Multinationals Make Billions In Profit Out of Growing Global Food Crisis
Speculators blamed for driving up price of basic foods as 100 million face severe hunger
by Geoffrey Lean
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.
The following are excerpts from blogs re: Myanbar government/situation which is several months old.
Nov. 2007
The Burmese military are responsible for using rape as a weapon of war against women and children. I am a former political prisoner and was tortured by the military, I was beaten by them until I lost consciousness. They tried to kill my family and me. When I arrived home I found my father dead. Now I work for the Burma campaign UK and we need your help!
I,ve myself have been assisting Burmese refugees for some years now,and have been told there stories of horror,I agree that sick excuse for a goverment which isn't one must be stopped,they don't have the power to call an election, they lost the 1990 election....only a govement that was elected by the people has that power. We have wars on terroisim,what about the state run terroisim that excist in Burma, NATO or the UN must act!!! Nato has acted before by themselves with out the UN, why not now for Burma. April 2008
We do need more pressure to Military in Burma, mainly neighbour countries such as China, Thailand and India. They should doing business with govermant, including Total Oil Company.Many Thanks! ! April 2008
As one of your respondents said the Burma issue remains as part of the international community apathy - "Evil persists when good men do nothing" - how true it is. Most people knows that because of the policies adopted by China and India towards Burma this issue has been dragged on for decades. Countries in the region have a lot of trade with China and India as well and so it will take a lot of moral courage to speak out against these policies. Our prime minister and foreign minister (as well as our cousin across the Tasman Sea Helen Clarke) may have come out to condemn Fiji for the deportation of Mr Russell Hunter but all of them are silent whereas our fellow Mr Ross Dunkley is helping the military regime in Burma to do the opposite. If Mr Hamish McDonald from Sydney Morning Herald felt compelled to file a report on how China and India are helping to prolong the military rule in Burma why no such report ever exists with Mr Dunkley's paper? Aren't we a bit hypocritical? Freedom of speech for Fiji and not for Burma? I thought Australia will have a rethink of its policy towards Burma with the new government in power but one doesn't need to read Morgantheau to understand why it's 'Realpolitik' and not 'ethics' that are more important.
