UN Food and Agricultural Chief: 'Speculation Is an Important Cause of High Prices'
In a SPIEGEL interview, Josť Graziano da Silva, 62, the new head of the United Nations aid organization FAO, discusses his plans to combat hunger as well as his efforts to†limit speculation and the impact it has on dramatically fluctuating food prices.
Somalian refugees at a camp in Kenya: "We need sustainable agriculture tailored to regional conditions."
SPIEGEL: Mr. da Silva, as the new head of the Food and Agriculture Organization of the United Nations (FAO), you have made it your chief goal to eradicate hunger in the world. Isn't this an extremely ambitious objective, in light of skyrocketing food prices, a continually growing world population and ongoing economic crises?
SPIEGEL: Declarations of intent have been around for a while. In 2000, the United Nations announced its intention to cut the percentage of hungry people in half by 2015. But in reality their numbers have actually increased, from 826 million to more than 925 million.
Da Silva: We have also made some progress. In my native Brazil, in Vietnam and, most of all, in Ghana, among other countries, the fight against malnutrition has been very successful. The biggest difference between now and 2000, however, is that ever since the Lehman bankruptcy, the world has understood that we all live on one planet, and that each country depends on others. There is a new sort of solidarity.
SPIEGEL: Where exactly do you see evidence of that?
Da Silva: Nowadays, the world reacts much more quickly to hunger catastrophes. There are special funds available for emergency efforts. This sort of solidarity reflects a new will. Everyone has recognized that no one benefits from hunger. And only if everyone works together can the hunger problem be solved -- as with the financial and debt crisis.
SPIEGEL: Wouldn't it be more effective, as an immediate measure, to enact legislation that would exclude speculators on Wall Street and elsewhere from the food trade? After all, speculation in commodities is seen as one of the main causes of the price increases that drove many millions of people below the poverty line.
Da Silva: In my view, speculation is indeed an important cause of the heavily fluctuating and very high prices. It only benefits banks and hedge funds, but not producers, processors and buyers -- and certainly not consumers. The FAO can only do two things. It can supply the market with data, studies and statistics, thereby making markets more transparent. And it can encourage governments to invest more in agriculture.
SPIEGEL: Why don't you just call for a ban on speculation in food products?
Da Silva: We need stricter regulations, but not just in the area of food. New rules are not the only solution. There are other, important areas, such as the latest round of trade negotiations, the Doha Round among the members of the World Trade Organization. The industrialized countries should finally open their markets and get rid of their agricultural subsidies. It's not that I'm overly optimistic in this respect, but it would be the right approach.
SPIEGEL: How does eliminating subsidies lead to less hunger?
Da Silva: For example, when the United States decided to end subsidies for corn-based ethanol last summer, the price of corn dropped immediately. It was felt in poor countries, like those in Central America, where corn is used for both food consumption and the feeding of livestock, and in Eastern Africa where corn is a key staple. The American decision had a direct and positive effect on the food situation.
SPIEGEL: Why are you reluctant to push back the financial industry?
Da Silva: I'm just saying that it's not enough to restrict individual markets. But I'm also saying, just as clearly, that the deregulation of the financial markets contaminated the food market and made speculation possible in the first place. We have to regulate all markets where there is evidence of such excesses.
SPIEGEL: Then the people who are now hungry will have to be patient for a while.
Da Silva: I'm more optimistic than that. The euro crisis has shown that governments can agree to common goals very quickly. International regulations have been in place for a long time in other areas, such as in the financial sector. Now we also have to take this important step with food security, putting in place regulations also for the food sector and create a global governance system for food security. It isn't the ultimate solution, but the beginning of a worldwide mobilization, which we need when it comes to this issue.
SPIEGEL: Where do you get your optimism?
Da Silva: One of the few good things about rising food prices is that they have created a global awareness of how fundamentally important it is to feed the world -- the other is that higher prices give farmers incentives to produce. Put differently, hunger is finally being given top priority. We should and can take advantage of this, by coming up with a global strategy for food security.
SPIEGEL: Those are nice words ...
Da Silva: ... which can and will be followed by actions. The decisive factor is access to food, or to land, so that people can buy or produce food themselves. Globally, there is enough food for everybody, but for many people, especially the poor, it's simply too expensive. They are going hungry, even with full shelves of food.
SPIEGEL: So the food crisis is really a financial problem?
Da Silva: Of course. And, in a first step, it can be solved with money. Using cash transfer programs, we have provided cash to the poorest families in Brazil, Mexico and Colombia since 2005, so that they can have a minimum income and feed themselves. The needs of about 120 million people were met in this way, and they survived the first food crisis, with its sharply rising prices, more successfully than in other countries. We should continue this sort of program -- not to react to current crises, but to avoid future ones.
SPIEGEL: But that's probably not enough.
Da Silva: At the same time, farmers were supported so that they could sell products in regional markets at reasonable prices. Local farming is the crucial point. Those who produce regionally are less dependent on currency fluctuations, speculation, transport costs and even climate-related disasters. Instead of buying milk, sugar and rice at high prices on the world market, countries should resort to local products. Central America could focus on beans, for example, Chile on quinoa, and so on.
SPIEGEL: International food conglomerates like Cargill and ADM, which produce on an industrial scale, won't like this.
Da Silva: Don't be deceived in this regard! The big companies can also make money in local markets. In light of rising oil prices, long-distance shipping is becoming less and less worthwhile. Besides, promoting innovation is virtually part of the genetic code of businesses. McDonald's now sells fresh salad that is often purchased locally. In doing so, the company does a lot for its image -- and its bottom line.
SPIEGEL: McDonald's might be an exception, but what about the agriculture multinationals, which grow food in massive monocultures for export all over the world?
Da Silva: We are in the midst of a transformation process. Since the so-called "Green Revolution" in the late 1950s, we have pursued high-performance agriculture with industrial means. We have used fertilizer, pesticides and machines without considering the side effects. We know today that many of these things are unnecessary and don't produce the desired results. Monocultures led to soil erosion, depleted fields, over-fertilization and poisoned groundwater.
SPIEGEL: Are you picking a fight with industrial agriculture?
Da Silva: We need sustainable agriculture tailored to regional conditions. In tropical countries, industrial plowing destroys the humus layer in soils. Seeds can no longer thrive. In Argentina, one of the key producers of corn, wheat, grain and soybeans, more than 90 percent of fields are no longer plowed today. In addition, the use of pesticides and chemical additives is being reduced more and more. Instead, farmers are relying on old methods like crop rotation, as well as planting traditional types of grain suited to regional requirements. All of this saves energy and brings down transportation costs and prices ...
SPIEGEL: ... and, as a result, the profits of the agriculture multinationals decline.
Da Silva: The big companies will not be opposed to these ideas. This shift toward small farms and local cultivation methods is a global issue, an issue for the future. They will not be able to ignore it in the long run. But consumers also have to change. We need a new kind of consumption, in the interest of the environment as well as our health.
SPIEGEL: What exactly do you mean? Eat less? Eat better? Eat differently?
Da Silva: Hunger isn't the only problem we have to address. The number of overweight people has also risen to alarming levels. They too are malnourished, but in a different way. They lack essential minerals, and they get sick. They die. We have to address this.
Da Silva: We have to reestablish a relationship to food. My grandmother still grew her own tomatoes. She knew exactly how to cook pasta pomodoro, and how to make wonderful noodles. People who shop in supermarkets today don't even know where the food comes from anymore. They have no idea what they're eating. Getting the right nutrition has become a problem for the young generation. And just think of all the victims of bulimia! Anorexia is also an issue. All of this will be the challenge of the future.
SPIEGEL: You envision major changes. How can the relatively small FAO afford this?
Da Silva: The rise in food prices and the financial and economic crisis have increased awareness of poverty and hunger issues around the world. The international community is mobilizing to eradicate hunger. The Committee on World Food Security (CFS), hosted by FAO, has become a key forum for governments, the private sector, civil society and international organizations to address the issues of hunger, food insecurity and malnutrition. This gives us an important foundation for building an effective global food governance system.
Da Silva: Transformation processes always take time. But eliminating something usually happens more quickly. It took us 100 years to introduce chemistry into agriculture. We can get rid of it much more quickly.
SPIEGEL: Mr. da Silva, we thank you for this interview.
Interview conducted by Susanne Amman and Michaela Schiessl
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