Nile to grow its own maize and alfalfa. Senegal is also said to be hunting for a similar deal. • The idea, which has been called a "new scramble for Africa", is not without its critics, who question why Africa should lose valuable farmland when it is chronically short of its own food.

21. The Land deals...(6) • Jacques Diouf, the head of the United Nations Food and Agriculture Organisation, has called the land deals a type of "neo-colonialism". • "It's clearly a good sign that these developing country governments are looking to more long-term ways to benefit from their agricultural land, but at the moment these deals all look far more lucrative for the buyer than for the seller," said Duncan Green, the head of research at Oxfam.

22. BIO-FUEL TRENDS

23. Drivers of Bio-fuel • Increase in global energy demand projected to increase by 53% by 2030 . The global demand will move from 84 million barrels to 116 million barrels per day, according to Energy Outlook 2006. • Economic expansions in China & India • Energy security considerations by G 8 countries OECD nations. • Geopolitical Issues

24. Global Trends of Energy Crops prices • Global increase in commodity and energy crop impacting on the following value chains; • Food Economy • Transportation • Water resources • Energy Security • International Food Policy Research Institute US estimates bio-fuel will impact food prices significantly (2006); • Global Corn prices rise by 20% by 2010 and 41% by 2020 • Global Oilseed Prices rise by 26% by 2010 and 76% by 2020 • Global Wheat Prices rise by 11% by 2010 and 30% by 2020 Small Holder Feedstock Producer Multinational Commercial Feedstock Production

25. EU – BIOFUEL TARGETS ...(1) • In 2003 the Bio-fuels Directive on the promotion of the use of biofuels and other renewable fuels for transport, set out indicative targets for Member States. To help meet the 2010 target – a 5.75% market share for biofuels in the overall transport fuel supply – the European Commission adopted an EU Strategy for Biofuels, along seven policy axes

26. EU – BIOFUEL TARGET...(2) • The EU is supporting bio-fuels with the aim of reducing greenhouse gas emissions, boosting the de-carbonization of transport fuels, diversifying fuel supply sources, offering new income opportunities in rural areas and developing long-term replacements for fossil fuel. • EU plans to imposed a compulsory 10% quota of biofuels in all petrol and diesel by 2020, a central plank of its programme to lead the world in combating climate change; • Under the proposals, to be turned into law within a year, bio-fuels are to supply a tenth of all road vehicle fuel by 2020 as part of the drive to slash greenhouse gas emissions by 20% by the same deadline

27. EU – BIOFUEL TARGET...(3) • The EC is proposing that the overall impact of biofuels - produced from biomass from rapeseed, corn, sugar cane or palm oil - results in carbon dioxide cuts of 35% compared to fossil fuel equivalents.

28. Smallholder farmers producing energy crops across the feedstock spectrum are affected

29. Projected Increase in energy crop production up scaling • Policy Shifts in favor of biofuels and renewable energy. • Energy policy • Agriculture policy and resource allocation • Regional policy framework, support biofuel trade and distribution infrastructure Experts predict that most of the Greenfield production will take place in the tropics and sub-tropics. • 14 million hectares jathropha in India • 120 m hectares of biofuel in Brazil • 400 m hectares of biofuel across 15 African countries • 1.4 million hectares of reclaimed desert land in Egypt

30. Africa’s Food Security & Bio-Fuel Debate • Africa is being viewed by many as having huge potential for bio-fuel production given its vast land; • Corporatization of land becoming a big issue in Africa; • Competition between land for food and land for agro-fuel production. Are our priorities right with more than 230 million Africans hungry and malnourished?

31. Kenya, Food Security & Bio-Fuel Debate • About 20% of Kenyan land mass considered arable for crop production; • Government gone public to promote bio-fuel production; • Government sets aside 500,000 hectares of land formerly under ADC for bio-diesel production; • A conservative figure of 10 million Kenyans are said to be suffering acute hunger and malnutrition; • Government leasing out land to foreigners for bio-fuel production;

32. Why Bio-fuel is not a solution to food insecurity? • the rapid expansion of bio-fuel production pushes out other farming elsewhere causing deforestation, loss of wildlife and huge social problems, including violent conflicts and forced land evictions. • knock-on effects such as rising food prices • negative impacts on soil, water, and biodiversity; • Shifts investment focus away from food production to agro-fuel;

33. Way forward • Governments should impose immediate moratorium on further expansion of industrial, monoculture agro-fuel plantations. Elimination of financial and other incentives (such as targets) encouraging the large scale development of agro fuels. • Need for a policy and legal framework on Bio-fuel and institute a participatory policy formulation process; • Enforceable code of conduct in relation to land deals for food export in Africa. It must also include prior informed consent, fair and adequate compensation for affected communities before assessing the effect of any potential deal on food security, hunger and rural livelihoods. No deal should be approved where there is any adverse impact. UN is best placed to establish this code.

34. Way forward…2 • Stop imposing trade rules and economic policy conditions undermining African countries from supporting smallholder farmers and agriculture. Commit to ensuring that all trade agreements uphold the right of developing countries to protect their smallholder farmers and labourers through local agriculture and industrial development. • Increased quantity and quality of funding to agriculture and food security programmes. The minimum amount of financial investment needed to end hunger is US$ 30 billion per year. • African Governments must allocate at least 10% of national budgets to agriculture and food security. • Need to place an overwhelming focus on sustainable smallholder production systems and approaches targeting particularly women farmers, poor smallholder farmers and remotest of communities.

35. Way forward…..3 • Need for an ambitious post-Kyoto deal reducing greenhouse gas emissions from developed countries by at least 40 per cent below 1990 levels by 2020 and global emissions by at least 80 per cent by 2050. This in line with the latest science which shows this is necessary to avoid the worst impacts of climate change. This must be agreed before or at Copenhagen UN climate change conference (COP15/CMP5) in December 2009. • The Climate offenders (esp G8 members) should honour their commitment to fund climate change adaptation separately from their ODA commitments. By 2020 developing countries will need US$182bn per year to finance climate change mitigation and adaptation in developing countries, of which the ‘fair share’ for G7 countries is about 143bn. <END>