Davos: Alvaro Lario (UN) predicts food supply crises and cites China’s positive action

While Britain’s politicians voice the old platitudes about open markets, their systems are breaking down. Markets are patently failing to deliver security — whether on jobs, energy, healthcare, transport, food or anything else.

The World Economic Forum in Davos, Switzerland, 2023

In a recent editorial, Ben Chacko (below right) warns that Britain’s politicians should heed the ’Davos voice’ of International Fund for Agricultural Development president Alvaro Lario, who warns that food supply crises are likely to worsen through 2023.

Former MI5 chief Eliza Manningham-Buller, warned in November that domestic food production should be viewed as an element of national security (FT). That view is not so far reflected in the government’s plans, which abandon the CAP’s explicit goal of protecting food production.

Government statistics suggest the prices of 30 common foods rose by an average 17% from September 2021 to September 2022, and the figures were much higher for many basics like bread, pasta, tea and vegetable oil and the situation is even grimmer globally.

The war in Ukraine has hit food and fertiliser exports from Ukraine, Russia and Belarus and the global climate is also becoming increasingly unpredictable. Huge regions of east Africa have been hit by five years on the trot of failed rains. Vast tracts of farmland were inundated by Pakistan’s apocalyptic floods. Both Europe and China recorded their worst droughts in hundreds of years last summer.

The US and WTO have exerted pressure on countries like India and China who keep affordable grain reserves instead of paying top price for imports; they called this hoarding

Lario cited China’s positive role in providing food security for its own people and “South-South” food supply co-operation (see UN websites). Though there are serious problems in Chinese agriculture and ecology, China’s grain reserves — accounting for almost 70% of the global total — ensure resilience in the face of supply chain shocks.

At the close of 2021 it estimated its wheat supplies alone would meet national demand for 18 months. Like many other countries, China also applies price controls to essential foods. 

Agricultural output and rural incomes have risen through a mass shift to rural co-operatives under Xi Jinping, with well over 100 million rural households (around 50%) now part of such co-ops.

The UN food expert’s praise for China reflects the fact that it recognises the instability of global systems and seeks to reduce dependence on the market. Its joined up approach, where projects like new solar farms are funded for rural co-ops so they can sell energy as well as food, has helped eliminate absolute poverty and also revitalised the rural economy as a whole.

 

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Liquid milk from Britain to China?

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The Telegraph reports that Chinese state-owned companies are approaching British dairy farmers to secure millions of litres of UK milk.

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Martin Lovegrove, who has a 250-strong herd of Holstein dairy cows, said he was speaking directly to a delegation from China that wants to buy between 30m and 50m litres of milk. He has just had the website for his Henden Manor dairy translated into Chinese, with buyers expected to visit his farm soon.

Will this perturb Arla, who has sold powdered milk products on the Chinese market since 2005, and is increasing its investment in a joint venture with Mengniu?

Last year, Arla and Mengniu Dairy decided to export a full range of dairy products to China.

Just-food reports that Arla expects to have more milk on its hands following the abolition of EU milk quotas in 2015 and Arla’s projections, in its 2011 annual report, are that China will need 45bn kg of milk between 2010 and 2020.

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Shades of things to come as government and NFU support farmers exporting milk to China?

For some months this year British supermarkets rationed sales of baby milk powder to two boxes per customer, because of additional demand from Chinese tourists, students who posted them to relatives and also export businesses buying from wholesalers. This was prompted by the Chinese government’s ban on milk powder imports from New Zealand on August 4 this year after Fonterra announced that there might be a potentially harmful bacterium in three batches of its raw milk powder.

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Comments on the Telegraph article included:

• The Chinese must look to their own resources for their milk and not to another country, unless it is a genuine surplus.
• Meanwhile many British dairy farmers struggle to pay bills and make any sort of profit.
• Our British milk must stay here and farmers must receive proper and fair income for producing it.
• I suspect the boot will be on the other foot, very soon – with UK supermarkets being forced to match the Chinese on prices, or find themselves without stock.

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MP Neil Parish & DEFRA spokesman blame the victim instead of addressing the injustice

 

James Badman FFA

Protesting farmers, who are losing money on each litre of milk they produce, are heaping pressure on processors Dairy Crest, Arla Food and Robert Wiseman Dairies to reverse plans to cut their milk price.

Brushing aside these legitimate concerns, former farmer Neil Parish, Conservative MP for Tiverton and Honiton, said prices would always rise and fall on the market, and – in effect – told farmers to ‘get on their bikes’.

 

Neil Parish ignores the imperative to cut pollution and carbon emissions

 

Despite the imperative to cut pollution and carbon emissions expressed by our government and others across the world, he pointed to the Government’s Farming, Food and Drink Exports Action Plan, which includes appointing a food and drink ambassador and championing British food at overseas events. Central to the strategy is removing bans on British meat imports. If successful, this would benefit corporate exporters and food processors, not the primary food producers.

His words are in tune with the Department for Environment, Food and Rural Affairs spokesman, quoted in the Western Morning News, who said: “Time after time ministers have been saying that milk processors should stop squabbling over milk bottling contracts and focus on the wider, more lucrative emerging markets which are crying out for dairy products like butter and cheese.

 

Rebuttals extracted from a manifesto by former dairy farmer Michael Hart

 

Facts presented by Michael Hart demolish the Neil Parish/DEFRA argument – “the standard political answer to the problem of low farm gate prices in all sectors”:

• “farmers are flooding the market with liquid milk”: we drink more straight milk and use more liquid milk in tea, in coffee and on cereal than other countries – the demand is there.
• “ India is an emerging market for dairy products”: Parish ignores the fact that India is the largest milk producing country in the world & will increase home production as the skills and knowledge to produce more become available.
• China is third in the world milk production table and, while imports are increasing, home production of milk has risen rapidly over the last eight years and will continue to increase as they import genetics and knowledge to enable them to do so.
• Brazil, another country Neil Parish mentions as a possible market, is number five in the world milk production league, producing more than twice as much as we do. Last year the neighbouring milk exporting  country of Argentina increased production by 12.6% and cost of production is much lower there than here.
• Other southern hemisphere milk exporting countries have also increased production: Chile up by 5.6%, New Zealand up by 10.4%, Uruguay plus 19.5% and the USA, Australia, both exporting countries have increased production as well.

 

Michael Hart asks: “So who is more likely to supply the emerging markets of the southern hemisphere those countries already there, or close by, or us here in the UK thousands of miles away?”

 

“Farmers produce raw material, like milk, which they sell to a processor to make the product for the consumer to buy – whether that is for the home market or for export markets. Processors and exporters export, and they benefit from that, not farmers, hence the need for fair trade products so that farmers get a fair price . . .

“When I was producing milk before the BSE export ban in 1996 I was surprised to find out that my milk was going for export to Belgium for use in chocolate, due to its quality. However while I assume that the exporter was getting a good price which made it worth exporting the milk, I as the producer of that milk received no more than I would have done for use here in the UK – again showing it is not farmers who benefit but the exporters.

 

“I do not believe that exporting – put forward by Mr Parish as the answer – is the answer to the problem faced by UK dairy farmers. It is being put forward to avoid the government dealing with the real problems.”

 

Michael is a sheep and beef farmer in Cornwall, an ex dairy farmer, and has travelled widely on agricultural matters.

 

 

 

 

“A slice of contracts, irrespective of actual public benefit or sustainability . . .”

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Copa-Cogeca knows better – scroll down

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As James Paice flies to China, the words of a local transport consultant came to mind. He emailed, “businessmen are clamouring for ever-more-expensive solutions that their companies can get a slice of in contracts, irrespective of actual public benefit or sustainability . . .”

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Exports to China an ‘engine for growth’

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That was my reaction to our agriculture minister repeating Defra’s mantra: describing exports to China as an ‘engine for growth’.

Earlier professions of concern for the environment, oil consumption and China’s human rights record fly out of the window when money beckons.

And it will be the exporters, with the greatest political lobbying power, who will take by far the largest share – not those who do the essential work.

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Pie in the sky?
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Mr Paice focussed on the pig industry, but China has been the biggest pig and pork producing country in the world for many years. That must be why he says they want to export ‘pig genetics’ – enabling more intensive production in China.

But China is encouraging its industries to diversify, giving low-costs loans to enable large companies like Wuhan Iron & Steel to add pig production and other agricultural enterprises to their portfolios.

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Get your own house in order

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Before using taxpayers’ money to finance and insure export deals, Mr Paice should be working to get his own country’s food supply on a firmer footing by helping to negotiate a set of fair practices agreed by all actors along the food chain, including farmers, co-operatives, traders, and other retailers.

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Or face a demand for legislation

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In a document on Copa-Cogeca’s recent seminar on the food chain, accessible from their website’s home page, Copa-Cogeca Secretary-General Pekka Pesonen warns that should voluntary agreements to address unfair commercial practices not deliver in the short term, the alternative is to demand legislation addressing B2B* unfair commercial practices along the food chain.

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Wikipedia: B2B means Business-to-business commerce transactions –for instance between producer and retailer