Fuel And Seed Cartels

Agriculturally based fuels (biofuels) and seed cartels threaten international food security.
by Glenn Ashton

June 2007

(This article was submitted to Independent Newspapers – The Cape Times - but was probably deemed too questioning of the mainstream economic model, so it was rejected.
Anyway they would doubtless have edited the hell out of it and taken all of the edgy bits out so here you have it from the horses mouth.)

Most who pay the monthly grocery bill are aware of an ominous acceleration in food prices across the board. The price of everything, dairy products, meat, staples such as maize and bread, are all escalating. Why? What is driving this upward trend in food prices?

The US Department of Agriculture has, in its latest market assessment, predicted further falls in global supply of grain, to its lowest estimate in the past 47 years. Global grain stocks will diminish to an estimated reserve stock of only 53 days. This reserve estimate has declined every year for the past 8 years. It is now the lowest since records began.

This reality is reflected by the increases in international staple food prices such as maize, which has increased in dollar terms by almost 30 percent over the past year. In South Africa we have seen almost a doubling of the cost of this staple over the past 18 months locally. The cost of Mexican cornmeal recently tripled, causing national protests in that country.

Maize is an international bellwether crop in that it forms a major component of feed, not only for dairy products, poultry like chickens and turkey - both staple protein sources for the poor - but also for beef and pork.

It is mainly in Central and South America, as well as in Southern Africa, that maize is also a human staple. Here, increased prices have a far more direct impact on poor communities, as in its Mexican centre of origin.

The rise of the Indian and Chinese economies has put pressure on global grain prices but this is not the sole reason for this general upward trend. Far more important - and relevant - is its increasing role as a feedstock for fuel in so-called green fuels or “bio-fuels.”

The very name “bio-fuels” is a misleading and fraught term. A strong international civil society lobby is arguing that its use is incompatible with the reality of the diversion of food to use as fuel feedstock. Instead they insist that they should be called ‘agrofuels’. These include not only grain-sourced fuels but also those extracted from sugar cane, such as the Brazilian sugar- derived ethanol, blended with petrol for the past 20 years. Brazil, the world leader in this technology, strongly supports the push for the global adoption of agrofuels.

It is notable, given the leftist affiliations of Brazilian President Lula da Silva, how he has forged strong bonds with the USA in their mutual support for agrofuels. Da Silva sees the possibility of exporting Brazilian know-how to Africa and elsewhere in South America as a means of strengthening Brazilian hegemony, while the US administration views any source of automotive energy not sourced from the Middle East or OPEC as attractive.

Agrofuels are derived from two primary sources. The first is ethanol, distilled from fermented carbohydrates like grain and sugar. The second is diesel oil substitutes extracted from various oil crops, such as soy, maize, sunflower, canola, palm oil, as well as non-food oil crops like jatropha.

The increased and accelerating diversion of maize and other grain crops for ethanol distillation has been the primary reason for the upward pressure on food prices over the past year.

Historically, ethanol production in the USA has been low, possibly as a side effect of prohibition. It was between 1 and 1.5 billion litres per annum during the 1990s, utilising less than 5 percent of the maize crop. However since 2000 the trend has been precipitously upward, to more than 5 billion gallons in 2006, overtaking Brazil for the first time. The US will produce nearly 10 billion gallons by 2009. This would require approximately 40% of present US maize production.

If all the currently proposed ethanol plants were built in the USA, something dependent upon numerous extraneous factors such as the international oil price, the US would have a capacity exceeding 19 billion gallons of ethanol per year. One state alone, Iowa, may produce over 4 billion gallons.

The implications of this are alarming for international food security. The US is the largest global exporter of maize. Whilst China remains self sufficient in maize production at present, this is not going to continue, given increased demands for meat production.

Both the maize-based ethanol industry and the US government have played down threats to global food security. They counter that increased oil prices are far more influential on food prices than the amount of food used as fuel feedstock. They point out that US maize production can be increased by using fallow land. Conservation land is already being shifted into production. Industry and state perspectives on this remain somewhat self-interested.

Yet the fact remains that it is the poor who remain most at risk if substantial portions of global food stocks are redirected toward other uses. Given the sharply increased prices across the world, such risks are borne out.

The very nature of capitalism and international markets make it obvious that agrofuels will certainly divert food towards an industrial process that firstly offers a higher price than many may be able to afford and secondly - and perhaps more importantly - are more demanding of feedstock, given their large capital investment. If food security is to be decided between capital and the poor, capital wins every time.

This is especially relevant in light of global insecurity around the oil industry. The unpredictability of occurrences in Iran, Iraq, Nigeria and Venezuela all contribute to oil price volatility.

It is estimated that - at best - ethanol from corn gives a small net energy gain and at worst is entropic, using more energy than is produced.

This disquiet around agrofuels is also stirred by the unprecedented spread of soy throughout South America, particularly across Argentina and Brazil, displacing rainforest and other threatened ecosystems. Much of the soy is destined towards diesel replacement agrofuel. Likewise in SouthEast Asia, rainforest is cleared to grow palm oil, yet another diesel substitute. So instead of a balm, agrofuels threaten to become a curse from environmental as well as human perspectives.

There is another aspect that is seldom analysed in this global energy game. This is the role of an increasingly influential group, that of the seed oligopolies that have arisen over the past decade.

Fifteen years ago Monsanto was a name linked to carcinogenic chemicals like dioxins, polychlorinated bi-phenols (PCB) and Agent Orange. It had little interest in seeds. Today it is the worlds biggest seed company and also the worlds biggest seller and distributor of patented, Genetically Modified (GM) seeds. Monsanto has a direct interest in the agrofuels debate. It even boasts of having developed GM seeds that can increase the percentage of ethanol produced from maize. Monsanto is not alone.

The worlds second biggest seed company, DuPont, also a chemical company and now a leading GM proponent, is in a similar situation. So is the worlds third biggest seed company, Syngenta, also a chemical company until a decade ago. Syngenta has even applied for globally widespread permission to contaminate global food supplies with this GM industrial crop, untested for human use. There is a clear pattern here that becomes even more sinister if recent developments are taken into account.

Monsanto, as the dominant seed provider to the wheat industry in South Africa, has threatened to withdraw from the wheat market in South Africa if farmers do not start to pay royalties or increased fees. This is despite the fact that farmers pay around R24 million per annum in statutory fees to develop wheat varieties, based on wheat sales. Monsanto wishes for similar fees as are levied on its GM maize, which is hybridised and which therefore cannot be replanted.

The fact that farmers are legally permitted to save wheat seed irks Monsanto to the extent that they have threatened to use their power to force changes. This illustrates the dangers of losing local control of strategically important seed stocks to purely profit-driven transnational entities.

It is notable that the first decade of GM crops globally has seen no real increase in yields of any of GM varieties. Maize yields have remained flat. GM Soy yields are less than natural varieties. Instead of constructively using the massive revenues leverages by consolidating seed companies Monsanto and its competitors have utterly failed to engage in meaningful research to increase yield of their crops. Despite extensive media hype that GM technology was going to feed the world ten years ago, this has failed to manifest.

Monsanto and the other ‘gene giants’ have been instrumental in pushing agrofuels in South Africa and elsewhere around the world. Instead of portending a shift towards green production and sustainable use of fuels, as ‘bio-fuels’ have been touted in the international mainstream media, there is an ominous reality behind the motives to push the increased adoption of agrofuels.

Agrofuels are advocated by interests identical and indivisible from those who have pushed to control both the international seed market and food production. They are the same players that have constantly meddled and destabilised the Middle East. The game is one and the same, the so-called grand game, played by the corporate – political nexus, the Washington consensus, at the expense of everyone else.

Energy makes the world go round. Agrofuels are touted as a green way of continuing business as usual. Even the charismatic Richard Branson has informed the world that his planes and trains are going to be fuelled by green “bio-fuels”.

Those who argue against agrofuels say that they are no panacea to either peak oil or global warming. They are just more of the same in a different guise.

Industrial farming is arguably the most destructive human activity on earth. To accelerate industrial agriculture in order to provide energy for a hopelessly inefficient global transport and power system is a quixotic misadventure. If agrofuels were explained to the public in a balanced way the rejection would be immediate and incontrovertible.

Only by accurately and meaningfully analysing the real factors driving the push toward agrofuels will we be able to properly engage with the true magnitude of the matters at hand. It is essential we examine the dangers of relying on agrofuels to continue business as usual. We must debate all the facts and not accept the concept on faith, or worse, on outright misrepresentation. We must consider the implications of developing an addiction to an energy source that runs in direct competition to food security.

Only when we have considered all of the facts can proper, informed decisions be taken.