August 2012 MS. SOPHIA MURPHY INDEPENDENT CONSULTANT AND SENIOR ADVISOR AT THE INSTITUTE FOR AGRICULTURE AND TRADE POLICY DR. DAVID BURCH HONORARY PROFESSOR SOCIOLOGY, THE UNIVERSITY OF QUEENSLAND DR. JENNIFER CLAPP PROFESSOR, ENVIRONMENT AND RESOURCE STUDIES AND INTERNATIONAL AFFAIRS, UNIVERSITY OF WATERLOO Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus ADM is publicly listed and Bunge is also a fully public company. Dreyfus and Cargill remain essentially family-owned businesses. P5 The ABCDs do not operate in a vacuum. They are shapers of the world they inhabit, but they are also shaped by it. New realities, particularly the rise of new economic powers, including China, Brazil, and India, as well as the re-emergence of Russia and some of the former Soviet republics as agricultural powerhouses, are reshaping the global economy. P5 The new emerging powers are not as wedded to open trade, deregulated markets, and deregulated capital flows as are the governments they now challenge (the United States and the European Union, in particular). One effect of this change in the balance of power has been to make the likelihood of a meaningful outcome to the Doha negotiations at the World Trade Organization (WTO) improbable. These changes and their implications are only just becoming apparent. P5 **intergovernmental agency report to the G20 and the High Level Panel of Expertsâ report on food price volatility. p6 However, a growing number of analyses link at least some of the food price volatility of recent years to increased investment in these markets. The Bank for International Settlements, for example, has noted that financialization affects commodity prices, especially in the short term; a conclusion that several UN reports have also recently come to recognize.2 The correlation between prices of commodities and commodity assets under management is examined in Part 2. P6 **A note on language âFinancializationâ has entered the policy insidersâ lexicon as an overarching term to refer to the increasingly important role that investors play in the food system. Traditionally the food system involved producers (farmers) and a series of commercial interlocutors, who traded, processed, distributed, and sold food. Today, banks and other investors, as well as dedicated investment funds established as subsidiaries of the ABCDs themselves, have invested billions of dollars in food commodities with no interest in taking possession of any physical commodity. Their behaviour is intimately linked to what is happening in the physical trade of food, of course, but it also affects that trade by affecting prices and behaviour. This is what is meant by the financialization of commodity markets. A second dimension of financialization is also considered in this report: that of production itself. In this case, the term refers to the increasing involvement of investment funds of different kinds in buying or leasing land and producing agricultural commodities. P6 Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus, collectively known and referred to in this paper as the ABCD companies â in the modern agri-food system. P7 That restructuring ties into the rapid growth of the biofuels sector, large-scale acquisitions of land in developing countries by foreign investors, and the financialization of agricultural commodity markets with the rapid growth of commodity trading by investors who have no interest in acquiring or selling actual commodities. P7 Not all grain is traded: in fact, most production never crosses a border. For example, only about 18 per cent of world wheat production and 10 per cent4 of maize production is traded globally. P7 ...major shifts that are taking place in world production and trade in food, in turn a consequence of the redistribution of power along the agri-food supply chain with the emergence of global retailers such as Wal-Mart... P7 Food processors, too, are constantly in motion â Unilever and NestleĚ are two continuing giants in this group, but many other firms have been swallowed up or merged into new entities... P8 Wal-Mart is today the largest firm on the planet, judged by the Fortune 500. In contrast, the only new firm in the top five commodity traders since the mid-19th century is ADM, which was founded in 1902 but which only became a global player in the 1970s. The one other change occurred in 2002, when one of the big five, the Swiss-based AndreĚ, went bankrupt. Bunge is now just six years from its 200th year of continual operation. P8 **What distinguishes the ABCD firms from their rivals? First, it is their sheer scale and breadth. The ABCDs share a very significant presence in a range of basic commodities, including corn, maize, wheat, oilseeds (such as soy and cottonseed), and palm oil (see Appendix 3). In 2003, for example, the ABCD firms controlled 73 per cent of the global grain trade.11 More than that, they are highly diversified and integrated both vertically and horizontally; for example, Cargill, ADM, and Bunge not only account for more than 60 per cent of total financing of soy production in Brazil,12 but they also provide the seed, fertilizer, and agrochemicals to the growers, and subsequently buy the soy and store it in their own facilities. The big traders also transport commodities in their own rail cars and ships â for example, Cargill Ocean Transportation,13 Louis Dreyfus Armateurs, and the barges operated by Bunge along inland waterways in the USA. P9 ADM is a world leader in the origination and transportation of grains and oilseeds. Our strategy here is to extend our origination footprint as we have in Canada and Eastern Europe, and to grow our destination opportunities in the Middle East, Asia, and Africa. P10 (source: ADM website) website of Cargillâs subsidiary AgHorizons says: Professionally trained customer focus teams work one-on-one with their producer customers, building long-term relationships â striving to understand their farming businesses and providing distinctive solutions, matched to their unique needs.â P11 **The ABCDs buy grain from the elevators and then process a large share of it. Their subsidiaries then consume much of the processed grain, as feed for livestock or as feedstock for biofuels. Vertical integration means that there is little room for price discovery;30 the commodities become an internal operating cost and are not sold on the open market. ...The barriers to entry are a function of asymmetrical information â the established firms have a worldwide information system that is sans pareil. P11 **The price of grain on world markets is certainly important to them, but they can profit regardless of whether prices are rising or falling â what is important to them is to maintain the high volume of trade. p11 **the companies also have a significant advantage in their access to information. This makes volatility important: they know better than most what supply and demand are likely to be, and they make big investments every year in financial markets,32 using this knowledge to full effect. Volatile prices are good for knowledgeable speculators. p12 **These commodities â including palm oil, soybeans, wheat, and maize â are unspecialized and generic, and can easily be substituted for one another. p12 In many cases, it is almost impossible to know for sure the size of the commodity stocks these firms hold â much of that information is a tightly held secret.33 p12 ?? Source Cargillâs acquisition of Continental Grain and ADMâs acquisition of A.C. Toepfer. In addition, recent purchases by Cargill include Cargill Australiaâs purchase in 2010 of the grains business of the newly privatized Australian Wheat Board (AWB), and the $300m acquisition of 85 per cent of Sorini Agro (Indonesia) in 2010. Sorini Agro is the worldâs second largest producer of sorbitol, a sugar alcohol used as an artificial sweetener. P12 The finance and risk management divisions of the ABCD traders are huge and absolutely central to their businesses (see the further analysis in Part 2, and also Appendix 4). P13 In 2003 Cargill established Black River Asset Management, a hedge fund with some $5bn in assets. In 2010, Black River established two private equity funds, each worth around $300â400m, to invest in global food and farmland assets, with a focus on aquaculture in Latin America. P14 ... placing former staff in key decision-making roles in government (the ârevolving doorâ), and hiring former government officials to lobby on their behalf. The companies spend a lot of time and money on influencing public and political debate on trade, production, and investment regulations at the domestic and international levels. They are circumspect about this influence, but are strategic in their aims. P14 ...each of the ABCD companies is an active participant in the Roundtable on Sustainable Palm Oil (RSPO). P14 Soybean oil costs roughly twice as much to produce as palm oil and so processors have to exploit significant economies of scale to remain competitive. P16 **Amazon âSoy Moratoriumâ Wilmar Group, a Singapore-based conglomerate that owns more than 235,000 hectares of palm oil operations in Indonesia and Malaysia, as well as fertilizer and shipping interests. P17 Louis Dreyfus is the only one of the four big commodity traders to have any significant involvement in the rice trade. P18 Cargill supplies companies such as Kraft, NestleĚ, Unilever, and General Mills â and, in some cases, finds itself in competition with the food processing companies. Both Cargill and ADM do, however, manufacture a range of chocolate products, under the brand names of Peters (Cargill) and Ambrosia (ADM). ...Cargillâs extensive poultry operations supply retail outlets throughout Europe and North America. Cargill companies supply all the eggs used by McDonalds in the USA,53 and Cargill recently established poultry operations in Russia to supply McDonalds fast food outlets there (these had previously been supplied by its French subsidiary). P18 ...In 2009, Louis Dreyfus joined up with a major Brazilian sugar company, Santelisa Vale, to create LDC-SEV, the second largest renewable energy company in the world. P19 **Ethanol ** "12 per cent of global maize use in 2007 was devoted to ethanol production (in addition to the 60 per cent used for animal feed). ...and in 2010 close to 40 per cent of the US maize crop went to ethanol plants. P19 ***The history of the traders is imposing, in some cases extending over 150 years. The companies have successfully grown and evolved to create enormous fortunes and to wield very significant power â economic, political, and social â in the worldâs food systems. But nothing lasts forever. The ABCD commodity traders are not immune to challenges. Here is a short list of the most pressing, which are areas for further research. First, the tradersâ imperative to grow and keep on growing (Cargill likes to boast that it doubles in size every seven years) carries inherent risks and difficulties. Finding new and creative ways to attract new capital is a constant challenge. Second, the retail sector has transformed itself, and with it many aspects of the food system. Although the supermarketsâ direct engagement with farmers and production has focused on fresh produce, where the traders are not present, the challenges posed by supermarkets to some of their big customers, especially food processors, cannot go unnoticed by the traders themselves. For example, NestleĚ has started to move back down the supply chain in its chocolate operations, creating competition for the historically dominant traders, including Cargill. Third, the technologies of globalization, particularly information technologies, are eroding some of the advantages cornered by the global traders. Global networks have become cheap, quick, and accessible to many more people than was the case even ten years ago. Fourth, global food markets have undergone a series of profound and possibly game-changing shocks in the past few years. The food crisis, the financial crisis, and the mounting evidence of how climate change is already disrupting food systems have all undermined confidence in global trade as a reliable mechanism for the delivery of food security. The agenda of trade liberalization that the ABCDs have invested significant energy in securing is in question in many developing countries, and in some richer countries as well. The companies are well placed to influence the newly emerging powers of the global economy, especially Brazil and also China and Russia to some extent. But they face new and important challenges to the free market ethos that has allowed them to consolidate so much power over the past 20 years." ** p20 Cargill made record profits in 2008 (nearly $4bn) as food prices shot up rapidly. The company openly acknowledges that it profits from its unique base of information. Its profits in 2008 were not due to rising commodity prices alone, but rather to its ability to predict price changes in a period of volatility. Cargill was among the first to bet on falling wheat prices in the second part of the year, based on harvest information, which enabled it to clean up in futures markets. P25 **" Financialization can be defined as the â...increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy and its governing institutions, both at the national and international levelsâ.91 Financialization â a clumsy and unhelpfully obscure word â has now entered the policy insidersâ lexicon as an overarching term for the increasingly important role that financial investors play in agri-food systems. Financialization is a factor in both the commodity futures markets (dealt with in this section) and in agricultural production itself (dealt with in the next section)" p26 Traders have used insider knowledge to manage their investments and to hedge their risks since their firms were first established over 150 years ago. ...Yet something important has changed. The connections between finance and food markets have become more intense and intricate in recent decades as a result of financial deregulation (explored in more detail below). We are only just beginning to understand the full extent of the complexity involved. Historically, banks were prohibited from the hedging activities permitted to commercial grain companies. Deregulation relaxed the rules, in the 1980s allowing financial actors, including banks and investment brokers, to sell to investors products known as derivatives93 based on food and agricultural commodities. As deregulation unfolded in a series of regulatory and legislative changes during the 1990s, these new products grew more complex. Today, financial products are often bundled with other non-food commodities, and the amounts of these derivatives that are traded on markets have grown significantly in recent years. These developments have linked the worlds of food and finance in new ways: food has become âfinancializedâ. ...The way that the futures markets are set up in effect means that âinsider tradingâ is legal for these firmsâ activities in the commodity futures and agricultural derivatives markets. The Wall Street Journal reported in 2009, âIn contrast to stocks, commodities trading is the only major US market where companies are allowed to act on inside information to manage risks others might not know about. In fact, that is how futures markets were designed.â94 And the Financial Times notes, âPhysical traders are often the first to know when crops are falling short or energy cargoes are interrupted, giving them an edge over others.â95 What the regulations say they cannot do, however, is to deliberately manipulate prices. This is forbidden for market actors, including the grain trading firms. P27 **FUTURES v HEDGING** **Questions have also been raised about whether these firms are manipulating markets for their own gain. Bunge Global Markets was found in 2009 to be in contravention of the Commodities Exchange Act by the US Commodity Futures Trading Commission (CFTC). Twice in March 2009 Bunge traders placed buy and sell orders for soybeans in the pre-opening trading session, which they then cancelled before the market session opened. The CFTC found that the traders had no intention of executing those orders (something that the traders openly acknowledged), but instead were deliberately seeking information about support for specific price levels. Their activity influenced the Globex (electronic trading platform) Indicative Opening Price (IOP), which is an opening price broadcast to Chicago Mercantile Exchange market feed data and all CME Globex users. The CFTC noted, âIf successful, they would have obtained information that was unavailable to other traders. Because the traders had no intention of allowing the orders to be executed, placing the orders caused prices to be reported that were not true and bona fide...â and as such were in violation of parts of the Commodity Exchange Act.100 The CFTC ruling was released in 2011, and Bunge was fined $550,000 for this violation and ordered to âcease and desistâ from violating those parts of the Act. P30 The US Commodity Exchange Act of 1936 empowered US federal regulators (now known as the Commodity Futures Trading Commission, or CFTC) to establish âposition limitsâ on ânon-commercialâ traders who are not bona fide hedgers. Non-commercial traders are those who do not trade the actual commodity, such as speculators and banks. P30 Banks also began to request and were granted âno action lettersâ from the CFTC. These letters provided regulatory relief by stating that the regulatory body would not recommend enforcement action against the requesting entity for failure to comply with specific CFTC rules or regulations p30 The Commodity Futures Modernization Act (CFMA) was passed in the USA in 2000, legislation that exempted OTC derivatives trade from CFTC oversight. The OTC commodity derivatives trade, including CIFs, was not subject to any position limits under this regulation, nor any reporting requirements. The Act also allowed purely speculative trading in OTC derivatives. In other words, investments in these products were not required to be hedges against a pre- existing risk for either party. In effect, the CFMA codified what the no action letters had already established, limiting the oversight of the CFTC and opening the possibility of a much higher volume of speculative trading in commodity markets. P31 "Trader firms already saw themselves as commercial actors, but in some cases they asked for exemptions from rules as well. In 2006, for example, Cargill requested exemptions from regulation from the CFTC for future sales of OTC agricultural derivative products to external customers by a new financial division of the firm. Cargill wanted to be sure that its subsidiary would be exempt from regulation if it became a separate agricultural trade options merchant. The CFTC granted âno actionâ relief to Cargill for its soon-to-be-established subsidiary to act as an ATOM (agricultural trade options merchant â for which the rules state that the firm must be a producer, processor, or commercial user, etc.): âClearly, as used in the agricultural trade options regulations, the phrase, âproducer, processor or commercial use of, or a merchant handlingâ a commodity was intended to apply more broadly than to just first handlers of commodities. The division believes that the Applicant, as a wholly-owned subsidiary of a grain merchant such as Cargill, is an appropriate candidate for inclusion within that broader application of the âproducer, processor...â category.â105 The US regulatory context was important, as it applies to the most important agricultural commodity markets in the world, primarily the Chicago Mercantile Exchange Group, which includes the Chicago Board of Trade, the worldâs oldest and largest futures and options market. p31" **Dodd-Frank Bill 6100/0304 Conclusion of ABCD's : Historically, speculation and hedging in agricultural commodity markets were distinct activities. Financial investors were typically speculators; commercial operators in the grain business were hedgers. Changes to legislation and regulation have blurred the boundaries. Commodity prices are increasingly influenced by factors that have nothing to do with physical reserves. While debates have raged in recent years as to whether financial speculation in agricultural commodity markets is a leading driver of food price volatility, there is a growing consensus that there is at least a short-term impact on food prices as a result of increased financial speculation on those markets. While there is no evidence that the deregulation of commodity markets has helped the commercial sector to improve performance,124 there is a real risk that the activity is affecting prices in real markets, and therefore hurting some of the worldâs most vulnerable populations. Deregulation of financial markets has created new, more complicated investment tools and products. The ABCD traders have capitalized on these developments, as have other financial institutions. These agricultural commodity derivatives have in some cases merged agricultural commodity and non-agricultural commodity assets, linking food commodities in important ways to other commodities within financial markets. The ABCD traders are facilitating the speculation of others by offering agricultural commodity tools to third party investors via their financial services divisions.. The scale of money involved in commodity trades has grown exponentially in a very short time. Experts disagree about the importance and effects of this activity, much of which is speculative, although many commentators (both outsiders and insiders) suggest that there is cause for alarm.125 The level of commodity price volatility is not unprecedented, but its significance is, because of the rapid increase in developing countriesâ dependence on international markets to meet demand for food staples. This argues for caution and a need to put the onus on the ABCDs (and other financial actors) to prove that there is no harm from their activities. This raises some important challenges to the tendency of many donors to push developing countries into using financial tools, including reliance on commodity futures markets, to manage volatility. Physical food reserves and increased local production for local markets might offer stability that financial tools cannot in the current environment. ABCD firms have been very active in lobbying to influence financial regulatory reforms in both the USA and the EU. They are specifically seeking to retain their exemptions from regulations that would place limits on their levels of investment in commodity futures markets. At the same time, they are in favour of stricter regulation for banks that are carrying out similar activities. P36 Agriculture has historically been seen as a risky venture that generated low returns. This has changed in recent years, and the food system has come to be seen as a sector that will guarantee long- term growth. The reasons for this are several: The decreasing per capita availability of land; An anticipated increase in commodity prices over the long term due to finite resources and a still-growing (and increasingly rich) global population; The shift towards meat-based diets; The creation of markets in farm-related carbon credits and water rights; The increasing levels of investment by land-poor and food-deficient countries; The increasing value of farmland. P37 ** El Tejar, the worldâs largest farm company. El Tejarâs majority shareholders are the London-based hedge fund Altima Partners, with 40 per cent of the equity, and the private equity company Capital Group, with 13 per cent. P38 ** In terms of its involvement in biofuels, Noble is a significant processor of oilseeds and owns palm plantations, sugar farms, and other agricultural assets. P43 Archer Daniels Midland : ADM has been involved in intense lobbying of US politicians for subsidies and incentives for ethanol production. ...It seems clear from this that ADM is not only the largest ethanol producer in the worldâs largest ethanol market, but that it is also seeking a major position in the worldâs second largest market. P44 ...Black River Asset Management, Cargillâs investment management firm. P45 Renewable Energy Group (REG) of Iowa. REG is a major biodiesel production company with numerous biodiesel production plants in operation throughout the USA. P46 ...continued reliance upon fossil fuels (which industrial biofuels perpetuate) ...debate around the issue of food versus fuel p47 ...the nature of the demand for biofuels (steady amounts of feedstock, 365 days a year) and the purchasing power of the customers involved have changed the relative bargaining power of various consumers against the interests of poor people (with weak purchasing power and relatively elastic demand because of price sensitivities) and in favour of the rich (who drive cars and are worried about fuel emissions). P47 Cargill is among the companies that have been identified as having contributed to the destruction of forests in the production of soybean and other commodities. ... According to Greenpeace International, with the completion of this facility, land prices for the production of soybeans soared and the rate of deforestation accelerated. ... In 2006, however, following sustained pressure from Greenpeace, Cargill196 and other soy processors adopted a âSoy Moratoriumâ. P47 ... âmega-farmersâ such as El Tejar, the worldâs largest farm operator. P48 Financialization : "Somehow the very term âfinancializationâ, hard to understand and hard to explain, captures something of how remote the world of high commodity finance is from the reality of the vast majority of those who earn their living from agriculture, particularly those in the developing world." P48 The reviews of foreign investment in land continue to be overwhelmingly negative, summed up at recent academic conferences201 and in the press.202 There is some potential for positive outcomes, but little seems to be realized. P49 UNCTAD and UNAC " At the multilateral level, this trend towards increased private sector activity and away from state control was encouraged and reinforced by the Uruguay Round Agreements. TRIPS, for example, transformed multinational capitalâs interest â and possible profits â in the seed sector, while the abolition of variable levies and quantitative import restrictions made the exportersâ business more predictable. The conditionalities imposed by structural adjustment policies and successor World Bank and IMF lending policies, as well as donor conditions on official development assistance (ODA), also underlay the policy shift. The international donor community encouraged developing countries to focus on exports, which for many meant agricultural commodity exports. Less discussed, but a necessary corollary of this policy under the Uruguay Round framework, was increased reliance on imports as well. The Uruguay Round agreement bound all but least developed countries (LDCs) to reduce their tariffs, and even LDCs were required to bind their tariffs to prevent any increase in the future. The growth in trade, both in imports and exports, created new opportunities for the ABCDs to expand." P50 **In 2000, developing countries shifted as a group from being net food exporters to net food importers. p50 the 1996 Farm Bill in the USA and the 1992 McSharry reforms of the Common Agricultural Policy (CAP) in the EU) reflected a strong promotion of the idea that what was good for the ABCDs was good for world agriculture. P51 " The companies that attracted the most attention at this point (in the early 2000s) were the retailers â Wal-Mart, Carrefour, Ahold, and Tesco. The dramatic expansion and consolidation in the retailing of food was at the forefront of a transformation not just in where consumers bought food, but also what kind of food they bought. The shift brought globalized food systems into many developing countries, where, until then, global commodity markets and local food markets had co-existed, albeit uneasily, in largely separate realms." P51 John Ruggie A second change is the move away from spot prices at different stages of the value chain to vertical integration with contracted producers. This plays directly into the interests of larger consolidated firms such as the ABCDs because it makes competition difficult for any smaller firm that specializes in one part of the value chain. It also reduces price discovery (see Part 1) and makes it harder to control the potential abuse of practices such as transfer pricing (see section below on transfer pricing). Open price discovery is a fundamental pre-condition for open markets. The third change is a move away from local sourcing to using national, regional, and global networks. p51 **Among the UN agencies, UNEP, UNCTAD, FAO, IFAD, IFPRI, and others have looked at the problems, as did the 2008 World Development Report (WDR) on agriculture. P52 ** effect on women** The systematic discrimination against girls and women in education, access to credit, access to extension services, and access to employment (especially at equal wages) all work against womenâs ability to take advantage of new opportunities. P52 Another dynamic effect is to change diets, a process that is termed âthe nutrition transitionâ in much of the literature. As countries industrialize, a significant share of the population moves away from traditional diets to eat more meat, more fats and sugars, and more processed foods, in general. P52 The literature that documents the changes in food systems allows some tentative conclusions to be drawn on the role and implications for the ABCD companies, but little deals explicitly, or even extensively, with the ABCDs. P52 Genetically engineered : The ABCDs have lobbied hard, and quite openly, against any attempt to segregate GE from non-GE crops, insisting that they cannot afford the special handling required. P54 Transfer Pricing : There are many definitions of transfer pricing. The simplest is âthe price at which one unit of a firm sells goods or services to another unit of the same firmâ. P54 Article 9 of the OECD Model Tax Convention states: â[Where] conditions are made or imposed between the two [associated] enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.â P54 Ricardo Echegaray : ââUntil 2007 ... Bunge paid about $100m in corporate income tax in Argentina a year. Then it decided to set up an office in the tax-free zone of Uruguayâs [capital] Montevideo. From that date, it suddenly declared no gains in Argentina. We cross-checked with Uruguay and we found they had not exported anything from Montevideo and had almost no staff there.â [...] Echegaray ... said he had evidence that all four companies had submitted false declarations of sales and routed profits through tax havens or their headquarters in contravention of Argentinean tax law. In addition, he said, they had declared excessive costs in Argentina to reduce taxable profits there. He also accused them of using phantom companies, on occasion, to buy grainâ.232 p55 ...developing countries today account for 47 per cent of all imports and more than half of all exports. The ABCDs have positioned themselves already for this change and are important players in Brazil, China, India, and other emerging economies. P56 ** ...are we running out of the natural resources we need to grow enough food? Is industrial agriculture too wasteful and too polluting, or is it the only way to ensure an adequate food supply? Can global markets ensure food security, or must local food production dominate? Smallholders grow most of the worldâs food â how can they be given more political voice in deciding food-related policies? And, reappearing for the first time since the 1970s in a more mainstream way: do global grain traders (and the multinationals they work with, from Monsanto and Syngenta to Wal-Mart and Carrefour) have too much power? P56 While volatile prices come with good profits for the traders, they have also brought governmentsâ attention back to agriculture, in some cases dramatically, as higher prices have led to riots in the streets of more than 30 countries. P56 ... food aid caught up in regulations that made it more or less impossible for anyone but a US-based multinational to supply the contracts). P56 ...countries such as Saudi Arabia stocking food rather than relying on the world market for supplies as and when they need them, poorer countries understandably feel pressured to build reserves of their own too. P56 ** High Level Panel of Experts (HLPE)** Google **World Food Programme (WFP) ...it is clear that the 2007â08 crisis severely tested governmentsâ confidence in world markets. This was particularly true among the most vulnerable countries, but also among some of the middle-income and rich importers, who seem to have decided that they cannot rely on commercial sales when need arises, and instead are banking food (and future food through land lease deals). P57 ** International Food and Agricultural Trade Policy Council (IPC) - look into ** International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) - look into ...there is a need to manage demand given the planetâs finite resource base. The notion of managing demand is alien to free-market economics â price should be left to manage demand, rising when supply falls short so as to cut off demand. But there are obvious limits to this logic in relation to food: governments have an obligation to ensure access to food based on need, not demand. P58 The logic of trader thinking and argument is too seldom challenged, but food security is too precious to be left to the private sector. In making this argument, NGOs can help reclaim a larger place for the public interest in the complex world of financialized commodity production and trade. P58
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