Category: Sustainable Settlement and Agriculture

Queensland Conservation has aligned with Biological Farmers of Australia, to re-instate claims organic farm methods can contribute to lowering Australia’s greenhouse emissions by locking up more carbon in soil.

They also say organic production will become more competitive as oil and fertiliser prices climb.

As part of its climate change campaign, Queensland Conservation has referred to an extensive thirty year scientific trial by the Rodale Institute in the USA which found that organic practices can remove around 7,845 kilograms of carbon from the air for each hectare farmed annually by sequestering it in the soil.

The study found that if all 175 million hectares of cropland in America were converted to organic practices, it would be the equivalent of taking 217 million cars off the road – or, more than a third of the world’s automobiles.

Queensland Conservation board member, Jerry Coleby-Williams, says the research (first published in 2003) has relevance in Australia.

“Applying similar carbon sequestration results to those found in the Rodale study, an Australian farm with an average cropping area of 710 hectares, could sequester 5,500 tonnes of carbon each year,” Mr Coleby-Williams said.

“There is a total of approx. 50 M ha of periodically cultivated soils in Australia, representing the potential for at least 390 million tonnes of captured carbon per year.”

He said in the face of rising oil prices organic production combines ‘eco-friendly’ with ‘cost-effective’.

The push to conserve water comes as Australia tries to recover from its worst drought on record. The drought has cut farm output and slashed supplies in the Murray Darling Basin, the nation’s biggest river system.

“Climate change is a major threat – for much of Australia it means more droughts and less rain,” Wong said. “We can, and we must, make better use of our available water resources.”

The Labor government’s plan follows a A$10 billion proposal by former Prime Minister John Howard’s coalition government to improve the nation’s water efficiency.

Water shortages are a “serious threat” to the nation’s economy and way of life, Wong said.

Australia’s rainfall is the lowest of all the world’s continents, excluding Antarctica, according to the Web site of Melbourne Water, a water management authority owned by the Victorian government.

“In our towns and cities we must secure water supplies for current and future needs, including from a range of new sources that rely less on rainfall given the clear threat climate change poses to traditional water sources,” the minister said.

The plan also includes A$1 billion committed during last year’s election for an urban water and desalination program, she said. Water allocations bought to return to rivers in the Murray Darling Basin will be owned by a new government body called the Commonwealth Environmental Water Holder, Wong said.

Similarly, covert funds can now flow without restriction to Jundullah, or “army of god,” the militant Sunni group in Iranian Baluchistan – just across the Afghan border — whose leader was featured not long ago on Dan Rather Reports cutting his brother in law’s throat.
 
Other elements that will benefit from U.S. largesse and advice include Iranian Kurdish nationalists, as well the Ahwazi arabs of south west Iran.  Further afield, operations against Iran’s Hezbollah allies in Lebanon will be stepped up, along with efforts to destabilize the Syrian regime.
 
All this costs money, which in turn must be authorized by Congress, or at least a by few witting members of the intelligence committees.  That has not proved a problem.  An initial outlay of $300 million to finance implementation of the finding has been swiftly approved with bipartisan support, apparently regardless of the unpopularity of the current war and the perilous condition of the U.S. economy.

Until recently, the administration faced a serious obstacle to action against Iran in the form of Centcom commander Admiral William Fallon, who made no secret of his contempt for official determination to take us to war.  In a widely publicized incident last January, Iranian patrol boats approached a U.S. ship in what the Pentagon described as a “taunting” manner. According to Centcom staff officers, the American commander on the spot was about to open fire. At that point, the U.S. was close to war.   He desisted only when Fallon personally and explicitly ordered him not to shoot.  The White House, according to the staff officers, was “absolutely furious” with Fallon for defusing the incident.

Fallon has since departed.  His abrupt resignation in early March followed the publication of his unvarnished views on our policy of confrontation with Iran, something that is unlikely to happen to his replacement, George Bush’s favorite general, David Petraeus.

Though Petraeus is not due to take formal command at Centcom until late summer,  there are abundant signs that something may happen before then.  A Marine amphibious force, originally due to leave San Diego for the Persian Gulf in mid June, has had its sailing date abruptly moved up to May 4.  A scheduled meeting in Europe between French diplomats acting as intermediaries for the U.S. and Iranian representatives has been abruptly cancelled in the last two weeks.  Petraeus is said to be at work on a master briefing for congress to demonstrate conclusively that the Iranians are the source of our current troubles in Iraq, thanks to their support for the Shia militia currently under attack by U.S. forces in Baghdad. 

Interestingly, despite the bellicose complaints, Petraeus has made little effort to seal the Iran-Iraq border, and in any case two thirds of U.S. casualties still come from Sunni insurgents.  “The Shia account for less than one third,” a recently returned member of the command staff in Baghdad familiar with the relevant intelligence  told me, “but if you want a war you have to sell it.”

Even without the covert initiatives described above, the huge and growing armada currently on station in the Gulf is an impressive symbol of American power.

Armed Might of US Marred By Begging Bowl to Arabs

Sometime in the next two weeks, fleet radar operator may notice a blip on their screens that represents something rather more profound: America’s growing financial weakness. The blip will be former Treasury Secretary Robert Rubin’s plane commencing its descent into Abu Dhabi.  Rubin’s responsibility these days is to help keep Citigroup afloat despite a balance sheet still waterlogged, despite frantic bail out efforts by the Federal Reserve and others, by staggering losses in mortgage bonds.  The Abu Dhabi Sovereign Wealth Fund injected $7.5 billion last November (albeit at a sub-prime interest rate of eleven percent,) but the bank’s urgent need for fresh capital persists, and Abu Dhabi is where the money is.

Even if those radar operators pay no attention to Mr. Rubin’s flight, and the ironic contrast it illustrates between American military power and financial weakness, others will, and not just in Tehran.  There’s not much a finding can do about that.

Andrew Cockburn is a regular CounterPunch contributor. He lives in Washington DC. His most recent book is  Rumsfeld: His Rise, Fall and Catastrophic Legacy.

David Kotok, chairman and chief investment officer of Cumberland Advisors, said the deadly fungus, Puccinia graminis, is now spreading through some areas of the globe where “crop losses are expected to reach 100 percent.”

Losses in Africa are already at 70 percent of the crop, Kotok said.

“The economic losses expected from this fungus are now in the many billions and growing. Worse, there is an intensifying fear of exacerbated food shortages in poor and emerging countries of the world,” Kotok told investors in a research note.

“The ramifications are serious. Food rioting continues to expand around the world. We saw the most recent in Johannesburg.

“So far this unrest has been directed at rising prices. Actual shortages are still to come.”

Last month, scientists met in the Middle East to determine measures to track the progress of “Ug99,” which was first discovered in 1999 in Uganda.

The fungus has spread from its initial outbreak site in Africa to Asia, including Iran and Pakistan. Spores of the fungus spread with the winds, according science journal reports.

According to the Food and Agriculture Office (FAO) of the United Nations, approximately a quarter of the world’s global wheat harvest is currently threatened by the fungus.

Meanwhile, global wheat stocks are at lows not seen in half a century, according to the U.S. Department of Agriculture.

Scientists fear that the spores could spread on the wind and reach the U.S. and Canada or Europe.

“It will take five to eight years to genetically engineer a resistance,” said Kotok. “In the interim, U.S. agriculture faces higher risk.”

Kotok is worried that governments around the globe are reacting to the crisis — which he believes is as big of a threat as bird flu — inappropriately by artificially lowering the prices of domestic wheat, and raising export taxes on wheat.

William Gamble, president of Emerging Market Strategies, tells MoneyNews that artificial mechanisms put in place by governments could be as much to blame for the crisis as anything.

“Twenty countries have put food in price controls or export restrictions,” Gamble says.

“Others have restricted futures markets. It is the politicians who are interfering in the markets to protect themselves, and that causes the problem.”

Jean Ziegler, UN Special Rapporteur on the Right to Food, has called the exploding food crisis “a silent mass murder.” In an interview in the French daily Liberation on April 14, he said, “We are heading for a very long period of rioting, conflicts [and] waves of uncontrollable regional instability marked by the despair of the most vulnerable populations.” He blamed globalization and multinationals for “monopolizing the riches of the earth,” and said that a mass uprising of starving people against their persecutors is “just as possible as the French Revolution was.” In some places, this is already happening. In Haiti, where the cost of rice has nearly doubled since December, the prime minister was fired this month by opposition senators after more than a week of riots over the cost of staple foods. Violent protests over food prices have also been set off in Bangladesh, where rice has also doubled; in the Ivory Coast, where food prices have soared by 30 to 60 percent from one week to the next; and in Egypt, Uzbekistan, Yemen, the Philippines, Thailand, Indonesia and Italy.

In an April 21 Wall Street Journal article titled “Load Up the Pantry,” Brett Arends observed that the food riots now seen in the developing world could soon be affecting Americans as well. Rocketing food prices are not a passing phase but are actually accelerating. He recommends hoarding food – not because he is actually expecting a shortage but as an investment, because “food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund.” Arends goes on:

The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food. A secondary reason has been the growing demand for ethanol as a fuel additive. That’s soaking up some of the corn supply.²

That’s the rationale published in the Journal of Wall Street, the financial community that brought you the housing bubble, the derivatives bubble, and now the commodities bubble, producing the subprime crisis, the credit crisis, and the oil crisis. The main reason for the food crisis, says this author, is that the Chinese and Indian middle classes are eating better. Really? Rice has been the staple food of half the world for centuries, and it is hardly rich man’s fare. Moreover, according to an April 2008 analysis from the United Nations’ Food and Agriculture Organization, food consumption of grains has gone up by only one percent since 2006.³ That hardly explains the fact that the price of rice has spiked by 75 percent in just two months. The price of Thai 100 per cent B grade white rice, considered the world’s benchmark, has tripled since early 2007; and it jumped 10 percent in just one week. The fact that corn is being diverted to fuel, while no doubt a contributing factor, is also insufficient to explain these sudden jumps in price. World population growth rates have dropped dramatically since the 1980s, and grain availability has continued to outpace population.⁴ Biofuels have drained off some of this grain, but biofuels did not suddenly happen, and neither did the rise of the Asian middle class. If those were the chief factors, the rise in food prices would have been gradual and predictable to match.

Another explanation for the sudden jump in grain prices is not mentioned by this Wall Street Journal writer but is suggested by other analysts. William Pfaff wrote in the April 16 International Herald Tribune:

[M]ore fundamental is the effect of speculation in food as a commodity – like oil and precious metals. It has become a haven for financial investors fleeing from paper assets tainted by subprime mortgages and other toxic credit products. The influx of buyers drives prices and makes food unaffordable for the world’s poor. “Fund money flowing into agriculture has boosted prices,” Standard Chartered Bank food commodities analyst Abah Ofon told the media. “It’s fashionable. This is the year of agricultural commodities.”⁵

The “hot money” that has fled the collapsed real estate bubble is now moving into the commodities bubble, and that includes food. “Hot money” is an influx of speculative capital in search of high rates of return, quickly moving from one market to another. It moves, however, not because the products are better (the traditional justification for price-setting according to “free market forces”) but because the speculative “spread” is better. Money is invested not in making real goods and services but simply in making more money. Food prices are being driven by speculators, and today that includes ordinary investors like you and me, who can now gamble in agricultural futures through ETFs that have opened up a lucrative market formerly available only to big investment players.

Conventional economic theory says that prices are driven up when “demand” exceeds “supply.” But in this case “demand” does not mean the number of hands reaching out for food. It means the amount of money competing for existing supplies. The global food crisis has resulted from an increase, not in the number of mouths to be fed, but simply in the price. It is the money supply that has gone up, and it is investment money in search of quick profits that is largely driving food prices up. Much of this seems to be happening in the futures market, where fund managers seek to maximize their profits by using futures contracts. Balzli and Horning explain:

The futures market is a traditional tool for farmers to sell their harvests ahead of time. In a futures contract, quantities, prices and delivery dates are fixed, sometimes even before crops have been planted. Futures contracts allow farmers and grain wholesalers a measure of protection against adverse weather conditions and excessive price fluctuations. . . . But now speculators are taking advantage of this mechanism. They can buy futures contracts for wheat, for example, at a low price, betting that the price will go up. If the price of the grain rises by the agreed delivery date, they profit. Some experts now believe these investors have taken over the market, buying futures at unprecedented levels and driving up short-term prices. Since last August, this mechanism has led to a doubling in the price of rice.

The authors quote grain wholesaler Greg Warner, who says what is happening now in the grain futures market is unprecedented. “What we normally have is a predictable group of sellers and buyers — mainly farmers and silo operators.” But the landscape has changed since the influx of large index funds into the futures market. “Prices keep climbing up and up.” Warner calculates that financial investors now hold the rights to two complete annual harvests of a type of grain traded in Chicago called “soft red winter wheat.” He calls these developments “stunning” and points to them as “evidence that capitalism is literally consuming itself.”⁶

What about investing in agribusinesses such as Monsanto, which have promoted the “Green Revolution” through the bioengineering of foods and the production of GMO (genetically modified) seeds, synthetic fertilizers, and herbicide and pesticide sprays? Won’t these corporations, at least, help to alleviate the global food crisis?

To the contrary, say critics, these businesses too are just driving food prices up. Monsanto’s patented GMO seeds have been genetically engineered so that they cannot reproduce but must be purchased every year from the company. Small farmers who have fallen for the hype of greater productivity and subjected their land to these seeds and chemicals have found that not only have their yields been reduced but that the land will no longer bear anything except GMO seeds.⁷ Farmers who can no longer afford the seeds are priced out of the market, handing monopoly control over to the agribusiness giants that can then raise prices to whatever the market will bear; and in the case of food, it will bear a lot, right up to the point of slavery. As Henry Kissinger once famously said, “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”

What can you invest in, then, that actually would help relieve the global food crisis? One possibility is local organic farming. “Community-supported agriculture” (CSA) is a model of food production, sales, and distribution aimed at increasing the quality of food and the care given to land, plants and animals, while reducing losses and risks for producers. A variety of CSA systems are now in use worldwide, allowing small-scale commercial farmers and gardeners to have a successful, small-scale closed market while providing their customer-members with a regular delivery or pick-up of healthy local produce. The USDA provides a list of CSA addresses and websites.⁸

That still leaves the problem of speculation in food futures. How can parasitic profits to non-producing middlemen be eliminated while still protecting farmers? The futures market was first created for farmers, who needed to be able to lock in a price today that would cover their costs and return a reasonable profit later. One interesting proposal is to return to the policy of “farm parity pricing” enacted during the 1930s. It ensured that the prices received by farmers covered the prices they paid for input plus a reasonable profit. If the farmers could not get the parity price, the government would buy their output, put it into storage, and sell it later. The government actually made a small profit on these transactions; food prices were kept stable; and the family farm system was preserved as the safeguard of the national food supply. With the push for “globalization” in later decades, farm parity was replaced with farm “subsidies” that favored foods for export over local markets, and large corporate farms engaged in chemical farming over sustainable farming, forcing thousands of family farmers out of business.

Farm parity pricing could help, but a complete solution to the problem of global inflation would require an overhaul of the private central banking system that has created one bubble after another for the last century. (See E. Brown, “Market Meltdown: The End of a 300 Year Ponzi Scheme,” webofdebt.com/articles, September 3, 2007.)

And if you want to invest in the commodities boom without guilt? You can buy gold, which is no one’s staple food or fuel.