Organisers: CAFOD, Bretton Woods Project

Moderator:

• Luiz Vieira, Coordinator, Bretton Woods Project

Panelists:

• Jane Nalunga, Executive Director, SEATINI Uganda
• Grace Namugambe, Economics Justice & Rights Officer, FEMNET
• Geeta Sethi, Advisor and Global Lead for Food Systems, World Bank
• Cassio Beochat, Professor of Economic and Rural Geography, Federal University of Espírito Santo.

A recording of this CSPF event can be watched here. 

Luiz: In 2020, 160 million were facing acute food insecurity; by 2023 that had risen to 390 million. More than three billion can’t afford a healthy diet. Higher food prices have generated food insecurity and contributed to the cost of living crisis. The World Bank Group (WBG) has recognised the severity of the problem, and achieving Sustainable Development Goal 2 on agriculture and food (creating a world free of hunger by 2030) is supported by the WBG.

WBG argues that many factors have contributed to the food crisis: El Niño, climate change, the war in Ukraine, Covid-19, restrictive food policies, high debt levels and low productivity improvement in agriculture. Civil society doesn’t question those, but we think there is a missing element: The UN special rapporteur on the right to food said in 2020 that food systems are characterised by extractivism – a non-reciprocal dominance-based relationship.

Smallholders produce 70 per cent of the world’s food, but are themselves often still hungry. Corporate players in the global food sector are not held to account for the damage they do to health and the environment, for instance the so-called ‘big four’ ABCD seed companies control 70-90 per cent of global seed markets. Four agrochemical companies control 60 per cent of global seed market and 75 per cent of global fertilisers, but they serve the goal of shareholders’ profits, not food security, according to the UN special rapporteur on the right to food.

Speculation in global food markets is also a major issue. An unrecognised aspect of the food security crisis is the financialisation of agriculture, and food in particular.

It’s good that the Bank is focused on being the knowledge Bank, but this should be with input from the Global South (GS). It is surprising that the Bank is not aware of the financialisation of agriculture and its massive impacts.

Cassio: Financialisation is the rise and dominance of financial markets over the real economy. Interest is the price of money, the bank system transforms money into credits. The inflation of financial assets since the 1980s has altered expectations of wealth, and changed the perception of wealth.

The possibility of money becoming more money by asset price inflation removes it from the circuit of investment in the real economy. The prices of these assets vary in relation to many factors, not just market fundamentals of supply and demand. Speculation driven by promises of future production can massively distort market dynamics, and inflate assets.

Interest rates can influence liquidity and valuation of financial assets.

These have distorted market factors since 1980s.

Financial asset prices in 1980: 1.5 times global GDP. In 2023, that is 3.5 times global GDP.

Bonds, IPOs, derivatives, hedge funds emerged as new tools of financial markets and drove financialisation  in 1980s.

Finance capital is looking for new opportunities for profit, while agriculture companies are looking to refresh their debts. Financialisation has progressed massively in Brazil.

Geeta: How does the World Bank Group (WBG) think about and finance food systems?

Food systems are currently not fit for purpose. Half of the global population is not eating a healthy diet. Food systems are driving possible pandemics (through deforestation) and are major emitters of greenhouse gases. Agriculture receives $800 billion of public subsidies, half of that in the OECD, so these subsidies are not just a rich world problem. But only 35 cents of every dollar spent on food is going to the farmer. Private spending on agriculture and food globally is in excess of $200 billion. We need a serious rethink. There is a food finance architecture review underway.

Of the food and feed companies, less than 10 per cent pay living wages, far fewer do carbon audits. Consumer spending on food is 12-15 percent of global GDP, consumers spend a huge amount on food (12-15 trillion dollars). Three billion can’t afford a healthy diet.

Official development assistance (ODA) to food systems is $10 billion a year. The poverty line in many countries is calorie insufficient. We have a trillion dollars of social programmes to make them nutrition sensitive. They have also been looking at debt for food swaps – but there was a concern these could be reversed as happened with debt for environment swaps. Debt for food could be different, as children are the most affected by malnutrition, and that represents a permanent capital loss.

The Bank is putting $660 billion a year into climate finance. Agriculture and food receive around $25 billion in climate finance (about 4 per cent), but agriculture is responsible for c.1/3 of emissions… so finance needs to reflect this.

For the Loss and Damage Fund, Agriculture and food need to be considered, as between 2007-2022 about 25 per cent of the damage is to the agricultural sector, which lost about $4 trillion, so the food and agriculture sector needs to be well represented. It would require an estimated $400-500 billion, or half a per cent of GDP – not so much – to rebuild the system.

The WBG is trying to build a concert, to coordinate efforts, on food system financing.

Jane: Kenya and Africa more broadly face challenges in the food and agriculture sector and these challenges are rooted in how the WBG intervenes in this sector.

Financialisation is the dominance of finance over the real economy and the consequent restructuring of the real economy in the interests of finance. One effect of this is they have changed laws and policies to attract investment. This has happened in my country. The logic is: Attract investors, give them what they want, and let them take back their money. This has happened in agriculture as well, to make it more attractive to investors, and it has had a huge impact on agriculture and on women.

The agricultural sector is broken. We know the importance of agriculture, it is the mainstay of the African economy, providing about 70 per cent of employment but only 25 per cent of GDP. There is a lot of hunger and uncertainty over agricultural production. The reasons are internal (African government support for agriculture is low, most only dedicate 3-4 per cent of their budgets for agriculture). Governments liberalised their economies and left agriculture to the private sector.

All of these challenges have a strongly gendered impact, women have limited access to land, inputs, etc… How is the Bank addressing these challenges? The Bank recognises that agricultural production needs to be increased – and that gendered impacts and promoting gender equality are important.

However, there is a contradiction in implementation: WBG lending promotes increased private sector participation in agriculture. E-vouchers have been issued to farmers for improved seeds and chemical inputs.

In Africa most farmers use their own seeds, but WBG is promoting improved seeds from the private sector, which has a financial impact on the farmers. This drives corporate control over the agriculture sector over small scale producers. This has had negative impacts on agriculture, and negative gendered impacts.

Grace: Access to land remains limited for women – customary laws systematically disinherit them, and even national laws discriminate against them. Land is in the hands of men, not women. Agricultural improvement practices are largely a male domain. Men also control cash from the sale of agricultural produce, and this all marginalises women. Women who challenge this may be subject to abuse, including gender-based violence.

The WBG supports liberalisation of agricultural sectors. Privatisation and de-risking has been used to modernise agriculture and this can have massive gendered impacts. Private companies now control the food sector, even previously staple foods, and they are crowding out private farmers. There has been a reduction in food sovereignty. Hybrid seeds are very expensive, and their use tends to emphasise monocropping. Local seed varieties have been wiped out; staple foods have disappeared, and women have to work more to feed their children as this is their responsibility.

Land has been commodified, and many women have been forced off their land in land grabs. This also affects women’s access to credit, as land is used as collateral.

Because women don’t own land they can’t access credit, so they are largely confined to working as labourers in the agricultural sector, with no social protection, poor working conditions and low wages. They are also vulnerable to abuse.

The WBG gender strategy continues to perpetuate these challenges as it still leans toward protecting the rights of corporations over women. The assumption that economic growth will produce gender equality needs to be questioned, and the WBG still has to fully incorporate a gender lens in its work.

Gita (Answering a question on the WBG’s attitude toward the financialisation of agriculture): Africa’s import bill is about $100 billion; rice, maize and oil seeds are 3/4 of that, all of which Africa can produce. Global supply chains have been shaken up over the last few years, so this is an opportunity for Africa and African agriculture.

Food loss and waste is high, at around 40 per cent. Rwanda has 40 per cent food loss, almost 30 per cent is rice and maize. This is 12 per cent of its GDP, and 16 per cent of its greenhouse gas emissions. Nigeria wastes 78 million tons of food. This isn’t a public sector problem. What is making farmers waste food? The private sector does need to come in, in Africa. The private sector needs financial de-risking but also non-financial de-risking in terms of policy consistency.

Agriculture needs to be built from the ground up, not just through corporate agriculture. Private sector development must start with the domestic private sector, before international investors swoop in to sweep it up.

Geeta and her colleagues would like to engage in discussion and provide feedback on a CSO paper on the financialisation of food systems.

Jane: Surprised by the WBG’s one policy to fit all situations, and the promotion of land as a financial asset.

Agree with Geeta on the importance of limiting food loss, but doesn’t think it is a private sector problem. The private sector is about making a profit, so they haven’t invested in resilience, they buy what they want and don’t invest in storage. This means that farmers don’t have any storage facilities, so their maize is rotting in the fields.

Financialisation is about putting the private sector in the driving seat, and the private sector is about putting profit before all. Government should be in the driving seat instead, and should direct the private sector. The system is broken, it needs to be repaired. Agriculture should be production for food, not speculation and profit.

Cassio: Dynamics of agricultural control in Brazil are driven by investment in farms, and secured by land grabbing or deforestation. Machinery has been used to replace labour, especially in flat highlands like the Planalto that were traditionally used as commons by local communities. Now, many companies have moved to invest in land as a potential asset and this has driven the financialisation of land. Companies acquire cheap land that has been seized and consolidated in large farms.

This drove the increase in farmland prices from 2008 onwards. Farmland prices have hit a 20 year high, pricing poor farmers out. Land has been an important asset for investment over the last decade. The WBG backs land regularisation, which the government has to finance, for the commercial production of crops like soybeans, maize, etc. for export. But local communities that produce food for the local market are dispossessed. Contract farmers are squeezed and subordinated to financial interests and owners, their situation is not good.

Brazil has returned to the UN’s map of hunger, even while it produces record levels of agricultural commodities.

So what can academia do to highlight this issue? A 2011 WBG report on interest in farmland was widely criticised, but little appears to have come from this criticism.

Grace: The WBG should address issues concerned with food security. The WBG should empower states, not corporations, who are more likely and able to act in the interests of their citizens against the excesses of the private sector. The WBG should also focus on smallholder farmers, helping them to expand and ensuring local seeds are being protected as these seeds are cheaper and easier for them to use. Smallholder farmers often produce cheaper food. The role of the state is critical in this process.

The privatisation of water, etc. should also be looked at… these privatisations have had negative impacts especially on small farmers. There have been projects of land titling, with communal land turned into individual land, and women have been dispossessed.

The financialisation of the agricultural sector is not the solution to food insecurity in Africa, or in any other sector. The role of the state remains critical, and women remain a vulnerable part of the population, especially at the country level. A holistic feminist approach is critical to achieving food sovereignty and security.

Questions and answers: 

Rodolfo Lahoy, IBON: How is the Bank ensuring priority on food and climate? And how does the Bank reconcile that in light of its now recognised negative impact of its work in agriculture?

Gita: Agriculture is now in uncharted territory climatically. Fifty cents of every dollar the Bank is investing in agriculture has co-benefits for climate. A carbon price will primarily benefit smallholders, who are 3/4 women. Twenty-first century farmers should have several revenue streams, from production, from renewables and from ecosystem services (including sequestration of carbon). But for this to happen we need to worry about the correct pricing of carbon.

Luiz: There is a question about the methodology of how the Bank measures its climate finance.

Robert Bain, Bretton Woods Project: How is the Bank gender strategy going to be operationalised in the Bank’s agriculture programming, particularly in the seed sector?

Geeta: The Bank’s food crisis response during Covid-19 was $45 billion, and half of that was for women. Also all programmes are all gender tagged, in other words, these programmes’ lending do not go forward unless it has a strong and positive gender impact. If civil society knows of a programme in which the Bank has not done this, please let us know!

The also host the global agriculture and food programme. This focused not on crisis response but on transformation – and 86 per cent of beneficiaries in these programmes are women, so I think we are implementing our gender strategy.

Luiz: But the treatment of land as an investment – the financialisation and consequent commodification of land, as raised by the other speakers here today – has had a massive gendered impact that isn’t captured by gender tagging. It is these macro-policies that are the focus of this panel.

Wilmi, Global Shea Alliance: A specific question: How does the Bank help and what practical engagements can we expect?

Geeta : There is going to be a regional programme on Shea, but she doesn’t know the status of that. She will follow up.

Samah: Samah is from Sudan, currently experiencing a devastating famine because of the war. Studies have indicated that if women had been allowed to participate in agriculture fully, food insecurity would have been reduced by 30 per cent.

Also before the war, there were an increased number of projects that involved contractor farmers. What is the panel’s assessment in contract farming? Not many women are involved, but do you think the model is a workable approach?

Geeta: Women must be involved in farming, if a program works and benefits accrue, then the WBG should support that.

Jane: The issue of contract farming is that whole system needs to be overhauled. The entire system is broken. The question is how do we overhaul it holistically?

We must focus on productivity and a whole food production system, and all policies need to facilitate that. We also have to look at the role of the World Bank, the state and the private sector.

Grace: Contract farming is not an answer to the problem. It leaves corporations with an upper hand and subjects farmers to a lot of control, to market forces. Contract farming without effective government regulation would not solve the problems at hand.

Fabio: He agrees with Grace. In Brazil contract farmers are squeezed and subject to the corporations who are intent on their own profits.

Luiz: Fabio, do you see a gap between academia and the knowledge of the World Bank of financialisation? What can be done to

Fabio: World Bank’s 2011 report – rising interest in farmland – was criticised by academia. It favoured land markets, etc. It increased demand for land as a financial asset.

The Bank has a history of supporting the regularisation of land titles in highly disputed contexts. The land programmes funded by the World Bank give titles mostly to large farms and corporations that take land from local communities.

Jane: World Bank’s one size fits all approach of titling land to convert communal land to individual land, and this has had a huge impact in Brazil and Africa. We need to have these conversations at national level, in our countries. We haven’t had these conversations at the national level.

Grace: Financialisation of agriculture is not the solution to food sovereignty/insecurity issues in Africa or elsewhere. The role of the state is critical. Women, and women farmers, need to be part of this conversation. A holistic feminist approach is critical.

Luiz: The Bank has focused on reinventing itself as a knowledge bank, with the input of the Global South. Conversion of communal land for people’s food to land for financial speculation is a big change.