Reasons For Food Crisis 2. Pests and Fertilizer use

Fertilizer Total Yield Increase(kg) (bushels) (bushels)

1 10 102 21 113 32 114 42 105 51 96 59 8

In this case the point of diminishing returns is at 4 pounds of fertilizer.

Reasons For Food Crisis

2. Pests and Fertilizer use

In the US 59 kg (130 pounds) of fertilizer for every acre of cropland.

The same fertilizer, which in the US gives only marginal returns, would dramatically boost output in countries or regions where fertilizer use is low.

Improvements are being made with fertilizer use, especially with GPS and GIS to allow farmers to target the use.

Fertilizer application in different parts of the world

Agrium is a dominant player in the agriculture fertilizer sector.

Hemisphere GPS (signs licensing agreement with John Deere)

Tractor guided via satellite navigation

Reasons For Food Crisis

3. Economy – Controlling Prices

The developed world (the “haves”) control the economy and trade and will not allow the developing world (the “have–nots”) to compete.

Tariffs: Tax placed on imported goods to allow the domestic goods to compete

Example: The Ivory Coast is a major producer of Cocoa. Canada allows the Cocoa in duty-free, since we can’t grow it. But we will tax chocolate made in the Ivory Coast to protect our chocolate industry. The Ivory Coast is not allowed to industrialize and remains an agricultural supplier of Cocoa.

Reasons For Food Crisis

3. Economy – Controlling Prices

Subsidize: Governments in developed countries give money (subsidies) to their farmers to keep the prices of certain agricultural products down so they can be more competitive in the world market.

Aid: The developed countries will aid the developing countries in food supplies, but the aid is sometimes connected to some other kind of favour. The US gives a country food, but then expects to be able to place a military base in that country. This type of aid as we will see in another unit is called ‘Boomerang aid’.

Reasons For Food Crisis

4. Military Spending:

Countries would rather spend money of machines of death. Countries like North Korea, Iraq and others spend billions on military equipment while their populations go hungry.

Money is diverted away from agriculture to other sectors…

Military spending in millions of US dollars

Reasons For Food Crisis

5. Land Holdings:

If a farmer owns his/her own land they will take better care of it. The U.S.S.R. had a system (Collective farming) where the government owned the land and the farmers worked there much like a factory. This system was a disaster since the farmer had no incentive to improve the land.

Absentee Landlords: In many countries the rich own the land and they either leave the land alone or they rent it out to ‘peasant farmers’.

Could this system ever be implemented again? What would have to change?

Reasons For Food Crisis

5. Land Holdings:

Gavelkind Laws: As a farmer’s family increases each successive generation gets a piece of land. The land is divided into smaller units that are not as productive. Eg. A farmer has four children, his farm is divided into four. One child decides to leave his land and not farm. The others are left with 1/3 of the original farm.

6. Lack of an Infrastructure:

The developing world lacks electricity, roads, trucks, railways, storage facilities and distribution networks. Even if they did grow food it would be difficult for them to distribute it.

Do you recognize this truck?

It is essential that countries are able to transport perishable products to markets in a timely fashion.

Viterra – Western Canada grain storage

This type of infrastructure is obviously not created overnight. Developing countries face significant challenges in this regard.

Viterra Inc. chart indicating recent stock performance. This is an example of an International vertically integrated company, which acts as a grain handler, marketer and food processor.

What caused this rapid change in price?

If you had owned 1000 shares of this company, at an average buying price of $11 per share ($11,000), how much would your total share value now be worth? (approx. $16,000…45% increase in value)

Glencore International… Viterra was subject to a friendly

takeover by Swiss giant, Glencore. However, the stock has not done well recently, as many potential takeovers in other industries have come under significant scrutiny; the deal must be completed by Nov. 15th. Investors are nervous and apprehensive.

Bell’s proposed offer for Astral Media (HBO Canada, Teletoon, Movie Network)…CRTC rejects deal.

CNOOC’s proposed deal to acquire Nexen Energy(will the Canadian Federal Gov’t approve this deal?)

Reasons For Food Crisis

7. The Physical Environment:

20% of the world is too dry20% is too mountainous20% is too cold10% has soil that is poor21% is potentially arable – something has to be done to the land (irrigation, better drainage, fertilizers etc.)

Only 9% of the earth is cultivated. One fear worth mentioning at this time is the expansion of cities. Cities tend to locate near cultivated land. Once the city starts to grow, valuable farmland is lost. The area surrounding Toronto is a perfect example.

Encroachment on farmland in the GTA

Reasons For Food Crisis

8. Political Organizations:

Communist Countries: set the price for food – there is no incentive for the farmer to improve his/her output. Many times the farmer sells only to the government (at a low price) and the government sells to the people.

Capitalist Countries: Price is dependent on Supply and Demand. Rich countries can sometimes manipulate supply and demand and in turn control the price.

Reasons For Food Crisis

8. Political Organizations:

If Supply goes up (increase in surplus food) and the demand stays constant, the price of the food should drop. The rich country’s farmers can afford to:

a. Store the surplus food b. Destroy the surplus or c. The government will pay them NOT to grow any more. The above method lowers the supply thus increasing the price allowing the farmer to control the price and get more money for his crops. This allows the rich farmer to better compete on the world market. The poor country’s farmers have no control and thus have difficulty competing.

Reasons For Food Crisis 8. Political Organizations:

The wealthy farmers can even increase demand through advertisement. Today it is in style to advertise healthy, low fat food.

In a capitalist system the wealthier farmer can obtain loans and credit in many instances, while the poor farmer has difficulty staying in business.

Co-operatives have been created to make the small farmer more competitive. A Co-op is when many farmers get together and buy seed and equipment as one. The cost is lowered. This is also called ‘Economies of Scale’. Buy in bulk so to speak.

Examples of how agriculture industries advertise…

Reasons For Food Crisis 9. Surplus in Developed Countries:

When a surplus is grown in the developed world, much of it is stored or destroyed in order to keep the prices up. This extra food could be given as aid to starving people, in some instances.

10. Animals and Pets:

Since meat is a major part of the developed world’s diet, a significant amount of food is given to animals to “beef them up”, so to speak. Cattle and pigs are the main recipients.

Conclusion

The developing worlds are the countries that suffer most. They are the ones that do not benefit from all of the resources, technologies, and education that the HAVES do.

The HAVE-NOTs struggle for a fair share. Globalization is meant to help the poor, however, as seen through many recent WTO conferences, the developed world is not always willing to negotiate democratic, sustainable fair trade.

How will the developing countries ever get out of this perpetuating cycle of poverty and inequality?

THE END