China Secrecy Seen Thwarting Drive to Avoid Food Riots
After the crisis passed, global leaders agreed the lack of reliable information about crop inventories led nations to hoard their own harvests, worsening the situation. In response, the Group of Eight nations in 2011 pledged to do a better job sharing agriculture data.
G-8 agricultural leaders began a two-day meeting in Washington today to assess progress in making crop details more accessible. The global drive faces obstacles as nations including China and companies such as Cargill Inc. keep secret information on wheat, rice and other commodities.
“Some companies will feel that if they give away too much information they’re giving business away, and countries can become very jealous about telling people what they’re selling and buying,” former Agriculture Secretary Dan Glickman said in an interview. Still, “you need to get better information so that people who want to grow their farms have a better idea of when to buy and when to sell” in poorer countries.
Mars Inc. (MARS), Google Inc., (GOOG) will participate in the meeting along with the Global Harvest Initiative, a business alliance that includes Monsanto Co. (MON) and Deere & Co (DE)., and the Bill and Melinda Gates Foundation.
In China, the world’s biggest food consumer and not part of the G-8, “inventory is a state secret” and output data is “inherently unreliable,” said Li Qiang, managing director at Shanghai JC Intelligence Co., an agricultural research company, in a telephone interview. “Food security, or the ability to feed its population, is a tantamount issue in Chinese politics.”
Making crop and supply data more open helps in “reducing poverty, improving nutrition and sustainably intensifying agricultural production,” U.S. Department of Agriculture Secretary Tom Vilsack said at the meeting today. Taking the lead on transparency and showing how better data can improve the global food system “will encourage other countries, and perhaps other companies, to participate,” Vilsack told reporters after his speech.
Still, transparency efforts can conflict with national and company interests, said Gawain Kripke, policy director at Oxfam America, a humanitarian group in Washington.
Agribusinesses including Cargill, the biggest closely held U.S. company, Archer-Daniels-Midland Co (ADM). and Bunge Ltd (BG). control 44 percent of all crop-storage capacity in the U.S., the world’s biggest crop exporter, according to the USDA.
“These companies are highly integrated, they play arbitrage between markets and they increasingly are players in financial markets,” Kripke said by telephone. “There are real questions about the integrity of their business model and whether there’s some risk that their size and control, along with lack of transparency, creates systemic risk.”
Representatives from Decatur, Illinois-based ADM will be at the meeting, Jackie Anderson, a spokeswoman, said in an e-mail. White Plains, New York-based Bunge backs global adoption of the U.S. model of releasing frequent reports on crops, Susan Burns, a company spokeswoman, said in an e-mail.
“Cargill supports policies that increase overall food security and encourage agricultural development,” Susan Eich, a spokeswoman for the Minneapolis-based company, said last week. “Transparency is a key part.”
Businesses seeking to keep secret proprietary information often have access to resources unavailable to governments, giving them an opportunity to help public reporting, said Steve Elmore, chief executive economist for DuPont Pioneer, the seed division of DuPont Co.
“There are trends that governments may not pick up on as fast as we do” in weather and planting, said Elmore, whose company has commissioned a global food-security index with the Economist Intelligence Unit.
Companies that keep information private to gain a trading edge are probably less damaging to markets than governments that can’t or aren’t able to determine crop sizes or supplies, said Brian Wright, chairman of the Department of Agricultural and Resource Economics at the University of California, Berkeley.
Nations that are less transparent range from developed economies such as Canada, which can be ambiguous about supplies of its main export, wheat, to poorer nations like Ethiopia, which is self-conscious of its history of food shortages, he said.
Food security gained attention after a surge in prices for corn, wheat and soybeans in 2007 and 2008 sparked more than 60 riots, the U.S. State Department said. The G-8 in 2009 pledged $22 billion to boost food production in poorer countries.
Prices jumped again in February 2011 (FAOFOODI), pushing 44 million people into extreme poverty and contributing to the Arab Spring protests across North Africa and the Middle East, World Bank President Robert Zoellick said at the time. That same year, the Group of 20 nations began an Agricultural Market Information System, which monitors food markets and aggregates data.
Prices worldwide have dropped 11 percent as crop inventories rebounded.
G-8 members are the U.S., Canada, France, Germany, Italy, Japan, Russia and the U.K.
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