Monday, May 12, 2008

As food shortages and hunger are spreading worldwide, profits of agribusiness companies are soaring.

Bloated profits as poor go hungry
By Geoffrey Lean

Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation.
And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.
The prices of wheat, corn and rice have soared in the past year, driving the world's poor - who already spend about 80 per cent of their income on food - into hunger and destitution.
The World Bank says 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits.
Monsanto last month reported that its net income for the three months to the end of February had more than doubled over the same period last year, from US$543 million ($695 million) to US$1.12 billion. Its profits increased from US$1.44 billion to US$2.22 billion.
Cargill's net earnings soared by 86 per cent from US$553 million to US$1.030 billion over the same three months.
And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from US$363 million to US$517 million.
Similarly, the Mosaic Company, one of the world's largest fertiliser companies, saw its income for the three months ending February 29 rise more than 12-fold, from US$42.2 million to US$520.8 million, on the back of a shortage of fertiliser.
The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.
The Food and Agriculture Organisation reports that 37 developing countries are in urgent need of food.
And food riots are breaking out across the globe from Bangladesh to Burkina Faso, from China to Cameroon, and from Uzbekistan to the United Arab Emirates.
Benedict Southworth, director of the World Development Movement, called the escalating earnings and profits "immoral". The benefits of the food price rises were being kept by the big companies, and were not finding their way down to farmers in the developing world.
The soaring prices of food and fertilisers mainly come from increased demand. This has partly been caused by the boom in biofuels, which require vast amounts of grain, but even more by increasing appetites for meat, especially in India and China.
World food stocks at record lows, export bans and a drought in Australia have contributed to the crisis, but experts are also blaming food speculation.

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