By David Jessop
New international fault lines are emerging at the point where concerns about climate change, agriculture, food and energy meet. They run between nations in the developed world, the emerging markets of China, Brazil and India to the smaller nations of the developing world such as those in the Caribbean. They carry with them the threat of hunger and instability and raise much broader questions about the global distribution of wealth.
Despite the urgency, finding internationally agreed solutions to these issues will not be easy as they largely mirror the same differences that are causing the development round at the World Trade Organisation (WTO) to come close to stalling. Worse, resolution implies finding answers to questions that have the potential to be highly corrosive to the international system. These include whether there are limits to global economic growth, who decides what these are and by extension whether nations that have the greatest economic power and wealth are willing to cede some of this to others.
These are some of the seemingly unavoidable conclusions to be dawn from listening and reading news in Europe and the US about the future of farming.
For months now, the early morning farming discussions on the radio as well as the media coverage have been about the structural changes taking place in agriculture as farmers, governments, financial markets and the supermarkets respond to rocketing prices and food shortages. But more recently the nature of the debate has changed. It has turned to a less well understood issue: the ways in which concerns about food security are being exacerbated by the policies on climate change advanced by developed nations.
The debate revolves around bio-fuels, carbon trading, land prices, agronomy, water supply and even touches on sovereignty.
To explain: For the past several years developed nations – the US and Europe in particular – have seen the production of bio-fuels as the logical response to reducing carbon emissions and the uncertainties surrounding the supply of fossil fuels. To achieve this they have changed legislation, incentivised their farmers and encouraged change in the structure of their agricultural production so that fields for the first time in history are dedicated to energy production rather than nutrition.
This has occurred just as global demand for food and in particular cereals is growing rapidly. The effect has been to push the price of most staples higher because the feedstock used for livestock are some of the same cereals that are now used for energy.
All of this has happened as elsewhere, speculators are abandoning equities following the downturn in stock markets globally and have been seeking ‘safer’ new asset classes including soft commodities, the food staples and now energy.
In parallel to this investors and speculators have recognised that the world is moving towards the introduction of carbon trading schemes. These pay those who own land in rainforests by enabling them to trade in Europe now and elsewhere in the future, the carbon credits that flow from such investments. This involves selling such credits to big industrial groups in developed economies that are or will be subject to a cap on their carbon emissions. Under such systems these companies find it cheaper to buy credits than cut their own emissions. Such schemes make use of low-carbon emitting regions such as the Caribbean enabling the new owners of rainforest to profit in ways the Financial Times recently suggested, that are only second best to being able to print money.
At the same time huge sums of money are going into buying agricultural land as demand and prices for food and energy increase and commercial and residential property become less certain as investments. Because of the shortage of such land in the US and the nations of pre-enlargement Europe, this is leading investors to drive up land prices globally as they compete to purchase farms in countries where land values are still low.
This is compounded by concerns in the developed world about the need to change farming practices to reduce greenhouse gases. This has resulted in stricter environmental rules requiring the reduction in the amounts of nitrogen used to fertilise fields. However the result in Europe for example is lower yields per hectare. All of which is pushing governments and consumers to be more tolerant of the introduction of genetically modified crops and farmers to consider moving out of food production into crops for fuels where in some cases the subsidies or incentives can be higher.
The consequences of this for the Caribbean and other small states are not hard to see.
It is at its most apparent in the alarming leap in the price of food, and as Haiti has shown, the associated danger of social and political instability. However, more insidious is the hard to escape implication that beyond this these policies may be leading to new forms of colonialism that aim to protect developed economies by limiting growth in emerging and developing economies through transfer mechanisms that principally benefit the world’s most wealthy.
To be fair, some of the world’s developed economies have understood this and are reassessing the implications of their bio-fuels policies as it becomes apparent that their desire to reduce carbon emissions is actually driving up food prices for the world’s poorest. However, as yet there appears to be no holistic approach that tries to assess the global implications of policies on climate change in the context of development or on the behaviour or regulation of markets.
Quite rightly, emerging and developing nations want to achieve similar levels of development for their citizens as those experienced for decades by the developed world. However, it is as yet far from clear whether the global consensus-based systems on trade at the WTO or on climate change will be able to deliver solutions that accept the re-distribution of power implied by agreements to restrict carbon emissions or change the developed world’s incentive systems for farmers.
The Caribbean is inexorably moving towards becoming a services based society. That is the logical outcome of being small in size, having relatively high levels of education and not being able to produce very much that others cannot manufacture or grow more cheaply.
Global changes now taking place suggest that the concomitant of this must be not just the rapid development of the region’s agricultural and fisheries potential in order to feed the region, but also the development of a unified and intellectually viable position on how it intends responding to the very difficult global debate that will emerge this year and next over climate change.
Previous columns can be found at www.caribbean-council.org
