Global agriculture between hunger and profit

Feeding a growing world population seems impossible without major investment in global agriculture. But a symposium at the Green Week food fair has found that plans to curb hunger often clash with big business.

One of the most prominent participants in the panel discussion was Jürgen Fitschen, who, with Anshu Jain, is one of the two Chief Executives of Germany's Deutsche Bank. For Europe's biggest private bank, agricultural commodities are a growth market.

Fitschen announced at the gathering that the bank's board had decided to resume trading in so-called Exchange Traded Index Funds (ETF) based on agricultural commodities, reversing a ban on food speculation imposed by the bank last year. An internal review had found no apparent link between speculative food-based financial products and fluctuating global food prices, he said.

"Although it cannot be completely ruled out that price volatility is enhanced under certain market conditions, we've found that prices also fluctuate in the absence of this type of financial product," he claimed.

Capital-intensive agriculture

In addition to dealing in financial derivatives trading in foodstuffs, Deutsche Bank, as a global player in financial markets, also offers direct investments in agriculture, food trading and production. Just recently, the bank created a new investment fund worth $135 million (101 million euros) aimed at lending money to farmers in Africa. The fund is supported by Germany's development ministry.

Capital investments in agriculture were a prerequisite for safeguarding food production in future, Fitschen noted, adding, however, that any lending to this sector needed to be based on rational facts rather than guided by emotions.

"This means that investors want to have a decent return on their capital," he said.

However, Fitschen's position was vehemently opposed by Bärbel Diekmann, President of the German non-governmental Agro-Action pressure group, who also participated in the Green Week symposium.

She argued that price spikes in critical situations had contributed to epidemic hunger in various countries, and provided ample reason to become emotional. Big investors would often fail to invest in small-scale agriculture in spite of that fact that millions of people, including many children, remained undernourished, she said.

Investment role model

Investments which expropriated the land of small farmers for the sake of export earnings, Diekmann added, wouldn't advance food production but remained a profit-driven big business. She cited Swiss-based food conglomerate Nestlé as an example of a company which was trying to do things differently. In efforts to double sales of its coffee-based products over the next decade, Nestlé was spending 500 million euros to boost the productivity of its 650,000 local coffee suppliers worldwide.

For Nestlé, business interests and the advancement of small coffee farmers went hand in hand, said Nestlé's board director Peter Brabeck-Letmathe during the discussions. Nestlé had provided farmers with about 220 million new coffee plants, which Brabeck-Letmathe described as an investment in better quality and higher yields, based on using less water.

Nestlé's example is in line with demands made by the United Nation's Food and Agriculture Organization (FAO) for boosting investment in sustainable agriculture in developing countries. FAO estimated that about $83 billion would need to be spent on farming and rural development every year to secure food production for the 9 billion people who are expected to be living on this planet by 2050. Currently the average third-world farmer puts 114 euros a year into improving production. That's not enough and completely leaves out the costs of necessary improvements in infrastructure as well as market development, education and research into better crops.

Mozambiquestands out

The speakers at the meeting agreed that Mozambique was a remarkable example of a country which had made huge strides in agricultural development in recent years after having been dependant on food imports until about ten years ago.

"Today, Mozambique is an exporter of sugar, cotton, cashew nuts, maize and bananas," the country's agriculture minister Jose Condungua Pacheco told the symposium. Land was state-owned, he added, and foreign investors are only allowed to use arable land for a limited period of time. In addition, investors must negotiate contracts for land use with local communities and employ local workers.

"In this private-public partnership the power of local communities is strengthened because investors seeking to use farmland must negotiate with the people living there," Pacheco said.

Deutsche Bank's Jürgen Fitschen was strongly critical of such investment conditions. He said foreign investors must be allowed to hold majority stakes in farms, and that crops must be allowed to be sold on global markets if agriculture was really to move forward.

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World's largest agriculture show kicks off in Berlin

The world's biggest show for agriculture and horticulture has started in Berlin, with close to 70 nations participating. Organizers have said the event will focus on food safety, quality and price policies.

Marking its 78th anniversary, Berlin's international agriculture and horticulture show, also known as "Green Week," opened on Thursday in the presence of German Agriculture and Consumer Protection Minister Ilse Aigner.

The world's biggest display of agricultural produce from around the globe will have ten days to attract an expected 400,000 visitors keen to see and taste food items or learn about sector trends and services from over 1,600 exhibitors from 67 nations. Among them are newcomers Kosovo and Sudan.

The show is once again being accompanied by a broad range of specialist forums, debates and policy meetings to focus on issues ranging from food security and safety to global pricing policies.

Optimistic outlook

Agricultural experts said the "Green Week" was being held in a rather favorable business environment this year, with no major food scandals having rocked the world or Germany of late.

The president of the German farmers' Association, Joachim Rukwied, said in a statement that agricultural markets in Europe had seen a stable development in recent months. He mentioned that German agricultural produce had been at a premium abroad, with the domestic sector growth soaring by 4.1 percent in 2012 to a total of 170 billion euros ($226 billion) in revenues. He added that 31 percent of all produce was exported.

German Agriculture Minister Ilse Aigner said there was no reason to worry about exploding food prices in the country. "Although the hike in prices was higher than inflation in 2012, food prices continued to be much lower than those in most of our neighboring countries," Aigner told the newspaper Ruhr Nachrichten.

Consumer protection activists said they'd once again use the "Green Week" as a forum to push for better labeling systems for foodstuffs, criticizing that details about ingredients were often insufficient or deceptive.

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Agriculture Minister Invites German Companies to Invest in Iran

TEHRAN (FNA)- Iran's Minister of Agricultural Jihad Sadeq Khalilian, who is in Berlin to attend an international conference, said Tehran plans to develop its agricultural sector, and asked German companies to invest in this sector.

Khalilian is in Berlin to attend the International Agriculture Ministers' Summit. 

Addressing a gathering at Iran's embassy in Berlin on Friday, the Iranian minister said the government has allocated $10 billion for investments in the agricultural sector. 

He added that Iran welcomes the presence of German food and agriculture companies in Iran, and made clear that food exports for Iran were not on the western sanctions' list. 

He also stressed that Iran could serve as a transit country for German firms to expand their agricultural cooperation in the region. 

Late in October, Media reports said that the volume of the bilateral trade exchanges between Iran and Germany is on the rise despite the US-led western sanctions on Iran, and the volume of trade transactions between the two countries is getting close to the eye-catching figure of 4bln euros for 2012. 

Germany is on the course to increase its bilateral trade volume with Iran to 4bln euros for 2012, the Jerusalem Post reported at the time. 

The volume of trade transactions between the two countries also reached 4bln euros in 2011, it said, noting that the new sanctions have not affected Iran's economy. 

Germany is an important trade partner of Iran. Berlin has long been ignoring the US-led sanctions against Iran. 

The German banking system has also reportedly ignored the US-led western sanctions against Iran several times thus far, it said. 

The flourishing trade transactions between Iran and Germany have frustrated Israeli, American, British and French officials, the newspaper said. 

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Dioxins Discovered in More German Eggs

GERMANY - Dioxin–contaminated eggs from an organic farm in Lower Saxony have now been discovered in nine states. Investigations are on-going into the source of the dioxin and any possible link to recent similar cases.

Eggs from an organic layer farm in Walchum in the region of Emsland in Lower Saxony have now been found in nine German states – Rhineland–Palatinate, Baden–Wurttemberg, Bavaria, North Rhine-Westphalia, Saxony, Saxony–Anhalt, the Saarland and most recently,Schleswig–Holstein.

A total of 268,000 eggs from the farm, which is closed, are thought to be involved, according to a report from Norddeutscher Rundfunk (North German Radio; NDR).

Sales of the eggs were stopped immediately, despite assurance from the local ministry that they posed no immediate health risk. The business was closed last week and the distribution of eggs was halted. Eggs with the producer code ‘DE-0-0356091’ and an expiry date of 14 June or later should not be consumed but should be destroyed or returned to the trader. The contaminated eggs in Schleswig–Holstein were marked with the same producer code and the expiry date of 10 July.

The farmer at the centre of the case, Andreas Hartelt, has been unable to identify the source of the dioxin and the local authority has started investigation. According to Lower Saxony’s Ministry for Consumer Protection, the level found in the eggs is around four times the maximum safe level. Routine testing revealed a dioxin level of 19.5 picograms per gram of egg fat. The legal limit is five picograms.

Mr Hartelt said this is the first time he has experienced this situation and he has made no changes for years and his poultry houses are a long way from any obvious sources of pollution.

With the maximum permissible dioxin limits exceeded by about four times, Mr Hartelt said his eggs have been confiscated and are unlikely to come onto the market. If the elevated levels are confirmed, the hens cannot be marketed either, which will result in “enormous losses” to the farmer. He is awaiting confirmation of the test results on the eggs and investigations on the soil and feed on the farm.

The Ministry has said there is no obvious connection between this case and three other farms in the district of Aurich or another organic farm in the district of Oldenburg.

Despite the latest findings in Lower Saxony, a spokesperson from the Department of Agriculture stressed that the stronger testing measures – introduced that after the dioxin scandal in animal feed at the beginning of 2011 – are working. If an issue arises from routine controls, the farmer and authorities are informed immediately, preventing any cover–up or delay.

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Agriculture exports surge to $11b in first five months

HA NOI — Agricultural export value surged more than 10 per cent to US$10.9 billion in the first five months of this year, according to the Ministry of Agriculture and Rural Development.

Among the total, agricultural products contributed the most with $6.1 billion, up 2 per cent over the same period last year. The figures for seafood and forestry products were $2.3 billion and $1.9 billion, up 9.8 per cent and 19.6 per cent, respectively.

Director of the ministry's Information and Statistics Centre Nguyen Viet Chien said that export of most of agricultural products bounced back after last month's decline.

The country shipped 860,000 tonnes of coffee, worth nearly $1.8 billion, in the first five months, a year-on-year increase of 7.8 per cent in volume and 3 per cent in value. The country's biggest coffee importers were Germany and the US. Coffee exports to Indonesia also enjoyed a sudden jump of nearly eight times as much when compared to the same period last year.

During the January-May period, the country also earned over $69 million from exporting 49,000 tonnes of tea, up 17.2 per cent in volume and 14.8 per cent in value. Apart from Russia and Germany, tea exports to other major markets significantly rose, with Pakistan remaining Viet Nam's largest consumer.

Though seeing a decline of 9.5 per cent in volume to 3 million tonnes, rice export value in the first five months still surged 14.2 per cent to $1.4 billion thanks to a price hike in the global market.

China has become the largest importer of Vietnamese rice while Malaysia overtook Indonesia to rank second with a year-on-year rise of 30 per cent.

Several African countries such as the Ivory Coast, Ghana and Senegal also consumed a large volume of Vietnamese rice during this time.

Vietnamese rice exporters are making all-out efforts to seek new markets for their products in order to meet the target of exporting 3.5 million tonnes of rice in the first half of the year.

In contrast to rice, the country earned $952 million from exporting 317,000 tonnes of rubber in the period, up 35.2 per cent in volume but down 7.2 per cent in value.

General secretary of the Viet Nam Rubber Association Tran Thi Thuy Hoa attributed the value decline of rubber exports to a drop of the product's price in the global market, which currently stands at only $3,000 per tonne on average, roughly $1,365 lower than the same period last year. Hoa said that the rubber export volume rose sharply in major markets including mainland China, Malaysia, Taiwan and India.

As for the export of forestry products, the shipment of woodwork products contributed $1.8 billion, up 20.5 per cent over the same period last year, thanks to a surge in major markets such as the US (up 31 per cent) and Japan (up 29 per cent).

Despite a rise of 9.8 per cent, seafood industry insiders admitted that they were facing difficulties in the European market, explaining that it was not only because of the bloc's public debt crisis but also its non-tariff barriers on imported products. Vietnamese seafood exports to the bloc sharply dropped in the first five months, of this Germany saw a reduction of 26.4 per cent, Holland 10.9 per cent and Italy 16.3 per cent. — VNS

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US committed to improving farmers' business capacity: diplomat

The US will provide support to local farmers with programmes to build their business capacity and generate higher incomes was an important element of its commitment to promote economic development of Pakistan, US Consul-General Nina Fite said on Friday.

She was speaking at the concluding session of a three-day training programme 'GlobalGAP Train the Trainer Programme' organised by Agribusiness Support Fund under USAID's Agribusiness Project.

As many as 30 people from the livestock sector participated in the training held in collaboration with M/s FoodPlus GmbH of Germany.

The program trained the participants in GlobalGAP certification, a standard for dairy and meat export required by many European and international markets.

Nina Fite maintained that higher incomes would improve farmers' lives and the lives of their families.

"Programs, like this USAID-funded training, will have a direct and positive impact on the lives of Pakistanis through the promotion of livestock entrepreneurship," the US diplomat said.

She regretted that Pakistan's current level of livestock exports was very low and the training program was the first step to improve exports.

She hoped that it would go a long way in improving the livestock management in this country.

Agribusiness Support Fund's (ASF) Chief Executive Officer Khalid Khan highlighted various projects being carried out by his organisation for the benefit of the farmers' community, including ones in livestock, agriculture and horticulture sectors.

Dr Roland (trainer) and Dr Dilshad (representatives of the participants) shared their experiences of the programme.

Global Good Agricultural Practices (GlobalGAP) is an international private body that sets voluntary international standards for certification of agricultural production processes.

Certification under GlobalGAP is becoming increasingly important and a requirement of most retailers in European and international markets.

Copyright Business Recorder, 2012