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  • From: Dieter Brand <diebrand@yahoo.com>
  • To: Healthy soil and sustainable growing <livingontheland@lists.ibiblio.org>
  • Subject: Re: [Livingontheland] from Germany: The Choice between Food and Fuel
  • Date: Sat, 26 Jan 2008 02:58:24 -0800 (PST)

Here are three more stories from Europe, only anecdotal
evidence of course:
 
1) My sister in-law is crazy about horses, so she and her husband
finally decided to buy one for her. They don't have any land,
which made them ask a neighbouring farmer who has a fallow
field just across from their garden fence, if the horse could
graze on that field. Turns out that the farmer gets a substantial
amount of money from the EU to keep that field fallow. And my
brother, who has a good job at a good company, was unable to
pay an equivalent amount. They finally found another field in
another village, and my sister in-law has to drive 10 miles by
car each time she wants to ride her horse.
 
2) After sugar prices in Europe dropped to international levels
following an agreement with the WTO to scrap protection for
the European market, huge tracks of land, previously used
for sugar beet production have become available for other
purposes because costs for producing sugar from sugar
beet in Europe are way above international levels.
 
3) The population in rural Alentejo, where I live in the South of
Portugal, is constantly shrinking because farmers have
continued for many years to leave their land due to harsh
economic conditions. The vast tracks of empty land left
behind are partially converted to eucalyptus plantation
to feed the paper industry. But much land remains empty,
others is subsidised by the EU to grow a cover crop that
is then ploughed under to produce a summer corn that is
so meagre that it is hardly worse harvesting.  Much of
this rolling hill land would be served better to produce
biofuels by a perennial like Jatropha (don't know if Jatropha
can withstand local climatic conditions) to provide biofuels
from the nuts, organic matter and erosion control from the
the plant.
 
I think there are still margins like that, at least in Europe.
Well, and if all else fails we could still eat a bit less meat
so the Chinese can eat more.  It would be all for the better
and provide a cut in medical bills into the bargain.
 
Dieter Brand
Portugal

PS: There is nothing really surprising about that a Bayer
exec is feeling bullish about GM.

TradingPostPaul <tradingpost@riseup.net> wrote:

" If agriculture hopes to even come close to satisfying global demand, it
will have to find new approaches... The real challenge will be to maximize
crop yields on limited amounts of arable land."

(too bad they push GM crops as the solution)

The Choice between Food and Fuel
http://www.spiegel.de/international/world/0,1518,530791,00.html

Food prices are skyrocketing. Arable land is becoming scarce. And forests
continue to disappear across the globe. The world must decide between
affordable food and biofuels.

All it takes for Hans Dietrich Driftmann, a businessman from Germany's
northern Holstein region, to explain the way the world works is a package
of muesli -- or at least to explain the way his world, the world of
agricultural markets, works.

Driftmann picks up a packet of "Köllns kernige Multikorn-Flocken"
("Kölln's Crunchy Multigrain Flakes") and reads out the list of
ingredients: oats, wheat, barley and rye. Then he slips a set of price
tables out of a plastic sleeve and does a couple of calculations to
illustrate how the prices of the muesli's ingredients have changed: rye has
gone up by 55 percent, barley by 70 percent and wheat 90 percent. The price
of oats has also skyrocketed -- by 80 percent -- since the last harvest a
year ago. This final figure is what really hits home for Driftmann.

For the last two decades he has been the CEO of Kölln-Werke, Germany's
top producer of oats and a major player in the muesli market. It's an old
family-owned company, founded in 1795 and headquartered in the town of
Elmshorn, a place with a skyline dominated by enormous grain silos painted
sky-blue. The silos are beacons for truck drivers approaching Elmshorn to
unload their grain -- if they come at all these days.

Today Driftmann is grateful for every truck that shows up at his silos.
This year's oats harvest, he says, was "miserable." His buyers search the
whole world for grain, even in places like Finland and Australia. Price is
almost secondary. "The problem is availability," says Driftmann.

Highest Inflation in 14 Years

He ought to be able to achieve significantly higher prices in the
negotiations with the giant trading companies. He is convinced that a price
hike of more than 20 percent is justified, but he also knows that consumers
won't accept such a large increase. Not yet, at least. "We will see quite a
few price increases in the coming years," says Driftmann.

This is a new experience for agricultural companies -- and presents a
troubling outlook for millions of consumers. For decades, they have become
accustomed to stable or even declining food prices. But in September, when
consumer discount giant Aldi attracted nationwide attention with its
memorable advertising campaign ("Aldi is here to inform you about upcoming
price increases"), Germans knew that change was coming. Aldi then raised
the prices of about 50 items in its stores, and other chains promptly
followed suit.

Meanwhile, almost all supermarkets appear to have raised prices across the
board: for bread and butter, milk and cheese, pork and poultry, noodles and
chocolate, apple juice and beer. The growing wave of price hikes has pushed
inflation to its highest level in 14 years.

Some of those who were born after World War II and never experienced leaner
times may only now be learning that food does have a value, even an
existential one. Suddenly they realize that food is in fact an
indispensable resource, critical for life, and that they can no longer
expect it to be available at all times and in all places -- especially not
at guaranteed low prices.

Too Much Demand, Not Enough Land

When German Agriculture Minister Horst Seehofer, a member of the
conservative Christian Social Union (CSU), opened this year's Green Week
agricultural fair in Berlin last week, it was under a completely new set of
assumptions. For decades, the industrialized world enjoyed the questionable
luxury of producing far more milk, butter and wheat than its citizens could
ever consume. The surplus was exported, provided buyers could be found, or
was placed into indefinite storage or destroyed.

This folly has now come to an end. Europe's mountains of butter have been
depleted, its grain silos emptied and its lakes of milk drained. "The era
of overproduction is behind us," says Stephane Delodder, an agricultural
specialist with Rabobank in the Dutch city of Utrecht.

Worldwide flows of goods are shifting and becoming reorganized. For the
first time, we are seeing the emergence of a truly global agricultural
market driven by the underlying force of all economic activity: the
scarcity of goods. Wheat supplies, for example, have reached a 30-year low.
In only one year, inventories in the European Union have plummeted from 14
million to one million tons.

Given this situation, the meteorological forecast of a drought in
Australia, an important wheat exporter, can trigger a minor earthquake on
the world's futures exchanges, where commodities prices are constantly
hitting new all-time highs. Nothing fuels the fantasies of commodity
traders quite as effectively as a bushel of wheat or a hectoliter of
rapeseed oil.

Of course, the current uproar over rising food prices revolves around a lot
more than consumers paying a few extra euros for milk, cheese and bread.
The real issue is how mankind will be able to feed itself in the future --
and at what price.

How can agriculture feed a world that grows by 80 million people each year?
A world that is increasingly exposed to climatic extremes? And, most of
all, a world that doesn't just need food for people and feed for livestock,
but is increasingly consuming fuel derived from plants?

'Desperately Need a Good Harvest'

The problem is that there is too much demand and not enough land. In a
world hungry for agricultural products, the dilemma is that each hectare of
arable land can only be used for one purpose at any given time. Potatoes
can't be grown where corn is cultivated. Where rye is grown, there is no
room left for oats. And when rapeseed is converted into biodiesel, there is
no seed left to produce rapeseed oil. This fundamental conflict drives up
the prices for agricultural crops. There are growing fears that the world
could soon face a food crisis, and that the current bottleneck could expand
into widespread starvation.

"We desperately need a good harvest to ease the current situation," says
Klaus Schumacher, chief economist at Toepfer International, a large
agricultural trading company headquartered in Hamburg. "If that doesn't
happen, we'll soon face a genuine supply problem."

Kölln CEO Driftmann's assessment of the outlook for agricultural
production is even more skeptical, especially in developing countries where
a large share of food products has to be imported and where many people
live a daily struggle to survive. "I am afraid that we are slipping into a
global food crisis," says Driftmann. "And I'm extremely concerned about
it."

At the Global Economic Forum in Davos, Switzerland, which began on
Wednesday, the world's elites have identified the scarcity of agricultural
commodities as a critical global risk. "The world's food production
system," say the forum's organizers, "is about to face a true test." The
United Nations has already warned that food shortages could lead to unrest
in some countries. In Mexico, for example, tens of thousands of people took
to the streets a year ago to protest the explosion in the price of corn
meal, a staple of the Mexican diet. This "tortilla crisis" signaled the
beginning of the distribution battles the planet is about to face --
struggles over the most productive farmland, the most favorable supply
contracts and the best seed.

A debate is taking shape over how human beings will be able to secure the
basis of their livelihood, and whether they should use genetic engineering,
for example. What represents the most effective use of valuable
agricultural resources -- as a source of food for the world or as fuel for
our cars and trucks? Bread or gasoline? Or is it possible to have both: a
full belly and clean-burning cars?

German farmers derive a certain sense of satisfaction from the current
debate. Until recently, they were seen as a dying breed. They were
ridiculed as the notorious recipients of Brussels' welfare bureaucracy, and
as the beneficiaries of a peculiar market logic: The less land the farmers
farmed, the more money they collected. Now, for the first time in many
years, German farmers can enjoy the pleasant sensation of being in demand.
In fact, they are even respected again -- and able to make money.

Farmers are investing again, taking out loans to buy additional farmland,
build storage buildings and put new machinery in their barns. Food
production -- still Germany's fourth-largest industry after automobile
manufacturing, machine tool production and chemicals -- is suddenly turning
into a growth sector. Gerd Sonnleitner, the president of the Germans
Farmers Association, welcomes this "new form of liberation for farmers,"
now that supply and demand rule the market and buyers are setting prices
once again.

Farming Has a Future

"I even got calls asking if I had any grain left for sale when I was
sitting on my combine," says Hans-Jürgen Sandvoss, 57, referring to last
year's harvest. He and his wife have been running their farm in
Honerdingen, a bucolic little 17th-century village in the northern German
state of Lower Saxony, for the past 26 years. The family has owned the farm
for generations, and Sandvoss hopes that his son will keep the tradition
alive. The son, 19, plans to complete a training program on a farm after he
finishes high school, and then follow in his parents' footsteps and study
agriculture. "Until recently, I advised him against becoming a farmer,"
says Sandvoss. But now he is encouraging his son to pursue his plan after
all. Farming has a future once again.

Today's farmer can also act as a businessman. His portfolio consists of
crops like wheat, rapeseed, rye, brewer's barley, corn, potatoes and sugar
beets. The key to a farmer's success is being able to predict the demand
for certain products and plant his fields accordingly, taking the
requirements of crop rotation into account.

The price of farmland has jumped considerably. The Bodenverwertungs- und
Verwaltungsgesellschaft (BVVG), an agency in Berlin that leases and sells
government-owned farmland, is reporting record profits. In the first half
of 2007, the average market price of a hectare (2.47 acres) of agricultural
land in the eastern state of Saxony-Anhalt was €7,400, a 23-percent
increase over last year's price. Prices are even higher in western Germany.
In the state of North Rhine Westphalia, for example, the asking price for a
hectare of farmland can be as high as €25,000 -- and there are buyers to
be found.

The cost of leasing farmland has also increased in the state and €1,000
per hectare is no longer a rarity. "Any farmer who enters into leasing
negotiations nowadays has my sympathy," says Rüdiger Fuhrmann, an
agricultural expert at NordLB, a major bank based in Hannover. Johann
Kalverkamp, an agricultural consultant in Lingen, a city in Lower Saxony,
has also noticed a rapid increase in land prices. "Land is the scarcest
resource on earth," says Kalverkamp.

'Shortages Will Intensify Dramatically'

The fact is that arable land cannot be increased at will. Over the past
three decades, the amount of arable land worldwide has stagnated at about
1.5 billion hectares (3.7 billion acres). While new agricultural land is
being added in Russia or South America, more and more land is lost to
residential and industrial development in Asia and Europe. In China, eight
million hectares (20 million acres) of land under cultivation have vanished
within a decade. For comparison, just under 12 million hectares (30 million
acres) of land are currently used for agriculture in Germany.

These spatial limitations would be tolerable if the world's population
wasn't growing at such a breathtaking pace. A person born in 1950 has
experienced mankind more than doubling its numbers from 2.5 billion to 6.6
billion people today. If the population grows to nine or even 10 billion by
2050, "the world will see an enormous need for additional biomass produced
in agriculture," warns Franz Josef Rademacher, a mathematician in the
southern German city of Ulm. Rademacher, a member of the Club of Rome,
believes that "shortages will intensify dramatically."

At the same time, millions of people are changing their lifestyles and
eating habits. The new middle class in Shanghai, Hanoi and Jakarta, no
longer satisfied with a diet of rice and beans, has a growing appetite for
pizza and pasta, burgers and pork chops. Meat consumption has doubled in
the last 25 years and continues to grow. Meat production, though, requires
large amounts of feed. A hog farmer needs three kilos of feed to produce a
kilo of pork, and for beef the ratio is even higher: seven to one. Vast
amounts of water are needed to produce the grain that goes into feeding
livestock. It takes about 900 liters of water to grow enough corn for one
kilo of feed.

Feeding a Quarter of the World's Population

The impact of new eating habits is especially significant in China. In
Mao's day, the Chinese diet was predominantly vegetarian. With growing
affluence, the Chinese have expanded their menus considerably, adding large
amounts of meat to dishes like their traditional noodle soup. The huge
country will not be able to even remotely satisfy this growing demand with
domestic resources. The People's Republic already lives well beyond its
means today. China has a quarter of the world's population to feed, and yet
it has only about 10 percent of its arable land. As a result, the country
is steadily buying up the world's food resources. China now imports more
than seven times as many soybeans as it did only a decade ago. Corn
shipments from abroad increased by a factor of 15 in 2006 alone.

Paradoxically, it wasn't too long ago that China was an important exporter
of food products. But that was when crude oil was still affordable and
climate change was a topic that interested a handful of meteorologists at
best. Nowadays, with the energy and climate crisis at the top of the
political agenda, the Chinese, and the rest of the world, for that matter,
see plant-based fuel as a way out of the environmental trap -- but at the
price of agricultural commodities becoming scarcer and more costly.

Governments spend billions to promote the production of plants that can be
used to produce fuel and the development of production capacity. Growing
amounts of rapeseed are being refined into biodiesel while corn and
sugarcane becomes ethanol. On Wednesday, the European Commission examined
ways to implement its ambitious climate resolutions. Marian Fischer Boel,
the European Union's agricultural commissioner, is convinced that if Europe
hopes to achieve its goal of a 20-percent reduction in CO2 emissions by
2020, "there will be no getting around biodiesel and ethanol." The demand
for plant-based alternatives to fossil fuels increases along with the price
of oil -- with far-reaching consequences for consumers. The EU is calling
for fuels to include at least 10 percent biofuels by 2020.

When grain ends up in our fuel tanks instead of on our plates, food prices
increase, as does the cost of feed such as corn silage and soybeans. Higher
feed costs make it more expensive to raise livestock, which translates
directly into higher prices for beef and pork. The price of oil -- OPEC in
other words -- ultimately determines how much a pork chop costs at the
supermarket.

The Americans, in particular, have high hopes for biofuel making them less
dependent on oil-producing countries in the Persian Gulf region. US farmers
produced more corn last year than they have since the end of World War II.
Tim Recker, a 43-year-old Iowa farmer, says that he and his fellow farmers
get as much as they can out of the ground. "We're farmers. Our goal is to
produce, produce, produce."

At a recent lunch on Recker's farm -- the meal was steak and beans -- his
mobile phone gave a quick buzz: a text message with grain prices. Recker
receives similar text messages about three times a day, and the news is
almost always good. He and his neighbors are experiencing their own,
personal economic miracle. Brand-new grain silos are popping up in the
fields around Recker's farm, shining, rocket-like symbols of their
builders' faith in the future. Many Iowans already refer to their state as
"the new Texas," as if biofuel could serve as a complete substitute for
oil.

During harvest season, Recker drives his truck down a road along the
Mississippi several times a day, carrying 27 tons of corn with each load. A
major exporter has set up underground storage facilities next to the river.
>From there, the bulk corn is loaded onto freighters, which carry it down to
New Orleans, where it is transferred to larger ships. From there the corn
travels through the Panama Canal and to destinations around the world.

A Handful of Corporations

In places like New Orleans, it becomes clear that even in the America of
high-tech companies like Google, Apple and Microsoft, the traditional
agricultural industry still plays a powerful role -- and it's an industry
in which a handful of corporations dominate the world market.

The largest is Cargill, a family-owned company from Minnesota founded in
1865. With its 158,000 employees and $88 billion (€60 billion) in sales,
Cargill is in the same league with major international corporations like
BASF, Samsung and Hewlett-Packard. In company literature, Cargill aptly
describes itself as "the flour in your noodles, the salt on your French
fries and the corn in your tortillas, the chocolate in your dessert and the
sweetener in your soft drink."

Cargill, Archer Daniels Midland (ADM) and Bunge form the legendary ABC
complex. No one who hopes to be a player in the global business of
renewable commodities can get around dealing with at least one of these
companies. The agricultural multinationals buy grain and oilseed from
farmers and cooperatives, store it in their own silos and dry and process
it. They ship their products through their own transfer terminals and
charter fleets of freighters to dispatch them to every corner of the world.
They grind wheat into flour, process soybeans into animal feed and --
currently an especially lucrative activity -- convert rapeseed into
biodiesel. ADM operates Europe's largest biodiesel plant at the Hamburg
harbor, where anyone driving past the facility is immediately engulfed by
the penetrating odor of French fries. By controlling the entire process,
from harvest to finished product, these conglomerates manage to secure the
most profitable part of the value-added chain for themselves.

The focus of their business is shifting more and more to the southern
hemisphere. Vietnam and Thailand, for instance, have become important rice
exporters, Indonesia and Malaysia have developed significant plant oil
production industries, and both India and China export large volumes of
sugar.

No Enthusiasm for a Grain OPEC

The biofuel boom has also resulted in a renaissance for southeastern
Europe, traditionally Eurasia's breadbasket. "The region around the Black
Sea has enormous potential," Rabobank analyst Delodder says
enthusiastically. Russia, for example, is fast becoming an agrarian
superpower. At last year's Green Week, Russian Agriculture Minister Alexei
Gordeyev pointed out that about 20 million hectares (49 million acres) of
arable land are still fallow. Should Europe need anything, the minister
assured his audience, Russia would deliver. But his idea of forming a
"grain OPEC" with Ukraine didn't exactly meet with enthusiasm.

Agricultural conditions in Ukraine are at least as promising as they are in
neighboring Russia. During World War II, the Nazis shipped Ukraine's "black
earth" back to the German Reich by the ton. The soil is so fertile that
Ukrainian farmers are often able to produce two harvests a year. It comes
as no surprise that Ukraine and other former Soviet bloc countries are

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