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 5th May 08 - Geoffrey Lean, The Independent on Sunday (UK)
Giant agribusinesses are enjoying soaring earnings and profits out
of the world food crisis which is driving millions of people towards
starvation, The Independent on Sunday can reveal. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.
The prices of wheat, corn and rice have soared over the past year
driving the world's poor – who already spend about 80 per cent of their
income on food – into hunger and destitution.
The World Bank
says that 100 million more people are facing severe hunger. Yet some of
the world's richest food companies are making record profits. Monsanto
last month reported that its net income for the three months up to the
end of February this year had more than doubled over the same period in
2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn
to $2.22bn.
Cargill's net earnings soared by 86 per cent from
$553m to $1.030bn over the same three months. And Archer Daniels
Midland, one of the world's largest agricultural processors of soy,
corn and wheat, increased its net earnings by 42 per cent in the first
three months of this year from $363m to $517m. The operating profit of
its grains merchandising and handling operations jumped 16-fold from
$21m to $341m.
Similarly, the Mosaic Company, one of the world's
largest fertiliser companies, saw its income for the three months
ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on
the back of a shortage of fertiliser. The prices of some kinds of
fertiliser have more than tripled over the past year as demand has
outstripped supply. As a result, plans to increase harvests in
developing countries have been hit hard.
The Food and Agriculture
Organisation reports that 37 developing countries are in urgent need of
food. And food riots are breaking out across the globe from Bangladesh
to Burkina Faso, from China to Cameroon, and from Uzbekistan to the
United Arab Emirates.
Benedict Southworth, director of the World
Development Movement, called the escalating earnings and profits
"immoral" late last week. He said that the benefits of the food price
increases were being kept by the big companies, and were not finding
their way down to farmers in the developing world.
The soaring
prices of food and fertilisers mainly come from increased demand. This
has partly been caused by the boom in biofuels, which require vast
amounts of grain, but even more by increasing appetites for meat,
especially in India and China; producing 1lb of beef in a feedlot, for
example, takes 7lbs of grain.
World food stocks at record lows,
export bans and a drought in Australia have contributed to the crisis,
but experts are also fingering food speculation. Professor Bob Watson –
chief scientist at the Department for Environment, Food and Rural
Affairs, who led the giant International Assessment of Agricultural
Science and Technology for Development – last week identified it as a
factor.
Index-fund investment in grain and meat has increased
almost fivefold to over $47bn in the past year, concludes AgResource
Co, a Chicago-based research firm. And the official US Commodity
Futures Trading Commission held special hearings in Washington two
weeks ago to examine how much speculators were helping to push up food
prices.
Cargill says that its results "reflect the cumulative
effect of having invested more than $18bn in fixed and working capital
over the past seven years to expand our physical facilities, service
capabilities, and knowledge around the world".
The revelations
are bound to increase outrage over multinational companies following
last week's disclosure that Shell and BP between them recorded profits
of £14bn in the first three months of the year – or £3m an hour – on
the back of rising oil prices. Shell promptly attracted even greater
condemnation by announcing that it was pulling out of plans to build
the world's biggest wind farm off the Kent coast.
World leaders
are to meet next month at a special summit on the food crisis, and it
will be high on the agenda of the G8 summit of the world's richest
countries in Hokkaido, Japan, in July.
Additional research by Vandna Synghal
Link to original source
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