Profiteers Squeeze Billions Out of Growing Global Food Crisis

[one...two...tree 2,762]

By Geoffrey Lean, Independent 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 $1.12 billion. Its profits increased from $1.44 billion to $2.22 billion.

Cargill's net earnings soared by 86 per cent from $553m to $1.030 billion 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 1 pound of beef in a feedlot, for example, takes 7 pounds 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 $47 billion 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 $18 billion 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 $28 billion in the first three months of the year -- or $6 million 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.

[Anony 0]

I wonder if as a compliment the US were to invest in creating food production in foreign companies if it would help in the long run. In other wards if helping them make better farms with better tools would create less demand for them then just giving away food and money to buy food? I understand that for the US giving them money to buy US food is a "bonus" and makes it almost like investing that money back into the US.... but in terms of sheer "doing good" would this be a better path?

[mawilson 2,133]

I'd like to see something like NYC's

http://www.cityharvest.org

on a global scale.

City Harvest is a non-profit which picks up excess food from restaurants, caterers,

cafeterias and other suppliers, and delivers it to emergency food programs.

[Amby 490]

There's a company called second helpings that does that and some shelters do it as well

A lot of restaurants won't give their food away unless there is a middle man because they don't want someone to get sick and then sue them. I remember one time we couldn't get second helpings to pick up like $10,000 worth of food when I worked for Wolfgang Puck Catering and they made us throw it away. We ended up pulling these guys trucks up to the loading dock and filling them up with a lot of the food and they brought it to a shelter.

Edited May 5, 2008 by Fukitol

[mawilson 2,133]

It's kinda funny when you think about some poor guy in a homeless shelter who will

have a fancy $500 restaurant meal for FREE - white truffles, La Bonnotte potatoes,

Beluga caviar and lobster

[one...two...tree 2,762]

It's kinda funny when you think about some poor guy in a homeless shelter who will

have a fancy $500 restaurant meal for FREE - white truffles, La Bonnotte potatoes,

Beluga caviar and lobster

Sustainability doesn't translate very well on Wall Street.

[mawilson 2,133]

It's kinda funny when you think about some poor guy in a homeless shelter who will

have a fancy $500 restaurant meal for FREE - white truffles, La Bonnotte potatoes,

Beluga caviar and lobster

Sustainability doesn't translate very well on Wall Street.

What do you mean, Steven?

[one...two...tree 2,762]

It's kinda funny when you think about some poor guy in a homeless shelter who will

have a fancy $500 restaurant meal for FREE - white truffles, La Bonnotte potatoes,

Beluga caviar and lobster

Sustainability doesn't translate very well on Wall Street.

What do you mean, Steven?

Significant market growth doesn't really happen when sustainability becomes the motivating factor, at least when it comes to agriculture.