Food and Finance Toward Life-Enhancing Agriculture Edited by Athena Peralta Food and Finance Toward Life-Enhancing Agriculture Edited by Athena Peralta 2 FOOD AND FINANCE Edited by Athena Peralta Copyright © 2017 WCC Publications. All rights reserved. Except for brief quotations in notices or reviews, no part of this book may be reproduced in any manner without prior written permission from the publisher. Write: [email protected]. WCC Publications is the book publishing programme of the World Council of Churches. Founded in 1948, the WCC promotes Christian unity in faith, witness and service for a just and peaceful world. A global fellowship, the WCC brings together 345 Protestant, Orthodox, Anglican and other churches representing more than 550 million Christians in 110 countries and works cooperatively with the Roman Catholic Church. Opinions expressed in WCC Publications are those of the authors. This publication was developed in collaboration with Bread for all (Bfa), the development agency of the Swiss Protestant churches. Visit https://painpourleprochain.ch/. Scripture quotations are from the New Revised Standard Version Bible, © copyright 1989 by the Division of Christian Education of the National Council of the Churches of Christ in the USA. Used by permission. ISBN: 978-2-8254-1696-9 World Council of Churches 150 route de Ferney, P.O. Box 2100 1211 Geneva 2, Switzerland http://publications.oikoumene.org 3 Contents Foreword 5 Isabel Apawo Phiri and Miges Bauman Introduction: From the Financialization of Food to Life-Enhancing Agriculture 7 Athena Peralta Abbreviations 14 Part One The Financialization of Food in East Africa: The Role of Charitable Foundations and Global Agricultural Initiatives 17 Sasha Mentz-Lagrange Executive summary 17 Introduction 22 1. Background on the financialization of food 27 2. Overview and analysis of investment flows in food assets in (East) Africa 31 3. Analysis of financial flows in (East Africa) 46 4. How agricultural investors operate in (East) Africa 58 5. Local impacts of the financialization of food 64 6. Conclusion: Alternatives to the financialization of food for a life-enhancing agriculture 73 References 83 Part Two The Financialization of Food in Asia and the Philippines: The Role of the World Bank 91 Rosario Guzman and Arnold Padilla Executive summary 91 Introduction 96 1. The phenomenon of financialization in agriculture 100 2. Impact of increasing private investments in agriculture 116 3. Financialization of Asian Agriculture 120 4. World Bank and ADB: Facilitating corporate takeover of Philippine agriculture 125 5. Conclusions and recommendations 133 References 136 Glossary 140 4 Foreword Recent decades have been marked by unprecedented financialization – or the growing importance of financial markets, motives, institutions, and elites in the operation of the national and global economy. In agriculture, financiers and speculators are turning to food crops and monocultural farming estates as lucrative areas for profit-making. This ongoing phenomenon has resulted in unstable food prices as well as large-scale land acquisitions with profound social and ecological costs: hunger, displacement, and the poisoning of soils and waters. The phenomenon of financialization of food raises many questions: Globally, who are the key agricultural financiers or investors? What types of agricultural models are they financing and therefore promoting? What are the consequences of their activities for food access by the global poor, for the livelihoods of peasants worldwide, and for our increasingly fragile eco-systems? Are there other agricultural investment models that are not beholden to the profit logic, that foster just economic relationships and that encourage ecological renewal? Finally, how do we, as churches and faith-based organizations, respond through critical theological reflection, advocacy for policy changes and institutional transformation, and financing practical alternatives within our communities? Responding to these challenges, the World Council of Churches (WCC) and Bread for all (Bfa) initiated a project aptly titled “From the Financialization of Food to Life-enhancing Agriculture” with the following aims: to better understand the connections between food and finance; to explore agricultural production and investment models that are not beholden to the profit logic, that foster just economic relationships and that encourage ecological renewal; and to map out ways in which churches and church-related organizations can respond through critical theological reflection, advocacy for policy changes and institutional transformation, and investing in alternatives within their communities. As part of project, the WCC and Bfa commissioned the two studies contained in this volume to shed light on the role, channels of influence, and impacts of financial institutions and players – especially philanthropic foundations and international development banks – in agricultural production and distribution. These actors shape and affect the global food regime not only through hedging and speculation, but also through their traditional role of providing credit, and through direct or third- party large-scale investments in farming and farmlands. In this discussion it is essential to recall that by far the biggest investors in agriculture worldwide are the (small scale) farmers themselves, not banks and other financial actors as is often assumed. Farmers invest through their personal savings and labor to improve and enlarge the resource base, e.g. soil quality, irrigation systems and capacities. Therefore issues beyond finance have to be considered when talking about investment in life-enhancing agriculture. Policy and public goods such as health, education services and infrastructure are necessary for enabling smallholder farmers’ investments and strengthening rural livelihoods. Equally important is the recognition of individual and collective rights to land, water and biodiversity including seeds to allow farmers’ investments to be sustainable. Against this background, the WCC under the frame of its work on economy of life and care for creation is advocating for a financial architecture that invests in the social and ecological good, in life-giving agriculture that not only provides nutritious food and decent livelihoods, but also promotes just relationships between farmers, consumers, traders and investors as well as nourishes our ecosystems. Through the WCC-Ecumenical Advocacy Alliance campaign on food for life, it seeks 5 to uphold the rights of the small food producers who represent ninety percent of all farms worldwide and who produce seventy percent of the world’s food. Bfa is engaged in supporting the struggle of farmers and indigenous communities to maintain or re- gain control over their land and seeds in order to produce food and sustain their livelihoods. As a campaigning organization in Switzerland, Bfa sheds light on the role of Swiss financial and economic actors involved in unsustainable agricultural projects that lead to land grabbing, deforestation, environmental degradation and human rights violations. Bfa considers itself as part of a movement striving for a transformation in society based on true respect of nature and all human beings. A move towards democratically controlled agro-ecological food systems is at the heart of this transformation. Fortunately, a paradigm shift towards life-giving agriculture is slowly emerging across both developed and developing countries, led by social movements at the forefront of initiatives such as community-supported ecological farming, pesticide-free towns and cities, local communities addressing resource limits (transition networks), local food networks, and ‘de-growth’. Isabel Apawo Phiri Miges Baumann Deputy General Secretary Head of Development Policy Public Witness and Diakonia Bread for all World Council of Churches 6 Introduction Athena Peralta The Financialization of Food Sweeping processes of globalization have drastically changed the agricultural landscape in recent decades. An important feature of this ongoing transformation is the increasing penetration of financial motives, markets, institutions, and elites in the workings and operation of the global food system – a phenomenon that may be described as the “financialization” of food (Epstein 2005). Various financial actors are now turning to food crops and monocultural agricultural estates, which were previously sidelined and seen as high risk, as lucrative areas for profit making. Their maneuvers include creating and trading new financial products that convert food into commodities and highly complex derivatives, providing huge agricultural credits and, in some cases, directly managing industrial farms. In other words, agriculture is now regarded as an asset class (Chen et al. 2013, in Mentz-Lagrange). In the process, the free trade rhetoric that dominated the development discourse towards the end of the 20th century “has given way to an ‘investment-led assault,’ in which circulation of food is compounded by global financial flows into enclosing land for industrial agriculture and/or speculation” (Brooks 2016). “[G]iven the rising emphasis on competitiveness and profitability and the related abstraction of the financial product from its physical form,” Mentz- Lagrange in this report concludes in this report that “food is de facto becoming financialized.” The growing literature on the financialization of food has linked this phenomenon to volatility in food prices