Monday, May 05, 2008

Money money money

Getting rich while people starve.
Lahore, Pakistan (AHN) - Soaring profits for giant agribusinesses, their executives and stockholders are coming at the expense of the world's poor who increasingly can't afford to pay the soaring prices of food to buy enough to eat to avoid malnourishment or starvation.

Those increasing prices might undo a decade of gains in Asia and could throw millions of people back into poverty, regional leaders meeting at the annual Asian Development Bank's meeting on Sunday said, according to Pakistan's Dawn news reports. The leaders called for an increase in agricultural production to try to meet the soaring demand.

Escalating prices have come from several sources, including an increased demand for food and fertilizer generally. That increased demand comes from increased demand for meat in China and India, that in turn requires more grain go to feed animals to produce that meat, along with a growing population and tighter supplies because some food crops have been diverted to produce biofuels.

But, there is also another factor that is fueling huge increases in the prices of food and the record profits those price increases are providing to the world's richest food companies.

A growing number of investors are turning away from the stock market and playing in the food futures market, driving prices up as food is now increasingly viewed as an investment to earn passive income from for the rich, instead of a basic necessity to sustain health and life.
The prices of wheat, corn and rice have soared over the past year driving the world's poor – who already spend about 80 per cent of their income on food – into hunger and destitution.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill's net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

Similarly, the Mosaic Company, one of the world's largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.
BASEL, Switzerland (Reuters) - Soaring food prices are helping to push up inflation all around the world, central bankers said on Monday, urging more market competition and free trade to even out prices.
Strange. People really mind not eating:
MOGADISHU, Somalia—Troops fired into tens of thousands of rioting Somalis on Monday, killing two people in the latest eruption of violence over soaring food prices around the world.

Wielding thick sticks and hurling stones that smashed the windshields of several cars and buses, the rioters jammed the narrow streets of the Somali capital, screaming, "Down with those suffocating us!"

In Mogadishu, protesters including women and children marched against the refusal of traders to accept old 1,000-shilling notes, blaming them and a growing number of counterfeiters for rising food costs.

Within an hour, a reporter for The Associated Press watched their ranks swell to tens of thousands, and the riot spread to all 13 districts of the capital. Some threw rocks at shops and chaos erupted at the capital's main Bakara market.
But hey, the speculators are making money! Clearly that is more important!

crossposted at Rants from the Rookery