Overpriced berries and the junk food complex

Fresh fruit and veg come high in nutrients, but at a high cost

I was recently having a discussion with a friend who does not work in agriculture, and asked her the following question: If you could ask one thing of the EU’s upcoming reforms of the Common Agricultural Policy (CAP), what would it be? She replied: “They should make berries cheaper”.

My initial response was to reason that politicians are not there to micro-manage the prices of food products. Then I realised that they can, and they do. The problem is that it is not blueberries or blackberries whose prices are being manipulated downwards, or anything else in the fresh groceries aisle.

Here are some prices sampled from a medium-sized Delhaize supermarket in Brussels: 100g of fresh blackberries at €3.69; 280g of frozen chicken nuggets at €2.25; 100g of pine nuts at €5.49; 200g of coated snack nuts at €1.05. So the chicken nuggets cost 4.5 times less per gram than the blackberries, and the snack nuts 10 times less than the single-ingredient pine nuts. This despite the fact that the two processed items contained a long list of ingredients sourced from far and wide: salt, sugar, corn-based sweeteners, vegetable oils, flavourings, preservatives and so on.

Of course, anything is cheaper if it can be produced and sold in bulk. But not that much cheaper. Perhaps there is nothing we can do, ultimately, to prevent people from making the choice to eat unhealthy food. But there is something we can not do, and that is to not skew agri-food policies in a way that makes junk food artificially cheap, increasing what is already a strong temptation for shoppers.

Obesity epidemic spreading to emerging countries

The poor nutritional profile of highly processed foods, and their impact on health and well-being, are proven and well-documented. But that has not stopped us sleepwalking into an obesity epidemic, and with it a proliferation of potentially avoidable cases of heart disease, cancer and type II diabetes. Obesity rates have tripled in some parts of Europe since the 1980s, starting to rival America’s well-known weight problems. But the real worry now is big emerging countries, where eating habits – along with incomes – are starting to converge with the West. 60% of South African women, and 70% of all Mexicans, are overweight or obese, a problem which runs parallel to continuing malnutrition among other population groups.

This week the UN General Assembly makes a rare foray into the public health domain at a summit aimed at combating these lifestyle-induced diseases. What are the chances for a global commitment to crack down on junk food advertising aimed at children or to tax unhealthy food? Unfortunately, very little.

Given the gravity of the health crisis, a few countries may start to pioneer individual measures; France has recently proposed a soda tax, while the South African government has unveiled plans to limit salt content in processed breads and snacks. But huge financial interests, and a huge lobbying operation, swing into action when the spectre of food regulation creeps onto the horizon. Last year’s attempt to introduce ‘traffic light’ nutritional labelling in the EU, and 2009 plans for a federal soda tax in the US, were abandoned following big industry campaigns.

Realistically, agri-food companies can live with a few labelling requirements and none-too-punitive levies, such as the token sales taxes currently applied to sugary drinks in around 30 US states. But what they really don’t want is a wholesale questioning of why junk food is so cheap and abundant in the first place. This goes back to farm subsidies, and the question of what policies such as the CAP can, can’t, should and shouldn’t do.

The real beneficiary of farm subsidies

In a model applying with notable variations in both Europe and America: most agricultural subsidies make their way into the hands of big farm holdings with a history of high production volumes. By definition, these are mostly farms producing cereal crops and oilseeds. The subsidies provide farmers with an incentive to produce lots of the commodities in question, providing food processors with a convenient glut of their key raw ingredients, which they buy up at prices sometimes barely covering the cost of production. It is the subsidies which allow farmers to stay in business, despite the low prices they accept for their output.

And accept they must: the crucial middlemen in the food supply chain – the processors, distributors and retailers who link farmers to consumers – are few and far-between. One firm, Tyson, accounts for nearly 30% of all US meat and poultry sales. This type of market share may sound normal for the dominant player in other sectors, such as petrol extraction, where massive up-front capital and infrastructural operations are needed to yield the first drop of crude. But this should not be the case for a fresh product, chicken, which can be produced and sold in the same area – in any area – without the need for an industrial-scale operation.

The food supply chain faces an unrivalled David and Goliath effect: the producers are individual farms, and the processors/distributors are huge multinational companies. The farms that survive and prosper are often those which come to mirror the size and scope of the middlemen, aka factory farms, and what they produce and how they produce it becomes a function of what their buyer wants (for more on this see the excellent documentary Food Inc). The buyer not only benefits from the economy of scale of the factory farming operation, but also from the farm subsidies which continue to pour into these farms, allowing them to sell on their produce at low rates. A subsidy to a farmer is an indirect subsidy to a buyer.

The magical combination of cheap, abundant ingredients and long-life trans fats allows processed foods to be mass-produced, distributed and exported at low cost, and sold on cheaply enough that consumers will not think twice about buying them – even, or especially, where incomes are lower in the developing world.

Changing the status quo

Our subsidy schemes are the first building block in a system which churns out a disproportionate amount of unhealthy food at disproportionately low prices. Why this subsidy system was developed in the first place is one matter; why it has been allowed to remain is because it is in someone’s interests. Not farmers, the majority of whom would much rather receive a decent price for their produce than depend on subsidies. Not consumers, for whom the physical and financial burden of lifelong health complications more than cancels out the savings they make at the supermarket checkout. The real beneficiary is the industry that shepherds the passage of food from producer to consumer, an industry which is able to speak with a powerful and unified voice when defending the status quo.

So should junk food be made more expensive, or fresh fruit and veg made cheaper? Shouldn’t supply and demand decide? Perhaps, but only if we remove the distortions on the demand side that derive from subsidy-skewed price signals.

Reforming multi-billion euro agricultural policies is a complex exercise; a whole array of tools can be used to support different products and different production systems. But, whatever the ways and means, a narrowing of the price gap between blackberries and chicken nuggets should be the first symptom of a successful reform!

The opinions expressed in this blog are the personal views of the author

Photo by Valentina Pavarotti

No Comments

Development goals: celebrating on an empty stomach

Nutritional failures could hamper progress on other development goals

Just four years shy of 2015, the date by which the Millennium Development Goals (MDGs) will have been met or missed, the world is preparing to celebrate a major success: the 2011 progress report shows that the world is on track to reach the headline target of MDG1 – to halve the global poverty rate, defined as those living on less than $1 a day.

The proportion had already been brought down from 46% in 1990 to 27% in 2005 and – despite the economic downturn – is likely to resume the downward trend and fall to below 15% by 2015, exceeding the original targets.

However, the sub-target of halving the proportion of hungry people is veering well off course. Food poverty fell from 20% of the global population in 1990 to 16% in 2000-2002 – but subsequently stagnated, remaining at that rate as late as 2007. This unhappy picture is only half the story, given that food prices have subsequently ballooned, putting basic foodstuffs out of reach for many developing country households. The most recent price spirals, rising through 2010 and peaking in early 2011, have left an extra 44m people hungry, according to the World Bank.

Lifted out of poverty – just

But what is worrying is the lack of progress on hunger even when food prices were stable and economic growth was raising incomes. The figures suggest that people are being lifted out of extreme poverty – but only marginally, and not far enough to allow them to obtain the quality and quantity of food necessary to lead a healthy life.

If the hunger target is missed, this means that the poverty target will, for all intents and purposes, also have been missed, despite what the numbers say. Beyond the arbitrary dollar a day figure, this will mean that the most basic input for a human being – food – has not been brought into reach in the quantity and quality needed. What use alleviating poverty in relation to an income threshold, when crossing the threshold does not overcome the most basic hallmark of poverty – not being able to nourish oneself sufficiently?

The UN has acknowledged that the disconnect between the two figures merits a major rethink of hunger strategies in the remaining time before 2015.

Knock-on effects of under-nourishment

Come 2015, the hunger failings could not only undermine the poverty reduction claims, but could also unravel the apparent progress on other health and education-related MDGs.

According to the 2011 progress report, primary school enrolment has risen from 82% (1990) to 89% (2009), the under-five mortality rate has been reduced by one third since 1990, access to reproductive health has shot up from 64% to 81% in the developing world, and HIV incidence and malaria deaths have been brought down by 25% and 20% over the last decade alone. These advances may not be enough to make the ambitious 2015 targets, but they are still saving millions of lives and improving countless others.

But failing to combat hunger – and the related scourge of under-nourishment – could undermine all of this. UN officials indicated this week that the combined figure of hungry and under-nourished people is as high as 2.5 billion.

1,000 days

Worryingly, the MDG progress report shows that – despite some progress over the past two decades – nearly a quarter of under-fives in the developing world remain undernourished. Failure to secure adequate nutrition in the critical ‘1,000 days’ – stretching from pregnancy through to age two – is known to lead to irreversible stunting of physical and intellectual development.

New schools and hospitals are crucial, but how much of a difference can they make if the infants arriving for their lessons and check-ups have already been consigned to debilitating physical and mental limitations by early life nutritional deficiencies?

The missing progress on hunger and nutrition highlights the need to see the MDGs as a single, interconnected undertaking. Targeted actions in the health and education fields are clearly paying off (e.g. the removal of school enrolment fees, TB immunisation programmes) and should not let up. But a failure to deliver parallel investments on the food/nutrition side could jeopardize it all, with huge human and financial costs in the long run.

Extra development cash must bolster food and agriculture

There is therefore a very strong argument for additional development support to be channeled to tackling food security and nutrition. G8 countries pledged to raise development aid to 0.7% of GNI but are only on 0.32% at present. Should they come through with the funding – as is necessary to make meaningful and sustainable progress on the MDGs – then the current trend, whereby nutrition schemes focused on breastfeeding awareness, maternal health/education, and the provision of micronutrients are gradually growing in coverage, should continue.

But support for nutritional programmes should not displace agricultural development aid, which has finally been restored as a priority area after decades of neglect. It is after all the global imbalance of food production, and the failure of the market to make food available at affordable prices, which imposes the basic limits on developing world diets, causing both hunger and deficiencies in key nutrients.

Perversely, some 75% of the world’s hungry live in subsistence farming households. Malfunctioning price signals and voracious food commodity speculators were much discussed at last month’s G20 agriculture summit. But success in combating the global food system’s failings should not be measured in terms of volumes of derivatives trade or the ratio of food supply to demand. It should instead be traced back to the MDGs, and measured in the ability of subsistence farmers to make a basic living from their trade and to feed themselves.

Otherwise, when the wealthy world toasts its successes in poverty reduction in 2015, it will be toasting little more than the headline economic growth figures in China and India, themselves riddled with discrepancies between regions and population groups.

In the big emerging countries and elsewhere, the world will have failed to make any durable, systemic change. It will have empowered millions more people with schooling, vaccines and drinking water, but will have failed, cripplingly, to address the food system that still fails to provide them with adequate quantities of food with the right nutritional values at the right price, while consigning generation after generation of rural poor to toiling in order to produce that food – and receiving only economic hardship in return.

There is scepticism about what will happen post-2013, with a new set of numerical development targets unlikely in the current climate. All of this makes it even more crucial to make the current MDGs count, and to secure progress that genuinely resonates beyond 2015, rather than pushing the requisite number of people temporarily above the poverty line.

Photo by Valentina Pavarotti

No Comments

Biodiversity – what’s that again?

Small creatures play a big role

One quarter of animal species are at risk of extinction, fish are getting smaller and fewer in number, pollinators are disappearing, and naturally water-purifying ecosystems are falling apart. Faced with this genuine ecological crisis, it is no wonder that Brussels is re-launching its biodiversity strategy. The EU tried and failed to halt species loss by 2010. Now the deadline is 2020, and the stakes are even higher. Science is converging on biodiversity as it did on climate change – to tell us that we must pay now, or pay even dearer later. Insect pollination alone is worth a massive €15 billion per year to the EU.

Society will need to be co-opted in the biodiversity battle. Currently only 35% of people know what the term means. After all, we have only just got our heads around climate change, with its sense of looming disaster and weight of responsibility in our everyday actions. The two issues are inextricably linked, but biodiversity is the part of the narrative which got left behind. The prospect of butterfly varieties petering out is less threatening than the spectre of rising sea levels, floods and droughts. Convincing the public to build species/habitats loss into the doomsday narrative will be a slow and pain-staking job, but at least the story is simple and cyclical: As our climate changes more of its species/ecosystems perish, and when they perish the world is less able to manage the impacts of a changing climate.

Economic activity = biodiversity loss?

Understanding biodiversity means understanding the huge impacts of changing the way land is used. Each fragment of economic activity implies a change in land use. Wheat to maize. Mixed crop cultivation to monoculture. Rainforest to palm oil plantation. Palm oil plantation to housing development.  Housing development to factory. Population growth has exacerbated trends, but even without it, land use change – in the shape of new, expanding economic activities – is the very essence of progress and is unavoidable.

But does the expansion of one species – the human race – have to entail the eradication of others? Science tells us that we are reaching a tipping point beyond which this correlation cannot hold up. At a given point, scything through forests, replanting land and draining aquifers no longer delivers economic progress, but curtails it – given that ecosystems no longer perform the web of services which facilitate human life and prosperity. 

Unfortunately it is difficult to tell the EU’s 500m citizens and hundreds of thousands of companies to rethink their disparate economic activities in order to stop eradicating species. Their answer would be: we’re not responsible. And they would be right. Their activity alone would not eradicate any particular species, providing it could find suitable habitats elsewhere. It is the collective impact of the mix of activities in a given coastal strip, urban agglomeration or river basin which degrades an ecosystem as a whole, robbing a species of its habitats and sending it elsewhere – or gradually towards extinction.  

Regulation – part of the solution

So how then can the EU or anyone else govern trends occurring across millions of acres of land fragmented into small, privately owned parcels (even the Natura 2000 network of protected zones includes privately-owned land)?

When the effects on humans are direct enough, rules and regulations can be put in place to ban the most harmful practices, e.g. toxic substances from pesticides can be banned to prevent them ending up in the food and water that nourishes us, with positive knock-on effects (a sort of collateral un-damage) – for other species which also depend on those resources.

But these piecemeal solutions do not address the (eco-)systemic problems which are driving species into extinction. For this reason the EU strategy looks to put some land out of bounds for economic activity – 15% of degraded ecosystems must be restored by 2020, and the current protected nature zones (Natura 2000) which cover 18% of EU land must be better managed to become genuine hosts to biodiversity. These figures meet the requirements of the politically ambitious Nagoya international agreement on biodiversity; that is not to say that they are sufficient to safeguard endangered species and ecosystems.

Farmers in the hot seat

So what about the rest of the EU’s land? Is there scope for managing land use patterns beyond nature zones? It transpires that the EU does in fact have one trump card to play. Farmers. 72% of land in the EU is used for farming and forestry. And with EU farm subsidies making up around one third of farm income, the EU effectively owns them – or at least possesses a major ready-made source of leverage.

Much of the Commission’s biodiversity strategy reads like a prelude to reform of the Common Agricultural Policy (CAP), describing and in a way pre-empting its likely shape.

It calls for all farm subsidies to be tied to the provision of “environmental public goods” through obligatory practices such as crop rotation and ecological set-aside, while insisting that the reformed CAP drastically scale up the percentage of EU farmland subject to biodiversity protection schemes. In doing so, it may help to enshrine expectations from CAP reform and to prevent backtracking. When agriculture ministers balk at the extra requirements on farmers, EU agriculture chief Dacian Ciolos can wave the biodiversity strategy at them and ask whether they really wish to jeopardise attempts to prevent species loss…

Of course farmers will need to be co-opted with the right combination of carrot and stick in order for this to work.  Remonstration will be vocal, but when their EU subsidies are at stake, they have little room for manoeuvre.

And besides, the modern farmer is fast becoming accustomed to the accumulating public expectations in regard to his private land. Farmers have been well apprised of the fact that they are sitting on the lion’s share of our natural capital. It is on farmland – from fallow prairies to arable monocultures – that the battle against climate change, biodiversity loss and soil and water degradation will be won and lost. So whether they like it or not, farmers are now in the political hot seat.

Do people care enough?

But this leads us back to society’s position. For farmers to care, people must care enough. The survey on biodiversity awareness reveals that once the concept is explained, more than 90% of the public believes that action must be taken to curb species loss. But what if the question were to be phrased more honestly, e.g. For the sake of protecting biodiversity, would you countenance a wholesale rethink in the way land is managed, with the potential to curtail economic expansion in certain regions/sectors, and to push up food prices in the short/medium term by constraining production?

What people are actually meant to do on a personal level is –like for climate change – by no means clear-cut. The Commission’s initial advice effectively amounts to buying non-endangered fish and using ‘green infrastructure’, i.e. going to the park. Hopefully Disney’s imminent tour de force on the value of nature (‘Pollen’) will help to kick off the debate in the way that An Inconvenient Truth did for climate change (the trailer suggests a more visually impressive spectacle than Al Gore running through graphs in a lecture hall).

The biodiversity challenge boils down to the same core questions which underpin the debate on climate change and more generally on the way we use natural resources. Can we stop and repair the damage for long enough to allow our natural capital to be replenished? Can we hold back – or even roll back – progress sufficiently to allow a transition to a world where progress can resume from a different basis? It is short-termism v long-termism. The financial crisis makes it harder to front-up the cash to fund the transition process, but at least it has cemented the necessary logic: painful restructuring measures are needed to avoid default.

Photo by Valentina Pavarotti

No Comments

Climate change: king of the road(map)

The fight against global warming is an economically beneficial one, the Roadmap says

‘Roadmaps’ are often disappointing in politics. George Bush had a roadmap for peace in the Middle East, until the election of Hamas in Gaza and other off-piste developments consigned it to failure. This week the European Commission produced a different sort of roadmap. Its aspirations are equally bold, namely the effective decarbonisation of the European economy by mid-century.

Here the road is long and straight: the EU can and should reduce its domestic greenhouse gas (GHG) emissions by 25% by 2020, 40% by 2030, 60% by 2040, and finally 80% by 2050. This is the scale of contribution seen as necessary by the EU and other developed countries in order to limit global warming to 2° C.

The reduction percentages are big, round numbers, and the benchmark years are far enough away to feel futuristic. Nonetheless, the Roadmap breaks the target down into bite-size digestible targets – and suddenly it feels more attainable. The pathway to the 2050 target would require an annual reduction in emissions (compared to 1990) of 1% in the decade up to 2020, 1.5% up to 2030 and 2% thereafter. This will cost an extra 1.5% of EU GDP per annum than was invested in the low carbon transition pre-crisis, and the outlays are likely to be more than recouped by savings on fossil fuel imports.

The challenge for Brussels is to show member states that this is an attainable pathway, but not a self-evident one. The Roadmap does well to dispel any complacency about GHG reductions of this magnitude occurring of their own accord, on the back of miracle technologies or super fuels. Nor does it play into the hands of those who warn against climate change action plans as a smokescreen for draconian policies impinging on lifestyle freedoms, e.g. the freedom to eat meat and to travel extensively. The Commission is adamant that radical lifestyle changes – while potentially helpful – need not occur.

What would 80% emission cuts look like?

Instead, Brussels paints a detailed and necessarily prosaic picture of what 80% plus GHG emission cuts would look like. The resulting image is of a world where the systems of the present are meticulously adapted with the pick of emerging (but largely existing) technologies. The EU would produce more energy from renewables and progressively cut oil and gas imports, feed the new energy sources into more flexible ‘smart’ grids, remove the slack from emissions trading schemes to force up the virtual carbon price, deploy carbon capture and storage where heavy industries can’t decarbonise, electrify transport where possible and run other vehicles on biofuels, whittle down heat and light inefficiencies in buildings by applying existing technologies, and cut agricultural methane and nitrous oxide emissions (and to a lesser extent CO2) by applying state-of-the-art precision farming techniques. In short the EU must – in a broader, sustained and more focused manner – do what it is currently doing embryonically and in fits and starts.

In 2008 the EU scored a major victory for its climate credibility when it wrote 20% emission cuts by 2020 into law. The Roadmap shows that the Commission, largely thanks to its indefatigable climate chief Connie Hedegaard, is not resting on its laurels, and is convinced that the EU can and must go further, regardless of what the international community is doing.

The Roadmap is intended to be the starting pistol for a whirlwind of GHG-cutting initiatives. Brussels wants each member state and each sector to draw up its own roadmap for energy efficiency and GHG reductions. Putting sectors in healthy competition with one another could be a fruitful avenue; all sectors of the economy want investment (not least in r&d) to spur their future competitiveness, and they know that they will rise up the pecking order for public funding if they can add a strong sectoral GHG reduction performance (at the 2020 or 2030 benchmarks) to their CVs.

Targets: arbitrary but necessary

But if the roadmap has a weakness, it is the EU’s refusal to lay down the law. The current document merely maps out what scale of emission reductions can be achieved in which sectors and by which year, and relies on the goodwill of member states to rise to the challenge. Here the Commission should not be averse to a touch of dirigisme. Should short-termism prevent member states from grasping the economic/environmental win-win it has put on the table – and a long-term win-win can often be a short term lose-lose for popularity – Brussels should not be afraid to make the roadmap’s projections into binding targets.

Targets are arbitrary, approximate and unscientific, but this is the unavoidable face of any coherent international response to climate change. Emissions trading schemes are based on the allocation of an arbitrarily capped number of emission licenses. The Kyoto emission targets were arbitrary, and so are the EU’s 2020 targets. But these appear to be working: member states had already cut emissions by 16% by 2009. Targets have helped to drag them – kicking and screaming – in the right direction. Big round numbers are necessary, even if they incur the wrath of sneering do-nothings.

When it comes to the scale of change required to fight climate change, governments will need to sponsor particular industries, tax others prohibitively, mobilise huge fluxes of public and private money to particular causes, and send strong price signals. In short the very tenets of a planned economy. With this in mind, it is no surprise that many are tipping China to move to a low carbon economy with unparalleled pace and efficiency, once Beijing decides to definitively pursue that goal. When it comes to energy security, the US also shifts into planned economy mode – how else would America have managed to shift nearly 40% of its domestic maize production into fuel ethanol over the space of a decade? European politicians may be more sensitive to the environmental cause, but their failure to see the other side of the win-win – the economic gains – may mean that the EU stalls while others move ahead.

EU leaders have already signed up to a 30% GHG reduction scenario by 2020 on the condition that other wealthy countries follow suit; in the absence of any such agreement the commitment seems rather virtual. In the meantime the EU should do what makes economic sense domestically: according to the Commission’s modelling exercise, this means decarbonising ASAP. When other countries see the EU importing substantially less of their fossil fuels, and producing new jobs of its own through green investment, the most compelling case will have been made for them to follow suit in moving full throttle towards a low carbon economy.

Photo by Valentina Pavarotti

No Comments

Why are food prices soaring again?

Only six months ago, the world appeared to have put the destabilising food price spikes of 2008 behind it. Wealthy countries had clubbed together to deliver new seeds and fertiliser to African farmers, global harvests proved bountiful in 2009, and food stockpiles – which everyone had been surprised to find empty in 2008 – were gradually built up again.

But this week the world was jolted into submission when food riots erupted in Algeria, reminiscent of the violent unrest of 2008 in Cameroon, Egypt, Somalia, Haiti and elsewhere across the developing world. Six months ago food prices once more entered a steep upward trajectory, and by December 2010 they had breached even the June 2008 levels, setting alarm bells ringing at the UN.

Algeria first, where next?

Will the crisis be contained to Algeria? There are reasons to fear that it is only the tip of the iceberg. Food price increases are always more sharply felt in lower income countries, where food consumption takes up a higher percentage of household spending. Worryingly, Algeria is not even particularly poor by global standards. However, its reliance on food imports is matched only by Senegal, Yemen, Eritrea, Haiti and North Korea. When major suppliers into the world market suffer harvest failures and prices surge on international markets, major importers feel the pinch.

According to a 2008 World Bank report, only a handful of developing countries are at genuine risk of being destabilised by a repeat of global price spikes. Most agricultural trade deficits have been whittled down over recent decades, and for the remaining sub-Saharan food importers, “small changes in their agricultural production mix will generate enough food for their citizens and can turn most of them into net raw food exporters.” However, this sounds complacent when it is considered that in many cases a major deficit in core cereal crops remains, covered by a surplus in cash crops such as nuts or strawberries – a structural imbalance which cannot be remedied overnight.

With this in mind, it is not only the major net food importers like Algeria who are at risk; there are in fact a host of countries with the lethal combination of low, food-dominated incomes, and reliance on imports of key foodstuffs such as wheat, maize and sugar; with the prices of these commodities doubling from one year to the next, and producing a knock-on effect on meat and dairy prices, even small trade deficits can translate into destabilising price hikes.

Bad weather – nothing new

The trigger has once again been bad harvests: Russian and Argentine droughts have combined with Australian floods to depress global yields below expectations.

But bad weather is nothing new – even if climate change is making a structural problem structurally worse. What is new is the capacity for bad harvests to spark seismic price movements on global commodity exchanges, and for social unrest to erupt in poor countries as the price hikes filter through into day-to-day products.

As the second food crisis in two years comes into view, it is fair to question whether efforts to counter this huge emerging problem have been given the necessary urgency.

Speculators, stocks and silver linings

Many said that speculators were to blame last time round, and a series of reports and reviews were rolled out to shed light on shady practices in agricultural derivatives markets. However, if Nicolas Sarkozy’s rhetoric is anything to go by, these moves have gone nowhere near far enough. The French President has made the fight against commodity price volatility and market speculators one of the top priorities of this year’s French presidency of the G8 and G20.

What about food stocks? In the heady days of 2008, the idea of building up ‘global’ food stocks under integrated management gained momentum. But the idea was riddled by practical pitfalls, and soon petered out. In the meantime countries did start to build their individual stocks back up, but the next supply crisis appears to have hit too soon; the EU has spent much of the autumn whittling down its modest stocks of barley, wheat, butter and milk powder in a bid to keep domestic price increases in check.

Is oil to blame? Higher crude prices drive up the cost of agricultural inputs such as fertiliser, with knock-on effects on food. EU and global experts have identified clear correlations here. But can anything be done as crude climbs structurally higher? Biofuels, another scapegoat of 2008, could continue their current expansion and eventually take on a major share of the transport fuel blend. However, diverting extra hectares of sugar, rapeseed and palm oil to agrifuels could, perversely, drive food prices up even as oil comes back down.

Investing in less contentious forms of renewable energy looks like a simple win-win for food security in the long term: fighting climate change and its unpredictable impacts on harvests with one hand, and bringing down the price of oil (and its repercussions on food prices) with the other.

However, the 2008 food crisis failed to spark effective short term strategies to rein in price volatility, and it also failed to inject the urgency into the climate change debate which is desperately needed for the longer term.

Should a second fully-fledged food crisis materialise, it could at least provide further intelligence on the core problems, and how to go about resolving them. Evidently, supply and demand are not meeting each other, or the signals are not being transmitted well enough. Either way, the precedent is worrying, given that the demand side will soon swell to 9 billion. Producing the right amount of food and having it reach people at the right prices is proving a big enough challenge with current production capacity.

No Comments

Waiting for Doha

Could currency concerns poison WTO progress?

World leaders have set themselves yet another deadline for completing the World Trade Organisation’s Doha Round. The trade talks, launched in 2001 and tipped for completion in 2005, 2008 and then 2010, should now be wrapped up in 2011, according to last week’s G20 declaration.

Doha is fast becoming the global economy’s answer to Waiting for Godot. Like Beckett’s absent hero, a Doha deal is constantly talked about but never comes around. And as with Godot, you begin to wonder whether those who talk about Doha really know what it will look like when it finally arrives.

On the surface the signs are now good. The G20 – comprising all of the key players at the Doha table – identified 2011 as a window for completing the talks. Presumably the prospect of US elections in 2012 is enough to convince leaders that America’s wavering commitment to Doha must be tapped before pre-election posturing snuffs it out.

Leaders also voiced a willingness to pick up where they left off in 2008, the last serious round of talks between trade ministers. At that point, a fortnight of negotiations in Geneva yielded a complex web of trade-offs which all parties were willing to work from. The gist of it was big domestic subsidy and tariff reductions for the EU and the US, and significant slashing of industrial duties in the developing world (a term taken to include the likes of China and India in WTO parlance). For the world’s very poorest there would be only minimal tariff reductions, in order to ensure that Doha remains the development round it was initially branded as.

While the Seoul G20 meeting sent the political signal, the technical groundwork is thought to be moving ahead in Geneva, allowing officials to tidy up the edges of the 2008 compromise and work out how to agree the outstanding issues.

Exiting crisis is key incentive

So will the G20 countries be as good as their word when they sit down with other WTO members at the Doha negotiating table? Will they be willing to hammer out the necessary end-game compromises in order to get a wide-reaching, multilateral trade deal through? On one hand the world’s current economic woes in the wake of the financial crisis appear to be working in favour of Doha. Developed countries have tried a host of remedies since the crisis, but American unemployment remains high, European government debts are still undermining confidence, and Japan’s fledgling growth is predicted to grind to a halt as a strong yen curtails its exports. Governments across the world are insisting that once their stimulus packages subside and domestic spending incentives disappear, the real recovery must be export-led. With little prospect for raising domestic demand in the advanced economies, the prospect of multilateral tariff reduction, and fresh access to a host of foreign markets, should be mouthwatering.

And striking a world trade deal is not impossible. It was done in 1994 between the 123 members of the WTO (the organisation has subsequently expanded to 153 members). The current climate may not seem conducive to multilateralism, but that did not stop some 190 countries signing up to landmark biodiversity and genetic resource sharing deals in Nagoya last month.

Clash over currencies

So what would stop the big economies following through on their pledge to wrap up Doha next year? The reasons are in fact manifold. While penning last week’s commitment to finish Doha, G20 leaders were in fact busy haggling over competitive currency devaluations. The issue holds major potential to sour the trade climate. China stands accused of keeping the renminbi artificially low in order to boost its exports, while the US – principal prosecutor of China – is now in the firing line after the Fed’s decision to inject some $600 billion into the US economy, a move which could further weaken the dollar.

With this level of distrust circling around exchange rates, countries will be loathe to agree to tariff cuts and state aid reductions which would could pit their own producers against foreign competitors who are suspected of receiving the biggest export subsidy of all: a permanently undervalued currency. The logic was exposed recently when French agricultural think tank Momagri claimed that undervaluation of the dollar and advantageous central bank rates handed American farmers the equivalent of a €25 billion subsidy over their eurozone counterparts from 2008-2009. French farmers net some €10 billion of EU support annually; when criticism of trade distorting farm subsidies emerges from Paris, it is clear that something is up.

Currency fears destroy the vision of a level playing field once border duties are whittled away; in doing so they devalue Doha’s biggest prize: tariff cuts.

EU priorities diverging from Doha

Exchange rate fluctuations are by no means the only non-tariff issue which could hold back WTO progress. The EU has been one of the biggest proponents of a Doha deal, but even Brussels now appears to be turning its attention elsewhere. A new Commission ideas paper entitled Trade, Growth and World Affairs states: “Cutting tariffs on industrial and agricultural goods is still important, but the brunt of the challenge lies elsewhere. What will make a bigger difference is market access for services and investment, opening public procurement, better agreements on and enforcement of protection of IPR (intellectual property rights), unrestricted supply of raw materials and energy, and, not in the least, overcoming regulator barriers including via the promotion of international standards.”

Achieving any of these things is difficult at the WTO. Most of all IPR. The EU prides itself on its regional food specialties such as Parma Ham and Roquefort cheese, and uses a system of geographical indications (GIs) to reserve each term for foodstufs meeting defined production conditions in the region in question. Gaining international recognition of GIs is near the top of the EU’s Doha wish-list, but remained one of the major unresolved issues in 2008, coming up against resistance from the US, Australia and a host of other countries who are keen to prevent what they see as generic food terms being put out of bounds for their own producers.

Bilateral benefits

Making progress on this type of issue is more likely in the remit of a bilateral trade deal, where the EU can offer its own specific concessions as a quid pro quo for GI recognition. Country to country, or region to region agreements, not least the current attempts to strike a deal between the EU and Mercosur (Brazil, Argentina, Uruguay and Paraguay), appear to offer more scope for tackling the non-tariff issues which specifically bother each side. In the EU/Mercosur case, it may help the negotiating mood that the competitive devaluation charge has not been seriously levelled at the euro, the pound, the real or the Argentine peso.

Bilateral trade deals do not make a global accord more complicated, but only less urgent; they cannot deliver the same aggregate market openings as Doha, but are nonetheless seen as capable of delivering a key economic boost, and are far easier to complete in a period of diversifying trade concerns and general distrust over currency manipulation. For these reasons the G20′s latest WTO deadline may be simply another act in the Waiting For Doha saga.

No Comments

CAP reform: austerity or posterity?

Unprecedented food price volatility has reshaped the CAP debate

The stage is set for reform of the EU’s ever-contentious Common Agricultural Policy (CAP). The public has been consulted. Stakeholders have defended their stakes. MEPs have put their two cents in. And member states have laid down their red lines. In the coming weeks EU Farm Commissioner Dacian Ciolos will try to synthesise the conflicting views into concrete ideas for reforming EU farm policy.

But what type of CAP reform is the stage set for? Designing EU farm policy is always a delicate balancing act, given that countries at either extreme of the debate want almost diametrically opposed things. The pro-intervention bloc (France, Ireland and other CAP stalwarts) believes inherently in doing whatever it takes with public money to keep farmers in business. Meanwhile, the liberal-leaning bloc (principally the UK and the Scandinavians) is fundamentally opposed to ‘distorting’ the market by deploying public money to keep farmers in business.

This time the balancing act may be even tougher to manage. The economic crisis has raised the stakes in the debate over public intervention and the role of the state; when that ‘state’ is the EU and the public intervention is in the farm sector, divisions are even more crystallised. It appears harder than ever to reconcile those who envisage the state as the necessary overseer of stability with those who see it as the root of harmful dependencies and taxpayer burden. In many cases the fault lines are likely to run between agriculture and finance ministries within the same member states.

Stalking the speculators

On the one hand, the EU is rallying around efforts to bring stability to the economy, a trend which favours strong, interventionist policy.

Speculative financial activities are now in the spotlight. The EU’s internal markets chief, Michel Barnier, has launched plans to force transparency on secretive derivatives trading, in a bid to allow speculation to reveal itself – and to burst its own bubble – before the underlying assets are forced out of kilter.

Much of this speculation comes in the form of bets on interest rates, exchange rates and sovereign debt defaults. However, commodity-based derivatives – where buyers effectively bet on price movements for wheat, copper and other raw materials – is a growing source of financial activity, and is also coming under Barnier’s microscope.

Food prices are naturally subject to fluctuations: unpredictable climate factors and changeable trade conditions mean that the food supply can grow and shrink significantly over short periods of time – and prices can move accordingly.  But the real trouble is seen to occur when speculators pile into agricultural markets, buying up the commodity – or a derivative of it – and exacerbating price spikes. The topsy-turvy price curves of the last three years have confirmed some of the wildest fears about the involvement of new players on agricultural commodity markets.

Farms – too fundamental to fail?

With the issue now dominating EU and G20 agendas, the ground is fertile for tackling the volatility-speculation issue on all fronts. Right on script, agriculture ministers from France and its pro-CAP allies are talking up the risks of price volatility to farm livelihoods, and are driving the agricultural reform agenda in the direction of stability. In CAP language, this means strong income support payments to farmers and market management tools which kick in when prices plummet, i.e. two of the three tenets of current EU farm policy (the other being the recent addition of ‘rural development’). The status quo plus camp would also like to see EU-subsidised insurance schemes added to the toolkit to provide another layer of protection for farmers.

The liberal dissidents are trying to fight the tide. In their eyes, farmers should not hide behind subsidies, but should bank the high prices and ride out the low ones, plugging themselves into the markets and using hedging opportunities to their advantage. But their tough love message is being drowned out by the calls for fresh intervention, tied to compelling scenarios of what will happen if nothing is done and farmers are left at the mercy of unpredictable price cycles. Many – including EU Agriculture Commissioner Dacian Ciolos – are arguing that farms cannot be allowed to fail. The knock-on effects would be social upheaval, environmental damage, and a loss of ‘food sovereignty’, as rural regions have the agricultural heart ripped out of them. A whole tradition and way of life would be lost to posterity.

The political climate is highly receptive to this message. Banks were not allowed to fail – the ensuing upheaval would have been too great. Farm ministers are hoping that the logic will hold for European agriculture. And the EU is hardly alone in protecting its ‘strategic’ interests. Look at Brazil, French Farm Minister Bruno Le Maire fumed this week, pointing to Lula’s recent moves to restrict foreign ownership of farmland. Why can’t the EU protect its own farmers from the frightening forces of investors, speculators and market mayhem? The taboo about public intervention has been swept aside, and nothing will work more in favour of retaining a well-budgeted and strong-armed EU farm policy.

Is CAP next victim of the ‘war on waste’?

But from another angle, the climate is absolutely opposed to public intervention – at least when it is broken down into facts and figures. The idea of irresponsible traders betting on food commodities and sending bread prices skyward chimes perfectly with popular outrage at the economic crisis. But CAP largesse, to the tune of nearly €60bn per year, is also a natural target for popular outrage, at a time of burgeoning public deficits and wars on waste. This exposes the CAP to the same cost-cutting zeal which is currently taking aim at the welfare state in a host of EU countries. For the ‘small state’ lobby, scrapping EU farm subsidies is the holy grail.

And this is where the internal fault lines may fall.  For finance ministers, bringing stability to the EU economy can conceivably mean fighting for derivatives transparency – but may not extend to propping up farmers indefinitely through unconditional paychecks. The public and the political establish are currently highly averse to both economic volatility and to big public outlays. For the future of the CAP, much will depend on which of the currents subsides first.

Photo courtesy of Simon Howden at Freedigitalphotos.net

No Comments

How safe is our food?

 

How safe is the food that we eat? Is the EU responsible when contaminations slip through the net?

Italy is still reeling from the sight of ‘blue mozzarella’ after consignments of the contaminated cheese made their way from a German factory onto Italian supermarket shelves. This was not the first food scare of its type, and not even the first involving mozzarella: the Italian ‘buffalo’ version was mired in controversy when high dioxin levels were unearthed in 2008.

These type of food controversies tend to rekindle latent scepticism about the global food supply, sparking intense media coverage, consumer boycotts, and a general loss of trust in the ability of public authorities to shield us from food impurities.

While the necessary questions are now being asked about the hygiene precautions in German cheese factories, the latest Mozzarella scandal also raises questions about our legitimate expectations on food safety.

Modern European society expects safe food, and is outraged at any reported contamination scare. Meanwhile we draw on a huge and diverse food supply which we are increasingly disengaged from. Short of the odd farmers’ market, most Europeans shop primarily in supermarkets, where the food on offer is increasingly varied, unseasonal, and diverse in its origin. Between 1999 and 2008 EU food imports increased by around 25 million tonnes, bringing in new products from new destinations with new hygiene challenges.

Last month journalists accompanied Health Commissioner John Dalli to experience first-hand the food safety checks carried out on lettuces arriving at a Belgian fruit and vegetable auction, and on South American bananas being shipped into the Antwerp port. Afterwards Dalli was able to say: “What I have seen today fully reassures me that the fruit and vegetables that reach our tables are safe.”

Evidently a statement to this effect is a must from the Health Commissioner. But it reveals the large discrepancy between what is expected and what is feasible: how sure can he or anyone else be about the integrity of the tonnes of food stacked on supermarket shelves, comprising hundreds of ingredients, all subject to multiple points of potential contamination through the food chain, from pesticides sprayed in the field to components of animal feed to water-borne bacteria in the factory.

The spread of pathogens and contaminants occurs all the time, through multiple vehicles. The difference with food-based contamination is that there is no margin for error – impurities are directly ingested into the body.

Border checks: a limited solution

Ultimately, public authorities cannot check that every batch of domestic produce and every container of imported goods are pathogen and toxin free (or at least below legal trace amounts). Instead they have to work on the basis of random checks guided by continuously updated risk data.

Currently the EU operates 100% document checks on a handful of recurrently troublesome imports such as Argentine ground nuts, Turkish pears and Thai aubergines, soon to be joined by Chinese noodles and Peruvian chillis. Even in these cases, only a handful of food consignments are actually subject to lab tests for pesticide residues or toxin presence. As is the nature of a risk-based system, the border checks are focused around past cases of contamination, arising in particular products of a given origin. Hence the huge scope for novel and unexpected sources of contamination to slip through the net.

When it comes to domestic produce the role of food safety controls is also limited. Fruit and veg auction houses provide a common collection point for large amounts of regional produce, but even here it is difficult to catch every contamination, not to mention the challenges of doing so when smaller supply chains are involved.

Alerts play pivotal role

Luckily, modern food safety systems do not rely solely on random checks. The EU food safety model is in fact focused on responding quickly when contamination does – inevitably – slip through the net. The Rapid Alert System for Food and Feed (RASFF) provides a database for alerting the European community once a food scare is located at a given point in the chain, allowing national authorities or retailers to take actions such as withholding, recalling, seizing or rejecting products in line with the notification. The system is in constant use, and in the 2005-2008 period received around 7000 notifications (including follow-ups) per year on measures taken to restrict produce suspected of contamination.

Hence the importance of ‘traceability’ requirements: the extensive coded information obligatory on food labels is used in order to trace a contamination incident back from fork to farm, and back out again to all retail outlets stocking food from the same source.

Does the system work? The fact that so many alerts are received by RASFF, and so few cases turn into fully-fledged food scares, suggests that it does. The infamous blue mozzarella only made it to a handful of consumers, despite the fact that the German factory was late to notify the contamination.

How does the EU measure up globally?

Nonetheless, when contaminated foodstuffs do slip through the net and all the way to consumers, major consequences can ensue, and public feeling is legitimately strong.

In 2008 there were 45,622 human cases of foodborne illness in the EU, resulting in 6,230 hospitalisations and 32 deaths, according to the EU’s food safety watchdog. More than one third of cases were caused by salmonella alone, with eggs (23%) and pigmeat products (10%) the foodstuffs most likely to transmit a foodborne illness.

The data suggests that major food safety gaps still remain. However, a comparison with other countries shows the EU situation in better light; according to estimates from the American Centre for Disease Control, foodborne diseases are responsible for some 325,000 hospitalisations and 5,000 deaths in the US each year, with known pathogens such as salmonella and listeria causing 1,500 deaths alone.

Comparisons are obviously limited, given the differences in data collection practices between EU member states, let alone between Europe and the United States.

Nonetheless, the figures do suggest that European worries about food scares may be disproportionate to the actual impacts.

Consumer groups are often the first to lambast food hygiene failures, but even here the EU’s efforts appear to have garnered broad satisfaction: at a Brussels conference on CAP reform this week, Monique Goyens, Director General of European Consumers’ Organisation, acknowledged that, despite various gripes, the EU is still the “safest place in the world for food”.

The EU has in fact gone far beyond traceability systems in its efforts to keep food safe and healthy. Brussels has gone out on a limb – incurring the wrath of the US and others – by banning beef hormones and chlorine-washed chickens, as well as restricting pesticide use to a greater extent than its rivals. The relatively positive food safety record in recent years may be taken by many as vindication of the precautionary approach.

Why are we afraid of food?

Where then does the perception of unsafe food come from? It may relate to the fact that the European media, reflecting the interests of a food-centric society, covers each scare with avid interest.

In 2008 mass coverage was given to the Chinese melamine scandal, after it emerged that the industrial chemical had been added to watered-down milk, sparking kidney failure and caused the deaths of six Chinese babies. International outrage ensued, and precautionary bans were imposed on Chinese dairy products by many including the EU.

No EU consumers were directly affected by the melamine scare; nonetheless the case is likely to have fed into European scepticism about the safety of our food supply, coming as it did in China, one of the EU’s biggest trading partners, and at a time when the food supply chain is becoming increasingly global.

The EU complex about food safety may also relate to the bloc’s chequered history with animal disease. The mass controversy surrounding BSE remains close to mind. When the latest outbreaks occur there are perhaps automatic associations with the food supply, even though animal diseases such as foot and mouth disease and swine flu cannot be transmitted to humans by eating meat.

Evidently there is still plenty to do, and there is little to be gained from EU policymakers sitting on their laurels and congratulating themselves about the superiority of the ‘European food model’. Nonetheless, if current successes can be built upon and major crises averted, EU consumers may eventually drop their suspicions in regard to the food supply, and Brussels may even be credited with a major success.

Photo by Valentina Pavarotti

No Comments

Trade deal or trade-off?

An influx of South American chicken and beef could be headed our way

Why must agriculture be the “bargaining chip” when the EU negotiates trade deals?

This was the question asked by French Farm Minister Bruno Le Maire as he closed ranks with his Italian, Polish, Portuguese, Irish and Romanian counterparts this week to oppose the European Commission’s plans to reopen free trade negotiations with the Mercosur bloc (Brazil, Argentina, Paraguay and Uruguay).

The region-to-region deal could slash tariffs for Argentine beef and Brazilian chicken entering the EU, while opening up big South American markets for European car and chemical manufacturers, telecoms providers and financial investors.

The prospect of new negotiations and an eventual trade pact with the South American bloc exposes familiar fault lines.

Farm lobbies, agriculture-centric member states, MEPs from rural constituencies and the EU Farm Commissioner Dacian Ciolos fear their sector being undercut by cheap produce from South America. EU industrial exporters, liberal member states with services-driven economies, and the rest of the European Commission, are meanwhile licking their lips at the prospect of freer access to growing markets which have not yet been fully tapped by the US, China or others.

Is the EU ready to outsource its food production?

That the EU will lose on agriculture and gain on industry and services is already being taken as writ: Commission President José Manuel Barroso has already agreed to look into “special measures” to compensate EU farmers in the event of a deal.

Does this mean that the EU is willing to consciously outsource its food production to countries like Brazil and Argentina, while channelling its own investment and workforce into high value-added industries and services? Movement in this direction is already in motion, and the last decade saw EU food imports grow by some 25 million tons as the bloc’s farm trade deficit soared.

In reality the picture is more complex, and not every trade deal is about the EU sacrificing its agriculture for cars and banking services: the recent EU-South Korean deal saw Brussels pushing for access to the Korean pigmeat market, while the Franco-German automobile lobby kicked up the biggest fuss about being exposed to their Asian competitors.

Nonetheless an EU/Mercosur deal (in the absence of a multilateral WTO agreement in the meantime) would be the biggest political expedient to date of a situation where the EU imports more food and exports more industrial products/services.

Narrowing the cost burden

But even as this week’s EU Farm Council heard agriculture ministers slamming this unhappy division of labour, it also saw shreds of agreement on a way out of this bind. Ministers debated the ‘competitiveness’ of the EU agri-food model in parallel to the Mercosur discussion.

The two issues are very much interlinked: ministers concluded almost unanimously that the stringent animal welfare, food safety and environmental rules which regulate EU agriculture put it at a competitive disadvantage, particularly when tariffs are slashed and ‘low cost’ imports start flooding in.

These are the imbalances which are blamed for exacerbating the outsourcing of food production to less regulated economies.

Unfortunately ministers were less clear on how to remedy the situation. A few called for truly reciprocal standards to be made a sine qua non of trade deals. This still remains a far-off prospect, despite fledgling attempts to insert animal welfare obligations into WTO negotiations, and the basic social/environmental chapters which now figure in most bilateral deals.

Ultimately it is difficult to affect the bottom line; labour costs are and will remain considerably lower in countries such as Brazil for a time to come. But efforts to create a more level playing field, particularly on globally sensitive issues such as CO2 emissions, may go some way to rebalancing the cost burden between the two sides, and making Brazilian chicken and Argentine steak that bit less cheap.

It is now widely acknowledged that the brutal logic of economies of scale and comparative advantage cannot be allowed to run riot if it means driving whole sectors of the economy  out of business.

Keeping a social and ecological balance across European territories has gained a new premium, and the Commission recently illustrated this by releasing domesday scenarios of large-scale land abandonment in the event of full farm subsidy and tariff elimination.

Consumer penchant for local goods

If the EU does not manage to force standards harmonisation onto the agenda, shifts in EU consumer habits might provide a second line of defense against the ravages that a trade deal with the South American bloc could bring.

The EU’s ‘mature’ and wealthy consumers appear to be increasingly attached to the idea of homegrown produce. Consumers are flocking to the idea for diverse reasons: as an extension of organic sympathies, in opposition to carbon-intensive air miles, through a will to eat seasonally, through concerns for animal welfare, in solidarity to the local economy, or on the back of an assumption (perhaps misplaced) that local food is ‘wholesome’.

Either way the momentum in this direction is strong, and it is no coincidence that MEPs are pressing for comprehensive country of origin labelling and even an “EU quality label”. Next month’s launch of an EU-wide organic label reading “product of EU agriculture” will help to cement the increasing geographical dimension in ethical/lifestyle food choices.

The question is whether the growing base of consumer demand for ‘quality’ local goods can help to keep EU producers afloat in sensitive farm sectors: small producers such as cattle farmers in upland areas are likely to struggle the most should prices be driven down across the board when the low-tariff imports start flooding in.

Farm Commissioner Dacian Ciolos has talked at length about the need for small-scale family farms to stay in business. His CAP reform visions are likely to include some means of promoting local distribution circuits and reconnecting farmers with local markets; he could also look to channel a higher share of subsidies to small farms by capping the biggest payments.

These efforts may spell a lifeline for EU farmers if all else fails.

Photo by Valentina Pavarotti

No Comments

Natural resources: the x factor

Putting a real price on the use of natural resources is proving a challenge

Everybody is talking about resources. Maybe not directly, and maybe through bywords and buzzwords: sustainability, food security, energy security, water scarcity, climate change.

An increasing number of policy discussions are centring on one big question: how can we get the most from the world’s natural resources without further depleting them? The European Commission has made ‘resource efficiency’ one of the flagships of its new Europe2020 economic strategy. But does it – or anyone, for that matter – really know how to go about achieving it?

Unfortunately there is nothing finite in the resources equation, especially not the output: What we are trying to get the most of? Do we measure resource efficiency in terms of human end calories per unit of land and water? How do we factor in non-essential consumer items and services? Should we then measure the efficiency in terms of some unit of human pleasure (calories plus) per unit of natural resource?

Biofuels in the spotlight

This may seem grossly hypothetical, but it is often the question behind the question, and the ultimate bottom line, in current efforts to make ‘sustainable’ policy.

Take biofuels. The crop and biomass-based fuels have been the subject of a huge amount of soul-searching at EU level, precisely because they are at the resource crossroads. They bring together many of the trade-offs in a series of key questions: should we be using land and water, and incurring a biodiversity and greenhouse gas (GHG) cost, in order to produce alternative fuels in addition to/instead of current or potential food production? And at what point has the cost become too great?

Answering these questions means pitting various food and fuel scenarios against each other; this means assuming that food demand, land availability, the environmental footprint of fossil fuels, the energy potential of other renewables, and global fuel requirements are stable and finite. It soon becomes clear that there is no objective baseline in sight: there is surely infinite scope for raising the efficiency of current resource use (e.g. reducing net land and water use by wasting less food); similarly there is no way of deciding whether fuel-consuming journeys are necessary or discretionary, or whether a burst of radiator heating is for comfort or strictly subsistence.

A value judgement is always involved – and the terrain is thorny for policy-making.

Indirect land use: the new frontier

Brussels is looking at ways of factoring indirect land use change into the process of deeming a biofuel environmentally desirable or not, i.e. are GHG savings in relation to fossil fuels offset by displacing food production elsewhere and triggering conversion of new croplands with a GHG/biodiversity cost?

Palm oil embodies many of the uncertainties: it requires less land and less carbon-intensive fertiliser per unit of energy that it yields (compared to other oilseeds), but often takes the place of high biodiversity, carbon capturing forest-land; rapeseed biodiesel can meanwhile be produced on current cropland in the EU, but palm oil production would be likely to expand in south-east Asia anyway for food use to substitute for the lost rapeseed oil.

As the European Commission is finding out, the equation is full of ifs and buts. But even if – as appears increasingly likely – it is deemed unviable to count in the abstract land conversion factor at this point, the exercise will not have been futile.

With their political mandate, biofuels are the first frontier – and the EU feels within its rights to exact some form of resource sustainability. For food there is at best a hazy ‘food security’ mandate, but the same resource logic can and probably will ultimately be applied to food. The discussions have unleashed a logic for pitting one food production system against another, one fuel against another, food against fuel, food/fuel against urban development, and so on.

Holistic view needed

To date it is only the questions, and not the answers, which have been thrown up by the biofuel debate.

Despite disagreeing on the relative benefits of biofuel types, the slew of recent studies on the matter all tend to fall back on the same (crucial) post scripts: that biofuel production, like almost all human activity, taps natural resources and therefore impacts on the overall GHG and biodiversity balance; that no human activity is ‘zero carbon’ if the zero level implies leaving the land in optimum carbon-stocking, biodiversity-rich condition; that there are multiple direct and indirect effects which could tip the environmental balance either way; that there is a need to collectively rationalise global food and fuel production vis-a-vis available resources; that any system for calculating relative efficiencies is essentially arbitrary until an objective, holistic ‘life-cycle’ resource use model is agreed.

But even the big ‘independent’ studies have failed to take their logic to its conclusion, and to put forward the all-encompassing life-cycle blueprint in question. Last year’s biofuel paper from the UN’s International Panel for Sustainable Resource Management duly abdicates from the task: “A full consideration of all relevant strategies towards this end (e.g. changing diets high in animal based foods and reducing food losses) is beyond the scope of this report” it reads. Without this ‘x factor’ the Panel acknowledges that it is unable to come down conclusively for or against biofuels, even the most efficient ones.

Defining the x factor is certainly a huge task – and would have to involve a set of fairly arbitrary caluclations mapped out against each other. But without it, the current trend of singling out some sustainability factors (e.g. carbon) and undervaluing others (e.g. water use) is all the more arbitrary and half-baked.

Emissions trading schemes for carbon do not reflect the whole resource story and their ‘sustainability’ effect will therefore only be partial. The same applies to carbon footprint labels for food. Consumers are right to feel confused by them: if we are being asked to consider factors other than price, taste and healthiness in our food purchases, then why not paint the whole resource picture? And while we’re at it, what about the long-term socio-economic impacts of resources used towards food exports in developing countries? (For more on the water debt of western food imports see http://www.raeng.org.uk/news/publications/list/reports/Global_Water_Security_report.pdf)

EU environment chief, leading or alone?

EU Environment Commissioner Janez Potocnik has made positive noises about creating a more holistic resource efficiency strategy. In a recent speech he said that “what you don’t measure you won’t achieve”, calling for cross-cutting resource efficiency indicators to be drawn up. Potocnik advocated a “half common sense, half pragmatism” approach that prods the market until it puts “the proper value on the resources we use”.

But as the Slovenian recognises, he is only the Environment Commissioner, and natural resources are so fundamental a concern that any attempt to re-evaluate their use will pit various interests against each other within the Commission and within the Brussels body politic, not to mention the array of private sector interests at stake, nor the individuals who would ultimately be paying the price if water, soil and clean air become the new gold and ivory.

Nonetheless, the EU must try to use the Europe2020 strategy to put resource efficiency firmly on the map; if nothing is done now the EU’s next economic strategy could be drawn up against a backdrop of genuine resource scarcity – and an opportunity to safeguard and perpetuate the earth’s natural capital will have been lost.

Photo by Valentina Pavarotti

No Comments