Biofuels were suppose to save us and the planet from a combination of global warming and an over reliance on fossil fuels. The problem is that many biofuels are reliant on monoculture cropping and industrial agricultural systems, massive fertilizer inputs, large quantities of water and huge amounts of oil. One result of this is that biofuels may end up accelerating global warming by leading to the destruction of forests and other natural ecosystems when land is cleared for the cultivation of biofuel crops.
Another result is that biofuels end up in the developing world competing with food for land, increasing food prices and hunger. The biofuels industry is also supported by a number of different policies in both the USA, Brazil and the EU including various tax subsidies, trade barriers, government grants and loans. We need to bring to an end policies that directly support the production of environmentally harmful biofuels, and make room for sustainable energy alternatives and more environmentally friendly and socially responsible biofuels.
A recent report by Chatham House says the growing reliance on sustainable liquid fuels will also increase food prices . Basically biodiesel made from vegetable oil is worse for the climate than fossil fuels. The report noted that the UK’s use of biofuels is “irrational” and will cost UK motorists around £460 million over the next 12 months. The EU plan (underwritten by law) is for biofuels to make up 5% of the UK's transport fuel as of 15th April. The UK (since 2008) has required fuel suppliers to add a growing proportion of sustainable materials into the petrol and diesel they supply.
Many of these biofuels are distilled from ethanol which is sourced from corn and biodiesel made from rapeseed, used cooking oil and tallow. Chatham House research suggests that reaching the 5% level will result in UK motorists having to pay around an extra £460 million pounds a year because of the higher cost of fuel at the pump and from filling up more often as biofuels have a lower energy content. The report states that if the UK is to meet its obligations to EU energy targets the cost to motorists is likely to rise to £1.3 billion pounds per annum by 2020.
The problem with the EU biofuel mandates are that they have huge distorting effects in the marketplace. As a result of used cooking oil being regarded as one of the most sustainable types of biodiesel, the price paid for it has soured. By the end of 2012 used cooking oil was more expensive than refined palm oil. Another concern is that taking EU land out of production to grow rapeseed oil in particular will end up creating more climate problems than it solves.
The more fuel of this type that is put into cars the bigger the deficit created in the edible oils market. This had resulted in increased imports of palm oil from Indonesia, which is often produced on illegally deforested land. As the UK reaches its 5% of liquid fuels target, the government faces some tough decisions on how to move forward as it may end up facing a tripling of the costs for motorists by 2020.
The UK Westminster government may prefer to try and get do a deal with Brussels on the impacts of indirect costs which might restrict what exactly counts as biofuel. There are problems with this, especially when it comes to reaching an agreement with those EU countries which have powerful agricultural sectors who rake in the cash from the current biofuels arrangements.
Outside of Europe there are other consequences with the acquisition of land by multi nationals for development or to acquire resources at the expense of local people. This is bound to be a touchy subject especially when little medium to long term sustainable benefit is delivered to the indigenous inhabitants. What's happening now in Africa is subtly different, there is a race going on between multinational companies on one hand and the emerging economic giant of the Peoples Republic of China on the other hand to acquire land, not so much for the minerals (although that is a factor) but to acquire the ability to grow food.
An interesting report (produced by the Oakland Institute) has noted that Hedge funds are now getting involved in acquiring land in Africa to produce food and biofuels, which will all boost their profits. The report notes that foreign firms and hedge funds) have been quietly purchasing large chunks of land in Africa, often without any proper contracts and that this activity has led to the displacement of millions of small farmers, who are losing out as multinational firms try to secure their hold of the global food markets. Food production is often sacrificed to make space for cash crops for export, including flowers and biofuels, which fetch a tidy profit.
Since 2009 foreign firms the report noted that have acquired land equivalent to the size of France (nearly 60 million hectares) from questionable but lucrative deals with a combination of gullible traditional leaders or corrupt government officials in Ethiopia, Tanzania, South Sudan, Sierra Leone, Mali and Mozambique. I have no doubt that the foreign firms make many promises of progress, development and jobs to local communities, but they don't necessarily come close to delivering on the promises.
Investors benefit with a wide range of incentives written into their contracts from unlimited water rights to tax waivers, but, are clearly not there to help feed starving Africans. Sounds familiar doesn't it - not that much of step from the old days of the WDA throwing wads of cash of foreign investors, who got all sorts of benefits (grants and incentives), promised much (I seem to recall the magic figure of 6,000 jobs kept cropping up in the 1980's, 1990s and early 2000's) yet in the end never quite delivered all that was promised.
Showing posts with label hedge funds. Show all posts
Showing posts with label hedge funds. Show all posts
Tuesday, 28 May 2013
Wednesday, 22 February 2012
THIS LAND IS NOT FOR SALE!
In the end it always comes down to the land, Who owns it? Who farms it? And who lives on it? Or who makes a living from it? Since Humans have been living in relatively settled communities land has been bought, sold and stolen fuelling grievances both real and imaginary. What is a relatively new in recent years is that land deals have become a new form of international trade. In recent years, sub Saharan Africa has been the public focus for this trade (the reality is that is been going on around the world for many years). A combination of commercial companies and the various commercial arms of the People’s Republic of China (PRC) have been chasing profits (and land) in Africa pursing profits and (in the case of the PRC) foodstuffs for the world (and the Chinese) market.
Between 2008 and 2009 the World Bank noted media reports of land deals that added up to something like 60 million hectares. The traditional UK media unit of measurement, Wales, won't help to illustrate the scale of the issue, that all adds up to something like the land equivalent to the Ukraine – some two-thirds of the land acquired happens to be in Africa. The evidence points to the fact that land deals are taking place on an unprecedented scale and at an increasing rate. Some of the specific land deals are pretty big, a recent deal in Liberia involved some 220,000 hectares.
The western media has tended to focus on the land deals signed by Middle Eastern and Asian government-backed operators but in reality Western commercial companies and Hedge Funds have also been heavily involved in the process – they don’t like the glare of publicity. One of the reasons why commercial companies are seeking to acquire land is because there is potentially big money to be made with cash crops as world food and commodity prices are expected to increase because of increasing demand for foodstuffs and also bio-fuels from China and India. Some of this is being driven by governments who are chasing land acquisitions abroad as a way to secure affordable food for their people at home.
In 1961 at or on the edge of independence Africa largely fed itself and even managed to export surplus crops. This is no longer the case, partially due to a neglect of the agricultural sector in many African countries, political instability, corruption and a chronic lack of investment to improve productivity and the means of getting surplus crops to both local and international markets. It goes without saying that not all types of investment is good and evidence is beginning to pile up that suggests that large scale land deals have a detrimental impact on indigenous local farmers.
Research by the International Land Coalition suggests that a growing number of these large scale land deals are failing due to a combination of poor soil types, financial problems, local resistance and unrealistic business plans. Some of these land acquisitions have resulted in some pretty raw deals for local people and as a consequence have fuelled dissent and resistance (in Ethiopia and Madagascar to name but two).
Now this does not mean that African states and peoples should steer clear of all land deals. What is needed is for land deals to be implemented properly, transparently, with safeguards for local people and local involvement. Some of the world's poorest people are losing the land, water and natural resources that have supported their livelihoods and their communities for generations. In Uganda, Oxfam has noted that some 20,000 people who claim to have been evicted from their land have taken their case to court seeking redress.
Part of the problem is because of the massive power imbalance between multinational companies, African governments and local farmers and landholders. Many of these land deals are negotiated behind closed doors without transparency, without local consultation something which fuels local dissent and anger. Across much of Sub Saharan Africa, as noted by the International Institute for Environment and Development, there is lack of secure land tenure which affects local farmers, herders and gatherers. This is partially down to a lack of written documentation and also because a great deal of land is owned by the state, which can obviously allocate it to outside investors even against fierce local opposition.
There are some pretty successful business models out there that show what can be done by local people, one co-operative of 60,000 cocoa farmers (in Ghana) has been in business for almost twenty years and owns 45% of a UK company that manufactures and distributes chocolate. There are ways to improve productivity and market access that can support local farmers or at least give them a realistic chance of competing.
Many international companies are able to successfully source agricultural produce from local family farmers, and have invested in other activities along the production line to help secure their supplies and improve local livelihoods. Some farmers associations (in Mali and Zambia) own shares in the company they collaborate with, which gives them monetary benefits and a greater say. Co-operatives have reduced their costs by working with large numbers of farmers.
Some land deals could bring many benefits including increased food production; access to improved agricultural skills, secure land tenure for indigenous farmers and more sustainable development in rural communities. This is something that could help to slow one of sub Saharan Africa's greatest problems rural to urban migration. Civic groups in sub Saharan Africa are demanding far greater transparency and openness from their governments and from investors. If this is done right then local indigenous communities can be helped to become equal partners rather than ending up as victims.
Between 2008 and 2009 the World Bank noted media reports of land deals that added up to something like 60 million hectares. The traditional UK media unit of measurement, Wales, won't help to illustrate the scale of the issue, that all adds up to something like the land equivalent to the Ukraine – some two-thirds of the land acquired happens to be in Africa. The evidence points to the fact that land deals are taking place on an unprecedented scale and at an increasing rate. Some of the specific land deals are pretty big, a recent deal in Liberia involved some 220,000 hectares.
The western media has tended to focus on the land deals signed by Middle Eastern and Asian government-backed operators but in reality Western commercial companies and Hedge Funds have also been heavily involved in the process – they don’t like the glare of publicity. One of the reasons why commercial companies are seeking to acquire land is because there is potentially big money to be made with cash crops as world food and commodity prices are expected to increase because of increasing demand for foodstuffs and also bio-fuels from China and India. Some of this is being driven by governments who are chasing land acquisitions abroad as a way to secure affordable food for their people at home.
In 1961 at or on the edge of independence Africa largely fed itself and even managed to export surplus crops. This is no longer the case, partially due to a neglect of the agricultural sector in many African countries, political instability, corruption and a chronic lack of investment to improve productivity and the means of getting surplus crops to both local and international markets. It goes without saying that not all types of investment is good and evidence is beginning to pile up that suggests that large scale land deals have a detrimental impact on indigenous local farmers.
Research by the International Land Coalition suggests that a growing number of these large scale land deals are failing due to a combination of poor soil types, financial problems, local resistance and unrealistic business plans. Some of these land acquisitions have resulted in some pretty raw deals for local people and as a consequence have fuelled dissent and resistance (in Ethiopia and Madagascar to name but two).
Now this does not mean that African states and peoples should steer clear of all land deals. What is needed is for land deals to be implemented properly, transparently, with safeguards for local people and local involvement. Some of the world's poorest people are losing the land, water and natural resources that have supported their livelihoods and their communities for generations. In Uganda, Oxfam has noted that some 20,000 people who claim to have been evicted from their land have taken their case to court seeking redress.
Part of the problem is because of the massive power imbalance between multinational companies, African governments and local farmers and landholders. Many of these land deals are negotiated behind closed doors without transparency, without local consultation something which fuels local dissent and anger. Across much of Sub Saharan Africa, as noted by the International Institute for Environment and Development, there is lack of secure land tenure which affects local farmers, herders and gatherers. This is partially down to a lack of written documentation and also because a great deal of land is owned by the state, which can obviously allocate it to outside investors even against fierce local opposition.
There are some pretty successful business models out there that show what can be done by local people, one co-operative of 60,000 cocoa farmers (in Ghana) has been in business for almost twenty years and owns 45% of a UK company that manufactures and distributes chocolate. There are ways to improve productivity and market access that can support local farmers or at least give them a realistic chance of competing.
Many international companies are able to successfully source agricultural produce from local family farmers, and have invested in other activities along the production line to help secure their supplies and improve local livelihoods. Some farmers associations (in Mali and Zambia) own shares in the company they collaborate with, which gives them monetary benefits and a greater say. Co-operatives have reduced their costs by working with large numbers of farmers.
Some land deals could bring many benefits including increased food production; access to improved agricultural skills, secure land tenure for indigenous farmers and more sustainable development in rural communities. This is something that could help to slow one of sub Saharan Africa's greatest problems rural to urban migration. Civic groups in sub Saharan Africa are demanding far greater transparency and openness from their governments and from investors. If this is done right then local indigenous communities can be helped to become equal partners rather than ending up as victims.
Sunday, 28 August 2011
ALL IN IT TOGETHER?
News that George Osborne has done a deal with the Swiss in relation to the secret bank accounts held by UK citizens may not wholly be good news. There has been much speculation as to exactly how much the new levy will bring in and the figure of £5 billion pounds has been bounced about by the Sunday papers.
I am sure that an extra £5 billion would be nice, I mean we have to pay for those pesky bank bonuses or those aircraft carriers somehow. What has, however, been largely overlooked is that what Osborne has done is effectively legitimise the holding of bank accounts that are secret from the Inland Revenue.
We still need to (globally) deal with the problem of off-shore companies and individuals who are engaged in tax avoidance, tax evasion or money laundering. The scale of the problem is quite staggering, take the Cayman Islands; which are home to some 12,000 corporations and have a population of 50,000, yet are home to 70% of the planets hedge funds.
The British Virgin Islands (population 22,000) is home to 823,502 registered companies. General Electric paid no tax in 2010, yet made a $14.2 billion dollar profit. Barclay's has 181 subsidiaries registered in the Cayman Islands and paid little UK tax on its world wide profits. The Dirty Digger’s News Corp has 152 subsidiaries in tax havens across the planet (according to the US Government) and paid no UK corporation tax between 1998 and 1999.
If developed countries exchequers lose out then it’s much worse for developing countries. Tax dodging costs developing countries $ 160 billion dollars per year (Christian Aid). Some $ 1.2 trillion dollars was illicitly removed from poor countries in 2008 (US Integrity Research Centre).
If the governments of the world got together, as President Obama suggested, and tackled the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we may go so way towards dealing with the consequences of the worldwide financial crash. Perhaps if that nice (rich) Mr Cameron and the other 18 millionaires in the cabinet were to work with other governments worldwide to close the tax loopholes then perhaps we truly would all be in it together? Perhaps not!
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