Serious traders see the trends before anyone else. They do so because their business depends on seeing the minute deviation that signals the beginning of a trend.
Early in June 2010 commodities traders charted the new signals they were getting from the world's agricultural exporters and major consumers. What they saw then became the picture that in late July began to alarm governments and international development agencies. World foodgrain supplies were entering a new phase of tightening, as the impacts of drought and extreme weather in grain producing countries around the world became clear.
For the trading community - whose strong and deep links with the world's financial markets and banks have become more visible since 2008 - the opportunity is large, perhaps even bigger than the one that slowly unfolded in 2007, when the last global food price crisis swept through cities and villages alike. For inter-governmental agencies such as the United Nations system, the news is a body blow to the idea and effort that has sustained work on social justice and equality.
The Millennium Development Goals as a rallying point
The effects of the 2007-08 food price crisis were still being unravelled when the 2009 financial crisis took hold. That prompted many UN agencies, major aid organisations and hundreds of large NGOs to quickly study the impact of both on their work, and on those whom they work for, which is the poor and marginalised on all continents.
Much less visible and quite unrecognised is the impact of the same two crises on the small but philosophically very sound Transition Movement. Guided by tenets that became clear in the 1960s and 1970s, this constellation of movements (low carbon, sustainable communities, local resilience being some variations readily recognisable in the 'West') has adapted practices central to all ur-rural settlements, and continues to internalise the collected wisdom and practice of the world's indigenous peoples.
In so doing, the Transition Movement in the 'West' (and therefore North) has for the most part been unable to conceptualise a response to the human development and social justice needs of the South. Much of this lack, as I see it, has to do with the very formidable inertness which western societies inherited from the transformations wrought by the Industrial Revolution, and the apparently incontrovertible ideas of 'progress' and 'growth', which by the time the Bretton Woods institutions came into being were well suited to form the core of a 'development economics' that has wrought havoc on both North and South, although in different periods of the 20th century.
Transition ideas and praxis have had to therefore first wage an intellectual battle against 'development economics' and then launch a physical struggle against the socio-ecological degradation that followed such economics on the ground.
... the Transition Movement in the 'West' (and therefore North) has for the most part been unable to conceptualise a response to the human development and social justice needs of the South.
There was and is no alternative. For governance and real representation, participatory democracy and transparent public finance are in tatters in most countries today, whether in North or South, whether these be parliamentary democracies or feudal oligarchies.
If there is a dominant planetary economics which has emerged from the confusion around the apparent failure of 'development economics' it is the control of natural resources and the control of the conditions of their use. This ought therefore to be ideal circumstances for a renewed ecological economics, except for a vexed problem: equity or transformation?
Achieving the social equity so solemnly inscribed on several dozen international and inter-governmental charters (remember Rio 1992?) requires greater access to both energy and resources. Ensuring that social equity is equipped to face the challenges of at least the next generation requires the principles of Transition and degrowth to be built into all new efforts. How can one exist with the other?
A new report on the progress of the Millennium Development Goals (their deadline is 2015) gives us no answers, nor can it advise us, for it is meant to serve as a report card. Given its impressive roster of advising agencies, one expects the troublesome question at least to be posed, perhaps with a request for contributions towards an answer from Transition groups and peak oil discussants. But that is not the case.
What we do know [about poverty] is that rural realities and living conditions are usually very different from the sketches contained in funding documents. Poverty is the main source of hunger now, not a lack of food.
The report draws on the expertise of the following agencies: International Labour Organization, Food and Agriculture Organization of the United Nations, United Nations Educational, Scientific and Cultural Organization, United Nations Industrial Development Organization, World Health Organization, The World Bank, International Monetary Fund, International Telecommunication Union, Economic Commission for Africa, Economic Commission for Europe, Economic Commission for Latin America and the Caribbean, Economic and Social Commission for Asia and the Pacific, Economic and Social Commission for Western Asia, Joint United Nations Programme on HIV/Aids, United Nations Children's Fund, United Nations Conference on Trade And Development, United Nations Development Fund for Women, United Nations Development Programme, United Nations Environment Programme, United Nations Framework Convention on Climate Change, United Nations High Commissioner for Refugees, United Nations Human Settlements Programme, United Nations Population Fund, International Trade Centre, Inter-Parliamentary Union, Organisation for Economic Co-Operation and Development, and World Trade Organization.
All these were enlisted - some ten years ago, some more recently - in the massive combined effort to progress towards the MDGs, as the Millennium Development Goals are telegraphically known.
For a poor rural household, survival depends more on the degree to which social and natural capital has been husbanded. (Millennium Development Goals Report 2010)
Their summary conclusions alas leave much to be desired especially for those who practice participatory economics and expect mature argumentation about the course towards social equity. Said the summary:
"Robust growth in the first half of the decade reduced the number of people in developing regions living on less than US$ 1.25 a day from 1.8 billion in 1990 to 1.4 billion in 2005, while the poverty rate dropped from 46% to 27%.
"The global economic and financial crisis, which began in the advanced economies of North America and Europe in 2008, sparked abrupt declines in exports and commodity prices and reduced trade and investment, slowing growth in developing countries. Nevertheless, the momentum of economic growth in developing countries is strong enough to sustain progress on the poverty reduction target. The overall poverty rate is still expected to fall to 15% by 2015, indicating that the Millennium Development Goal (MDG) target can be met. This translates into around 920 million people living under the international poverty line - half the number in 1990."
What 'poor' is and how to recognise it
There are a host of problems with such a conclusion (even though it is somewhat qualified by detailed assessments of the eight MDGs). First, a dollar line-in-the-sand may be of use to conventional economists who are called upon to inform welfare spending, but it does not represent a 'poverty line' in the rural community.
For a poor urban household, which is likely to have been a poor rural household until recently, US$ 1.25 a day is a rankly unfeasible sum to reckon with for daily survival. For a poor rural household, survival depends more on the degree to which social and natural capital has been husbanded, less on a sum of ringgit or escudo or naira (they are likely to be in debt anyway). Similarly, what is a "poverty rate" supposed to mean? If we take as an example, the income line in Indian rupees which defines an urban Indian poor person from a non-poor person, then that line has been set by the government of India at 539 rupees per person per month (which only to point out the difference between relative ideas of poverty is in fact US$ 0.37 per day, and so very much under the World Bank figure of US$ 1.25 per day). Does that mean the person with 600 rupees per month (US$ 12.50) is not poor, and can be exempted from the benefits that are allocated to one with 520 rupees a month?
To argue for such a quota would be to deny social equity, and that is an argument that the government of India has - to its credit - kept current with a huge host of social scientists and voluntary aid organisations. The lines that define poverty are being re-cast, and even so will not become better equipped to describe poverty or dispel it. But it is important preoccupation because in the South, the question of poverty predates the idea of Transition. That is why Transition is at a sizeable disadvantage in 'developing' Asia, Africa and South America. Worse, events such as the food price rise of 2007-08 and the financial crisis of 2009 deepen the disadvantage, which is what will happen again with the developing food crisis of 2010-11.
Already, earlier in 2010, an updated estimate in a World Bank working paper (the Bank still produces very useful development knowledge) placed an additional 50 million people in extreme poverty in 2009 and some 64 million by the end of 2010 relative to a no-crisis scenario, principally in sub-Saharan Africa and South and South-Eastern Asia. That means effects of such crises are seen early in poor populations, which are affected longer and which are rendered vulnerable to the ills of 'development economics' sooner. That is also why the Millennium Development Goals Report 2010, which is meant to be a landmark assessment, is forced to say that "poverty rates will be slightly higher in 2015 and even beyond, to 2020, than they would have been had the world economy grown steadily at its pre-crisis pace". Even so it cannot jettison its automatic and fundamental working assumption that 'poverty' and 'economic growth' are inextricably linked.
It is this schizophrenia by an intergovernmental body, on a matter so grave, that signals to the Transition Movement why progress towards sustainable local societies will have to be a matter of local awakening and change, whether in the North or South.
Admitting that "poverty rates will be slightly higher in 2015 and even beyond"... (Millennium Development Goals Report 2010)
Despite all the evidence to the contrary since 2008, the 'development economics' bloc in the UN system have still had their way. This is why the MDGs 2010 assessment says, without acknowledging its contrariness in the least, that
"Poverty rates in China are expected to fall to around 5 per cent by 2015. India, too, has contributed to the large reduction in global poverty. Measured at the $1.25 a day poverty line, poverty rates there are expected to fall from 51 per cent in 1990 to 24 per cent in 2015, and the number of people living in extreme poverty will likely decrease by 188 million. All developing regions except sub-Saharan Africa, Western Asia and parts of Eastern Europe and Central Asia are expected to achieve the MDG target."
What we do know is that rural realities and living conditions are usually very different from the sketches contained in funding documents. Poverty is the main source of hunger now, not a lack of food. Efficiency has become a central theme, which means getting higher yields on small plots with fewer inputs of water and chemical/synthetic fertiliser. It hasn't helped that government investment in basic research and development on agriculture, in the countries of the South, is very little. Here are a few points that help explain why the MDGs assessment is crippled by its reluctance to face facts: In 2009, more than 1 billion people went undernourished - their food intake regularly providing less than minimum energy requirements - not because there isn't enough food, but because people are too poor to buy it. The US$1.25 a day line (which can be replaced by any currency unit at any ruling amount) does not describe a poverty threshold. At best it provides a measure of one marker out of many for poverty, and even that marker needs to be localised for it to have community meaning. Although the highest rates of hunger are in sub-Saharan Africa - correlated with poverty - most of the world's undernourished people are in Asia and particularly South Asia.
An outlook published in 2009 by the Food and Agriculture Organization (FAO) of the United Nations and the Organization for Economic Cooperation and Development (OECD) says that current cropland could be more than doubled by adding 1.6 billion hectares - mostly from South America and Africa - without impinging on land needed for forests, protected areas or urbanisation. But Britain's Royal Society has advised against substantially increasing cultivated land, arguing that this would damage ecosystems and biodiversity. Instead, it backs "sustainable intensification," which has become the priority of many agricultural research agencies.
Poverty is the main source of hunger now, not a lack of food. (Millennium Development Goals Report 2010)
The answer to the question, "sustainable intensification" for who, will usually be, "the poor and especially the rural poor who produce much of what the world actually eats". In his online diary, Duncan Green, head of research for Oxfam Britain and author of the book 'From Poverty to Power' describes poverty simply and directly.
"Ask poor people what poverty is like, and they typically talk about fear, humiliation and ill health, at least as much as money. But can the non-income dimensions of poverty be measured in a way that allows policy makers to weigh priorities and allocate resources? If not, the danger (as often happens) is that decision makers and documents initially nod towards the many dimensions of poverty, but by paragraph two, you're back in $ per day territory. And all too often, in policy terms, if it can't be measured, it gets ignored."
Understanding the many dimensions of 'poverty'
It is for this persistent reason that the Oxford Poverty and Human Development Initiative (OPHI) has been working for years to try and develop such metrics, and they recently launched the 'Multidimensional Poverty Index' (MPI), which will feature in the 2010 UNDP Human Development Report, which is also celebrating its 20th anniversary and a long and successful run of the Human Development Index, which has contributed more towards a global understanding of what it means to be poor, and the causes of poverty, than all the lofty inter-governmental pronouncements of the last century put together.
The Multidimensional Poverty Index is a set of measures that ought to be studied carefully by all groups practicing and advocating the Transition to a low-carbon future, the imperative of degrowth and the primacy of sustainable means of production and consumption. Understanding what make people poor is, at this point, critical to the uptake of 'Transition' as a secular living philosophy and critical to its adoption in the South. To do so it will be adapted endlessly, and it order to design it to be as flexible as possible, knowing what 'poor' is becomes fundamental.
To summarise what the new equation to measure poverty, in more dimensions than previously attempted, is made up of: there are 10 indicators of health (child mortality and nutrition), education (years of schooling and child enrolment) and standard of living (access to electricity, drinking water, sanitation, flooring, cooking fuel and basic assets like a radio or bicycle).
This makes the MPI a quite logical extension of its predecessor, the United Nations Development Programme's pioneering Human Development Index which combined life expectancy, education (literacy and enrolment rates) and GDP per capita (one can see the diminishing of GDP in the evolution of the HDI over the years; perhaps five years from now the successor to the current MPI will have found a way to do away with 'gross' and 'national' as being a contributing factor in any way).
Understanding what make people poor is, at this point, critical to the uptake of 'Transition' as a secular living philosophy and critical to its adoption in the South.
There will no doubt be a successor, for while it is a step forward from the existing Human Development Index, there are still many facets of poverty that it doesn't touch on, such as conflict, personal security, domestic and social violence, issues of ethnic and community power, and personal and family/tribe/clan empowerment. This is partly because it still relies on existing data sets, focusing on how to use differently the data we are already collecting, rather than proposing fresh conceptual frameworks on critical dimensions of poverty. There's no doubt that constructing such frameworks is at least as laborious as using existing data differently, and therefore the MPI has chosen to be more practical for now in place of radical.
From World Bank working paper, 'The Impact of Economic Shocks on Global Undernourishment', 2010 February"
How different do the world's poor look when viewed through the MPI instead of the HDI? Not very, at first sight. Oxford Poverty and Human Development Initiative researchers explained their work and the difference it makes as follows:
"OPHI researchers analysed data from 104 countries with a combined population of 5.2 billion (78% of the world total). About 1.7 billion people in the countries covered - a third of their entire population - live in multidimensional poverty, according to the MPI. This exceeds the 1.3 billion people, in those same countries, estimated to live on US$ 1.25 a day or less, the more commonly accepted measure of 'extreme' poverty."
" That's startling, but the MPI also captures distinct and broader aspects of poverty. For example, in Ethiopia 90% of people are 'MPI poor' compared to the 39% who are classified as living in 'extreme poverty' under income terms alone. Conversely, 89% of Tanzanians are extreme income-poor, compared to 65% who are MPI poor. The MPI captures deprivations directly - in health and educational outcomes and key services, such as water, sanitation and electricity. In some countries these resources are provided free or at low cost; in others they are out of reach even for many working people with an income.
For me, an Indian South Asian, the MPI's most striking contribution to the understanding of poverty was in its revealing of how acute poverty is persistent in India. We have seen this at such close quarters and in such excruciating detail that it forms a permanent background to the phoney story of India's economic growth. Any closer look points to the plain truth about such 'growth' - it exacts a terrible social and natural cost, and one of the ways that cost becomes visible is when the incidence of poverty surrounds us, in cities and towns more dramatically, in rural districts more invisibly.
Half of the world's poor as measured by the MPI live in South Asia (51% or 844 million people) and one quarter in Africa (28% or 458 million). Niger has the greatest intensity and incidence of poverty in any country, with 93% of the population classified as poor in MPI terms. The MPI data for India should have shocked its smug urban consumers: there are more MPI poor people in eight Indian states alone (421 million in the states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and West Bengal) than in the 26 poorest African countries combined (410 million)!
For me, an Indian South Asian, the MPI's most striking contribution to the understanding of poverty was in its revealing of how acute poverty is persistent in India.
From a South Asian point of view, the MPI poor in those eight states have already begun to be assaulted in the food price and food availability dimensions by the food crisis of 2010-11. The data I have on consumer price index for agricultural labour in India (used as a reliable series for rural farming and sharecropping households) shows a steady increase since the second quarter of 2009, when the effects of the 2007-08 food price rise began to wane. The data also show that the rise in the consumer price index for food staples for this section of the population is already as steep as it was in 2007, the difference between then and now being that in late 2009, it began from a higher price point!
When compared with data for other regions that host chronically poor populations in the South (such as Pakistan, Nepal, Bangladesh, Myanmar, Thailand, Cambodia, Vietnam, Sudan, Tanzania, Chad, Mali, Kenya, Burundi, Zimbabwe, Haiti, Somalia) the pattern is striking. In a year, the price of sorghum rose 39% in Khartoum (Sudan), wheat rose 24% in Lahore (Pakistan), maize rose 22% in Dar es Salaam (Tanzania), sorghum rose 21% in Abeche (Chad), millet rose 17% in Bamako (Mali), maize rose 14% in Nairobi (Kenya), beans rose 58% in Bujumbura (Burundi), maize rose 36% in Harare (Zimbabwe), rice rose 27% in Dhaka (Bangladesh), rice rose 23% in Port-au-Prince (Haiti) and sorghum rose 21% in Lasanod (Somalia).
Illustration from a Practical Action campaign on making the link between climate change and poverty
The gathering challenge for Transition
The swelling food crisis of 2010-11 is already showing why the conditions that fed it are different from those in 2007-08. In 2010, the links between the financial markets and agricultural trade flows have both become stronger and more visible. This has happened through (a) the growth and size of agricultural commodity markets and (b) the expansion in size and reach of powerful transnational and national food conglomerates, which are investing heavily in deep forward and backward integration of the crop, food trade, storage, processing and retail businesses.
These are the conditions that face the South and the MPI/HDI poor in 2010. Before 2007, commodity index funds had become the primary vehicle for speculative capital involvement in food commodity markets. The number of derivative contracts in commodities were estimated to have increased more than five-fold between 2002 and mid-2008, and in the aftermath of the 2008 price spikes it came to be known that speculators had dominated long positions (in which the holder owns the contract, and therefore profits from its price rising) in food commodities.
At the time the United Nations Conference on Trade and Development (Unctad) concluded in a study:
""Part of the commodity price boom between 2002 and mid-2008, as well as the subsequent decline in commodity prices, were due to the financialisation of commodity markets."
" Unctad's view was that financial investors accelerated and amplified price movements driven by fundamental supply and demand factors, a view that was shared within the financial sector too. Those accelerated and amplified price movements have not been banished by new regulations demanded after 2008 as controls for commodity markets. Rather, they have in Asia, Africa and South America been turned into a set of opportunities by a fast-growing industry (food production, processing and distribution) which is quickly gaining policy support.
For 2010-11 therefore, the commodities-plus-financial speculation activity which is blamed for the 2007-08 food price spike is now part of a worryingly larger armoury being deployed by the global food merchants and their powerful regional satraps.
The sprawling urban slumlands that provide the human and household services for the huge cities of the South have been turned into real test beds for financial and commodities speculators in which to play out scenarios of consolidation and dominance. The picture that emerges from this pattern is one that is vast in industrial scale and scope, and in which the smallholder farmer is further reduced to a negligible factor or to a disenfranchised migrant.
Into the conveniently created moral breach stepped the global agro-biotech industry in its avatar of global solidarity. This is how one such breach was exploited in Kenya, with sub-Saharan Africa the target. In 2008, Monsanto partnered with the African Agricultural Technology Foundation, a non-profit research organisation in Nairobi. It announced its aim: to apply the techniques and discoveries it has made with its commercial drought-tolerant maize to developing drought-tolerant varieties for subsistence farmers in sub-Saharan Africa, to be available as quickly as possible after commercialisation in the USA. An article in the journal Nature (29 July 2010) reported:
"The partnership, which is also funded with US$ 47 million in grants from the Bill & Melinda Gates Foundation and the Howard G Buffett Foundation is one of a handful of exceptionally large projects established in recent years in which public and private sectors have joined forces to tackle food scarcity in developing countries. The companies say that these investments are just good business sense because they will create future customers as developing-world farmers gradually move from subsistence to profits, making money to spend on seed."
This is an example that powerfully brings together the new combinations that the idea and praxis of Transition must learn to confront. The objective is naked - using food scarcity as the excuse (a scarcity designed in and by the financial markets and commodity oligopolists) small farmers are to be turned into perpetual consumers of high-cost inputs, swapping poverty ("subsistence") for a vassalage accompanied by the renunciation of their rights as stewards of rural communities.
This ugly and dangerous caricature is everything Transition is not, a ghastly doppelganger now being deployed in country after southern country.
At this point, the Transition Movement of the 'West' and North can look back at a run of more successes than defeats, as the slow internal dismantling of western democracies slowly plays itself out. The gains of such Transition however can be swiftly and clinically neutralised by global crises such as the two we have recently lived through and the third which has begun.
The responses of global solidarity fixes - orchestrated by the inter-governmental agencies and exploited by the finance overlords - will test the intellectual strength and integrity of the Transition idea to its utmost, as control of the means with which poverty can be ended will be a defining struggle.
The Millennium Development Goals Report 2010
'Feeding the city series on Grist and urban agriculture - Aug 10'
The 2010-11 foodgrain crisis
'Is the Next Global Food Crisis Now in the Making?'
The intersecting issues of climate, population, water, and biodiversity
Global scenarios for the century ahead: searching for sustainabilityHomeowners favor short-term loans