India has only managed a short-term reprieve from the WTO to implement its Food Security Act

Timothy A. Wise, originally published at BW|Businessworld

In the courtyard of the bali International Convention Centre, just outside the hall where World Trade Organization (WTO) delegates were negotiating a modest, if controversial, agreement, someone had erected a small impromptu shrine, replete with flower petals and other offerings. The memorial was for Lee Kyung Hae, the Korean farmer who, ten years earlier, had scaled the barricades keeping the masses from WTO negotiators in Cancún, Mexico. He pronounced the simple indictment that “WTO kills farmers,” then took his own life.

With a reported quarter-million farmer suicides since 1990, Indian negotiators may well have had Lee Kyung Hae on their minds as they arrived in Bali, Indonesia for the WTO’s ninth ministerial. The country’s National Food Security Act was under threat from the WTO’s arcane rules, and Indian negotiators came to fight.

So did India’s Right to Food Campaign, which sent two representatives to object to the intrusion of the global trade body in India’s domestic policy-making. The act was the result of a decade of organising and lobbying. How could a distant trade body undermine its simple principles of paying hungry farmers a decent price for their grains and distributing it to India’s millions of hungry?
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Timothy A. Wise

Cross-posted from Global Post.

Mexico’s largest agribusiness associated invited me to Aguascalientes to participate in its annual forum in October. The theme for this year’s gathering was “New Perspectives on the Challenge of Feeding the World.”

But it was unclear why Mexico, which now imports 42 percent of its food, would be worried about feeding the world. It wasn’t doing so well feeding its own people.

In part, you can thank the North American Free Trade Agreement (NAFTA) for that. Twenty years ago, on January 1, 1994, NAFTA took effect, and Mexico was the poster child for the wonders of free trade. The promises seemed endless.

Mexico would enter the “First World” of developed countries on the crest of rising trade and foreign investment. Its dynamic manufacturing sector would create so many jobs it would not only end the U.S.  immigration problem but absorb millions of peasant farmers freed from their unproductive toil in the fields. Mexico could import cheap corn and export electronics.

So much for promises.

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Timothy A. Wise

Re-published from the Global Post.

BALI, Indonesia — A tense and acrimonious four-day standoff ended Saturday morning at the World Trade Organization meeting in Bali.

A last-minute objection by Cuba and three Latin American allies held up the agreement Friday night, with Cuba objecting to the hypocrisy of a “trade facilitation” agreement – one part of the so-called Bali package – that ignored the United States’ discriminatory treatment of the island nation under the US trade embargo.

Overnight, text was added to reflect Cuba’s concern even if it did nothing to resolve the issue. Call it the story of the WTO.

Leading up to this week’s meeting, the US and other rich countries had attempted to declare India’s food security program in violation of the WTO’s archaic and biased rules and sought to discipline the program as “trade distorting.”

India and other developing countries fended off the challenge to these programs, which support small farmers and help feed the hungry. But the final agreement is no green light.

Countries considering such programs would not be protected by the “peace clause” that will shield India and some others for the next four years. And onerous reporting requirements put the onus on the developing country to prove that its stock-holding program is not “trade distorting.”

In return for the modest protections for food security programs, and a vague package of reforms for the least developed countries, developing countries also agreed here to a trade facilitation package that could benefit some of them but might demand more than they can give.

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Triple Crisis blogger Timothy A. Wise was interviewed by the Real News Network on the continuing controversy in Mexico over the government’s possible approval of permits to Monsanto and other biotech firms to grow transgenic corn on a commercial scale. As Wise explains, the opposition got a shot in the arm recently when a judge issued an injuction on further permits, calling for precaution given the concern (and pending lawsuits) over the environmental impacts of transgenic corn in a country with such a rich diversity of native varieties. Noting the recent controversy over the World Food Prize going to biotech engineers (see his earlier post), he points out that NAFTA’s environment commission studied a documented case of “genetic contamination” a decade ago and recommended precaution. (See the suppressed report and background research.) With a crucial referendum pending in Washington State on mandatory labeling of GM foods, there are signs the tide is turning against Monsanto.

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Timothy A. Wise

This year’s World Food Prize went to three biotech engineers, all of whom have been instrumental in bringing genetically modified foods to your table.

Inside the Marriott Hotel in downtown Des Moines, Iowa, where the prize’s four-day program took place October 15-18, the message was clear: Technology is the answer to the world’s looming food shortages, and anyone who gets in the way isn’t putting farmers and the hungry first.

And you have to admire the laureates for their candor.

In their prepared press statements, they couldn’t have been clearer about what the prize means to them.

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Timothy A. Wise and Marie Brill

Rumor has it that the Roman emperor Nero played a fiddle and sang while Rome burned for five days in the Great Fire of 64. Nearly 2000 years later, at the very site where this devastating fire started so long ago, history is repeating itself, only the leaders doing the fiddling are delegates to the 40th meeting of the UN Committee on World Food Security (CFS). And what’s burning is the world’s food, in the engines of our cars.

Unfortunately this time, the fire didn’t end in five days. Food-based biofuels have been burning for over a decade, the fires are growing in scale and intensity, and there is no end in sight.

It’s not as if we haven’t seen the warning signs. There have been three food price spikes in the last six years, with a wide range of studies implicating biofuels as a key driver of price volatility. How could it be otherwise? In the United States, 40% of our corn—fully 15% of the global corn supply—is now diverted to make ethanol, up from just 5% in 2000.

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Editor’s Note: Timothy A. Wise and Marie Brill of ActionAid USA have co-authored a new ActionAid report “Rising to the Challenge: Changing Course to Feed the World in 2050,” based on a GDAE Working paper. The following op-ed published by Triple Crisis and the Huffington Post summarizes the findings of the their report.

Timothy A. Wise and Marie Brill, Guest Blogger

Was Thomas Malthus right after all? In 1798, Malthus postulated that exponential population growth would outstrip our ability to feed ourselves, dooming civilization. This early attempt at global economic modeling has since been widely discredited. But if you’ve been listening to policy-makers and pundits since food prices spiked in 2008, you’ve likely heard the eerie echoes of Malthusian thinking.

“With almost 80 million more people to feed each year, agriculture can’t keep up with the escalating food demand,” warned Frank Rijsberman, head of the Consultative Group on International Agricultural Research (CGIAR). “FAO estimates that we have to double food production by 2050 to feed the expected 9 billion people, knowing that one billion people are already going to bed hungry every day.”

Well, not so fast. Yes, resource constraints, exacerbated by uncertainties over climate change and the unsustainable consumption of non-renewable resources have introduced new threats to our ability to feed a growing population. The issues are indeed serious, but the specter of looming food shortages is a bit overblown.
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Timothy A. Wise

The U.N. Food and Agriculture Organization (FAO) created a stir last October with its revised estimates of global hunger. After revising the methodology used in its annual State of Food Insecurity (SOFI) reports, the FAO reported that the number of hungry had not surpassed one billion following the 2008 food price spikes, as previously reported. Indeed, the new estimates showed barely an upward blip during the food price spikes. Moreover, new trend lines based on revised estimates of past hunger suggested significant progress in reducing the incidence of hunger.

“New estimates show that progress in reducing hunger during the past 20 years has been better than previously believed,” the FAO concluded, “and … given renewed efforts, it may be possible to reach the MDG hunger target [of halving world hunger] at the global level by 2015.”

Now, a group of hunger researchers led by Frances Moore Lappe, and including Triple Crisis bloggers Jennifer Clapp, Robin Broad, and Timothy A. Wise, have published a detailed critique of the SOFI 2012 estimates and report. “Framing Hunger: A Response to ‘The State of Food Insecurity in the World 2012,’” offers recommendations to the FAO, as much in relation to the presentation of its hunger estimates as on the methodology itself.

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Sasha Breger, Guest Blogger

In my last two posts (,, I addressed the roles of debt, farmland acquisition, and physical commodity hoarding in helping finance siphon wealth from global agriculture.  In this final post, I discuss the role of derivatives and insurance markets in this redistributive process. I then turn to some of the potential critiques of my argument.

Derivatives markets

Derivative and insurance markets are implicated in the redistribution of wealth from agriculture to finance in at least two ways.  First, derivatives—and some retail insurance products based on them (e.g. Brazilian CPR, micro crop and revenue insurance)—are increasingly marketed to farmers, traders and/or consumers as a means of reducing market and weather risks in agriculture (demand for such products has been catalyzed by the erosion of public arrangements to prevent and mitigate agricultural risk). To my mind, this arrangement in many cases resembles a case of unequal exchange.  An hedging product of mediocre quality is being exchanged for a stream of fees and commissions to the financial sector. Indeed, hedging with commodity futures and options is a tricky proposition without guarantee of success. Contracts are too large and relatively short-term (relative the positions of many food system participants), trading and brokerage accounts are difficult, expensive and time-consuming to establish (especially for smaller traders), and future prices are both volatile and inefficient in many cases (this complicates derivatives trading by increasing the frequency of margin calls, as well as driving basis risk).

In fact, recent speculation in agricultural derivatives (more below) has introduced such inefficiency into future prices that hedgers have been petitioning regulators to introduce new limits on speculative trading. A 2008 letter from the Missouri Farm Board to the US Commodity Futures Trading Commission (CFTC) comments on rising basis risk for hedgers: “For almost three years farmers have experienced a widening of basis levels for most commodities…The lack of convergence between an expiring futures contract and the cash market has… presented major challenges to producers trying to carry out marketing plans involving futures and options contracts.”  Even as speculators render cash prices more volatile, and effective risk management thus more essential, these same speculators are disabling one of the few price risk management options that remain for agricultural actors.  I hear that sucking sound growing louder.

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Sasha Breger, Guest Blogger

In my last post, I discussed the role of debt relationships and farmland acquisition in redistributing wealth from global agriculture to finance.  This post discusses another mechanism for such injustice: commodity hoarding by financial firms.  Over the last several years, as agricultural commodity prices rose, large financial institutions took the opportunity to speculate in both virtual commodities (via derivatives markets, to be addressed in part 3 of this post), and physical commodities. Speculating in physical commodities involves selectively storing and releasing food crops so as to profit from movements in price (and, sometimes to influence prices) over the time the crop is stored. Financial institutions factor into this dynamic in two ways: directly, as commodity hoarders; and, indirectly, as lenders to and shareholders in major global food trading companies that hoard commodities.

Despite reports that many prominent financial firms are exiting commodities markets (responding to public pressures to stop gambling on food, and higher regulatory costs), there is ample evidence to the contrary.  Global metals markets illustrate some new, scary methods for institutional hoarding and spot market speculation, methods that are likely to be transferred to food commodities moving forward.

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