AUS DEM SPIEGEL
Ausgabe 18/2008

Global Food Crisis The Struggle to Satisfy China and India's Hunger

With their huge populations, China and India exert an unparalleled force on world food markets. They are looking abroad as it becomes more difficult for them to be self-sufficient -- and the increasing demand often has disastrous consequences across the globe.

By SPIEGEL Staff


Santarém, in the heart of the Brazilian rainforest, is a modest little city. Quaint passenger steamers bob next to the breakwater of the Tapajós River, which flows into the Amazon here, while couples walk hand-in-hand along the riverfront.

The city would be even more idyllic, however, if the view of the cloudy tropical sky in the background were not marred by a terminal operated by the American agricultural conglomerate Cargill.

The steel structure protrudes into the air like the neck of a giraffe, constantly spewing ton after ton of soybeans into the holds of waiting ships. Every hour, a giant freighter departs for the mouth of the Amazon, 600 kilometers (373 miles) away. From there, the ships will set sail for China.

Until the end of the last century, soybeans were practically unknown in the Amazon basin. It was not until the grain terminal was built that soybean farmers came to the region from farther south. The land there was cheaper, the banks were offering low-interest loans and sales to Cargill were guaranteed.

Villages, rubber plantations and grazing land for cattle were transformed into bean fields. The farmers cut enormous swathes into the rainforest, until environmentalists put a temporary stop to the unchecked rash of clearcutting. In Mato Grosso, the most important farming region, producers and environmental activists agreed on a two-year moratorium on the purchase of soybeans from the Amazon basin.

But now the moratorium is set to expire and prices are rising. This is mainly the result of China's thirst for raw materials, says Pedro Jacyr Bongiolo, the president of the André Maggi Group, one of the world's largest soybean producers.

'A Culture of Death'

From the Río de la Plata to the Amazon, the Chinese are sucking the markets for soybeans dry. Large segments of the state of Mato Grosso are already covered with a green, pesticide-drenched monoculture. In the dry season between August and November, a cloud of smoke descends on Cuiabá, the capital of Mato Grosso. Despite a government ban, many farmers burn down sections of the rainforest to gain more farmland.

In neighboring Argentina, thick smoke even darkened the skies in the capital Buenos Aires two weeks ago. In that case, the smoke was coming from bush fires set by cattle ranchers in the nearby delta of the Paraná River. The ranchers need more pastureland because expanding soybean farms are swallowing up their traditional pastures. Here, too, the soybeans are being produced for the Chinese market.

It has long been clear who the losers are in this soybean rush. In Santarém, hundreds of small farmers became unemployed when they sold their fields to soybean farmers. The money was quickly spent, and now most of them live in slums, because there are now few jobs in agriculture.

"Soy is a culture of death," says union leader Ivete Bastos. But few are interested in opinions like hers, especially not 16,000 kilometers away in China. Brazil is one of China's major trading partners. Long-term contracts between the two countries are intended to secure raw materials for China -- and, more recently, food products in particular.

The rising world power, with its population of 1.3 billion, must take steps to ensure that it too does not become a victim of the global food crisis, having only recently managed to win the fight against poverty for much of its population at home. But now India, home to 1.1 billion people, has caught up with China in terms of the power it wields as a massive market. Together, the two Asian nations must feed more than a third of the world's population. In times of exploding food prices, their sheer size alone makes the crisis even worse.

To confront this growing problem and because wheat production has stagnated since the turn of the millennium, India has recently decided to develop an additional strategic food reserve. Statisticians have calculated that the demand for food increases by 0.7 percent for each percentage point of Indian growth. According to this calculation, last year alone, when India's per capita growth was about 7.5 percent, the country needed about 5.2 percent more food, especially more expensive non-staple foods. The situation is similar in China. Its global purchases of soybeans are a consequence of changes in eating habits. More than half of all soybean production in the world now ends up in China.

It isn't difficult to imagine what happens to prices when the world's two most populous countries buy up other food products in a similarly aggressive fashion. In more and more dangerously poor countries, wheat and meat have become an almost unaffordable luxury, while famine and hunger riots are only likely to get worse. London-based author Raj Patel, whose new book "Stuffed and Starved" takes a critical look at the global food industry, warns that the events in Haiti are "a sign of things to come."

A large share of the soybean harvest is traded at the Chicago Board of Trade. Although one is unlikely to find the Chinese there, they are the topic of many conversations. They sweep the market clean every day, "as if they had a giant broom," say traders. Chinese farmers need more and more feed for their livestock, while Chinese families are using more and more cooking oil.

The National Development and Reform Commission in Beijing is in charge of crisis management. It hopes to put a stop to spiraling prices by reducing import duties, but this hasn't worked as planned. A stampede even erupted at a supermarket in Chongqing, when customers rushed into the store to take advantage of a sale of cooking oil. Three people were trampled to death and 31 were injured.

Chinese Prime Minister Wen Jiabao tried to console himself and his fellow Chinese when he said: "With grain in our hands there is no need to panic." But the Chinese Communist Party has recently become concerned over the potential threat to calm and order posed by supply bottlenecks. Even in affluent Hong Kong, consumers bought up all the rice in stores in a collective attack of panic buying. To discourage such behavior, the government media have taken to constantly broadcasting images of lush fields and well-stocked supermarkets.

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