Politics of Poverty

Endless Appetites and a few questions

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Highlights from Oxfam’s conversation with Alan Bjerga

BuzzList_v_tagOn Tuesday, Oxfam hosted Bloomberg reporter Alan Bjerga to talk about his recent book, Endless Appetites. It’s a good read; very well written with some good reporting from the field, a fun exploration of the Chicago Board of Trade, and one of the better overviews of the controversial issue of the financialization of food commodities. The book also covers a lot of the same ground as Oxfam’s GROW Campaign. Edited highlights from the Q&A session appear below. Special thanks to Carolyn Yi who helped put these together.

Q: The book’s title refers to the commodities casino. Markets are changing; is there a way to bring things back into order or not? Has the cow left the barn?

A: Because of all the deregulation and financial instruments people have embedded into their models in recent years, to some extent we can’t go back. From a regulatory standpoint, things like credit default swaps do have value. But the important question is, how do you build a barn that works for everyone?

Q: Working at Bloomberg, which is an offspring of markets and Wall Street, what’s your feeling about how the building feels about the concerns raised in the book, like hunger and markets out of whack?

Endless Appetites

A: On the coverage of markets and agriculture: covering the CFTC wasn’t as high-profile when I started working there. When the 2007-2008 food price crisis happened, this was transformed. Now, people fight over CFTC stories because it is current and relevant. You get a real awareness of the financial world being part of Bloomberg, as well as of the intersection between finance and business in the global world.

Q: When Americans talk about food security, the conversation inevitably turns to obesity. We haven’t quite resolved ourselves on this problem. What are your thoughts?

A: I’m torn on it. There were strategic decisions on what to put in the book. I didn’t really go into obesity or food waste, which is also a huge issue. I didn’t go into nutrition because I didn’t feel I had the space to do it justice. Obesity is interesting because in developing countries, you see this problem growing as they become more developed. Obesity and hunger issues are side by side, but on different tracks in terms of segments of the population (rural and urban, rich and poor). It depends on the lens you are looking through. Maybe we need to be more holistic. You don’t want to give people food aid that’s not nutritious.

Q: Who will feed the world in 2050? We say smallholder farmers need to have a place, but it can very quickly turn into a romantic idea. What is your message about smallholder farmers and supporting them while not romanticizing them?

A: The book is consistent with support of the smallholder farmer. Could agribusiness feed the whole world? Yes, we produce more than enough calories a day to feed everyone. But what good does that do when you have a dependent bottom billion that cannot afford it? Despite being the worst off, the smallholder farmer is in the best position to do something about it. But they need proper access to markets, the proper resources, education for women, etc. The idea that the smallholder farmer will disappear as the modern world progresses isn’t realistic.

Many say large agribusiness must go away and we need to elevate the smallholder, but this is also a shortsighted view. It would be ridiculous not to find a way to use that expertise and those resources. But how do you make things fit for everyone? The role people play is key. All entities have blind spots and that must be shored up by other entities to reach a balance. These communities are very well-organized and I think there can be a solution with the smallholder at the center.

Q: Some countries, like Ethiopia, have naturally been food insecure prior to 2008. How much in your book do you attribute the problem of food insecurity to commodities markets?

A: It is volatility that has caused the main issues. Price rise, if it is gradual, is adaptable, but farmers have a difficult time coping with volatility. Farm subsidies mean that developed countries are protected to some degree, but countries without this safety net are at a great disadvantage.

Q: Can you give examples of countries that have good policies in place to support smallholders?

A: Ghana, Malawi (but they are controversial because of corn). It would be helpful to define “good policies” and the end goal. Is the goal record profitability? If so, the US is a great example. Ensuring security for farmers is not a bad thing. Also, a Brazil-like evolution may be something developing nations can look to.

Q: Is it possible to have those two conflicting farm systems (smallholders and agribusiness) in existence together when you bring into consideration the reality of natural resources?

A: Well, you can have zero farm systems if you have no natural resources. In the US, I think they are starting to coexist. For example, the organic farm trend shows that there is a very real alternative that is emerging. So I think the answer is yes.

Q: I was under the impression that before the market plunged, there was actually an influx of money into commodity markets. Will it flow out again as the economy and stock market pick up?

A: The financialization of commodities comes into play here. People see commodities as a safe haven, but then they collapse when the market goes down. When the economy improves again, stocks, bonds, and real estate will look better, and money will go back into those. But when there is more money, people spend more, and this will still push money into commodities.

Q: Will the development of commodity markets in developing countries improve food security?

A: The jury is still out. Data transparency and government transparency are still an issue. For commodity markets to really succeed, you need volume. Regional partnerships can be useful, but there are still a lot of issues around them (ex: the euro is even struggling these days). Regulations of government bring a lot of complexity with them, and there is no real answer.

…The best part of the research process was talking to farmers all over the world. What are the new treatments they are using to help their bananas resist drought? What do they need from their government? What has selling to Walmart done to your local market? Does it rain in the right month anymore? From these questions rise common themes: you need insurance policies, you need to be paid fair prices, etc. In the Horn of Africa, almost everyone talked about climate change.

Q: What do you think about sustainable commodities?

A: Certification and labeling, and anything that allows a consumer or investor to make an informed decision to nudge the world in the direction they want it to go, is helpful. Sometimes that leads to “greenwashing” to make your product look good. But we have to be vigilant.

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