3 challenges for science and democracy after Rio+20




Rally to Restore Sanity, from Steve Rhodes' photostream on Flickr (by-nc-nd)

By Melissa Leach, STEPS Centre director

When sustainability poses complex and often tangled questions, how do we answer them?

In international circles before, at and since Rio, we're seeing strong arguments for a science-led agenda – from Earth System Science and planetary boundaries, to climate science, to the uses of biotechnology to tackle the challenges and opportunities of food production. With initiatives such as Future Earth and the UN's High-level Panel on Global Sustainability, we are seeing important arguments that science needs to play a central role in debating and shaping planetary futures.

However, all too often, this translates into a view where expert scientists should be providing the evidence to counter the short-term, electoral cycle driven interests of national politicians – and the ignorant, ill-informed or self-interested publics who vote for them – in order to drive policies to save the planet.

In the arena of food, according to this view scientists need to work against the 'march of unreason' that raises concerns about technologies such as GM crops, in order to feed 9 billion people by 2050.

As a complex world attempts to move towards a post-2015 agenda and set of SDGs, will this simple view of 'expert science' and science vs. politics get us there? I believe not, and that we need to democratise science in 3 fundamental ways.

1) Evidence and values in debate

First, we need to recognise that complex, multi-scale challenges around global sustainability are open to diverse policy approaches that couple evidence and values in different ways; deciding between them needs democratic debate.

Take a particular challenge, such as ensuring the right to food for all within global and regional boundaries of climate change, land use change, biodiversity loss, and nitrogen use.

Diverse current proposals include:

• investing in raising the productivity of small scale food producers;
• promoting agro-ecological techniques that sequester carbon in soils;
• promoting large-scale, input-intensive industrial agricultural investments;
• creating pest-resilient and high-yielding genetically modified crop varieties;
• or a variety of other possible approaches.

If you look at each of these 'pathways' in turn, they all involve different actors, interests, and values. Each of them imply significantly different winners and losers, opportunities and risks. Some are compatible, but others involve clear choices and trade-offs. When people or groups appear to reject a science-informed technology or policy, it is often values and the way the issue is framed that are at stake.

This means a diverse group of policymakers and publics should be allowed to debate the implications. The job of science is to provide the data, and let a more open, democratic process be the judge.

2) Expert citizens

Second, the science and evidence that feeds such debate can come from citizens as well as experts; or put another way, citizens can be experts too.

Citizen-led investigations, local knowledge and experiential expertise – as revealed in activism and ethnography - have successfully revealed climate change impacts in Indian cities, untangled ecology-disease interactions in Bangladesh, and underpinned farmers seed experimentation and selection in Kenya, among many other things.

Clearly, not all citizen expertise stands up to scrutiny as a scientific mode of thinking – and even some that does is embedded in different language, metaphors and worldviews. This means that while we badly need hybrids of scientific and citizen expertise to address complex problems, it's not just a matter of filling in gaps in each other's knowledge. Democratic debate is needed here too about the content, meanings, and contributions of different framings and lines of evidence, founded on mutual respect and openness.

3) Taking science to global publics

Third, this means a different model for science and politics on the global as well as national stage.

The current, growing emphasis is on having more scientists in politics – whether it's through more MPs with a science background, or science advisors and expert science committees informing policy and politics, including internationally. This can lead to a linear, technocratic vision where science leads politics. This is a potentially highly dangerous - a democratic political process, surely, should have a more accountable relationship with scientific expertise, with scientists 'on tap, but not on top', as Winston Churchill put it.



Manifesto roundtable, Marathmoli, from STEPS Centre's
photostream on Flickr

This is a question that we'll be addressing at the STEPS Centre symposium in a few days' time.

I'd argue that science needs to move out of the expert political establishment into wider international society. A democratic political process needs to be informed by citizens and publics who debate its content, processes and meanings and bring this into voting on public issues, and into international consultation processes such as those currently building up around the post-2015 agenda. We need to recognise and re-legitimise scientific sensibilities and concerns as part of the knowledge and interests of voting, participating and creative publics, whether on the streets of Rio or the fields of Kenya.

Science is of course a vital contributor to contemporary societies, and nowhere is it more important than when global societies debate future planetary sustainability.

But it's essential to have a proper debate about what directions of science are linked to what kinds of change and for whom: it's a debate that should be globally participatory, democratic and inclusive.

Two new books on Zimbabwe’s land reform

This month sees the publication of two, long-awaited, books on Zimbabwe’s land reform. Both are excellent. Buy them both if you can! The first, Zimbabwe’s Fast-Track Land Reform, is by Prosper Matondi, director of the Ruzivo Trust, and a very well-informed commentator on Zimbabwe’s land issues. The book is based on work largely carried out in the mid-2000s in Mazowe, Shamva and Mangwe by a large team of Zimbabwean researchers, supported by Oxfam among others. By offering a broad geographical scope – from highveld Mashonaland to dryland Matabeleland – it offers an excellent overview of the diversity of processes and outcomes. As emphasised many times before in this blog, things are complex and diverse. But there are some important patterns that emerge: A1 smallholder farmers are doing well, while A2 medium scale farmers are struggling; violence and intimidation occurs, but is highly varied, and investment and production is occurring at a scale often not acknowledged. Clearly, as Matondi emphasises, more could be done, and the land reform beneficiaries have not reached their potential. The book lays out a set of challenges for policy which everyone concerned should take note of. The second book is by Joseph Hanlon, Jeannette Manjengwa and Teresa Smart: Zimbabwe takes back its land. This is more up to date, covering more comprehensively the period since the formation of the GNU and the stabilisation of the economy after 2009. It is based on some new empirical material centred on Mazowe, but its main contribution is to highly offer a readable overview of the land reform experience in Zimbabwe. In so doing it draws extensively on the findings of the three major studies to date – the AIAS district studies, our Masvingo work and the work by Matondi and colleagues. It is an important synthesis, and offers highly pertinent insights which will hopefully find their way into the wider debate. With these books published, together with the earlier contributions by ourselves and AIAS, plus the JPS special issue, no-one can say that we do not have the evidence base to understand the complex contours of Zimbabwe’s land reform. What is interesting is that, while there are differences in emphasis, there is a remarkable coherence in overall message. And, crucially, this contrasts dramatically with the mainstream commentary in the international media, many policy circles and (still) some academic writing. Maybe now – finally – the myths of Zimbabwe’s land reform will be put to rest, and we can debate more productively the complex realities. Below are some more details on the two books: Zimbabwe’s Fast-Track Land Reform The Fast Track Land Reform Programme in Zimbabwe has emerged as a highly contested reform process both nationally and internationally. The image of it has all too often been that of the widespread displacement and subsequent replacement of various people, agricultural-related production systems, facets and processes. The reality, however, is altogether more complex. Providing new, in-depth and much-needed empirical research, Zimbabwe's Fast Track Land Reform examines how processes such as land acquisition, allocation, transitional production outcomes, social life, gender and tenure, have influenced and been influenced by the forces driving the programme. It also explores the ways in which the land reform programme has created a new agrarian structure based on small- to medium-scale farmers. In attempting to resolve the problematic issues the reforms have raised, the author argues that it is this new agrarian formation which provides the greatest scope for improving Zimbabwe's agriculture and development. Table of Contents: 1. Understanding Fast Track Land Reforms in Zimbabwe 2: Land Occupations as the Trigger for Compulsory Land Acquisition 3: Interrogating Land Allocation 4: Juggling Land Ownership Rights in Uncertain Times 5: The Complexities of Production Outcomes 6: Accessing Services and Farm Level Investments 7: ‘Revolutionary Progress’ without Change in Women’s Land Rights 8: Social Organisation and the Reconstruction of Communities Conclusion: From a ‘Crisis’ to a ‘Prosperous’ Future? ‘More than a decade on, Prosper Matondi provides a comprehensive, evidence based analysis through which surfaces the ‘emerging order’ and a future out of the ‘chaos’ of Zimbabwe’s controversial Fast Track Land Reform Programme.’ – Mandivamba Rukuni, Director, The MandiRukuniSeminars ‘Refreshingly measured in its evidence-based analysis, Matondi’s work is scholarly, non-partisan and eschews the entrenched, dogmatic and often vested stances and positions that have been adopted by many of the analysts of the FTLR Programme. This book not only constitutes a valuable addition to the growing literature on the programme, but also is a sound academic addition to the corpus of international land and agrarian reform literature.’ Professor Rudo Gaidzanwa, dean of the Faculty of Social Studies, University of Zimbabwe ‘The study addresses an extraordinarily rich array of issues with economy, nuance and insight. In its attention to the role of the civil servants and in its disaggregation of multiple actors from the centre to the grassroots, it confronts the important question of whether the beneficiaries of land were predominantly political cronies. This is an exceptionally useful and intelligent response to a chaotic and complex moment of history.’ Diana Jeater, professor of African history, University of the West of England, Bristol Zimbabwe Takes Back Its Land The news from Zimbabwe is usually unremittingly bleak. Perhaps no issue has aroused such ire as the land reforms in 2000, when 170,000 black farmers occupied 4,000 white farms. A decade later, with production returning to former levels, the land reform story is a contrast to the dominant media narratives of oppression and economic stagnation. Zimbabwe Takes Back it Land offers a more positive and nuanced assessment of land reform in Zimbabwe. It does not minimize the depredations of the Mugabe regime; indeed it stresses that the land reform was organized by liberation war veterans acting against President Mugabe and his cronies and their corruption. The authors show how "ordinary" Zimbabweans have taken charge of their destinies in creative and unacknowledged ways through their use of land holdings obtained through land reform programs.   US and European sanctions are a key political issue today, and the book points out that sanctions are not just against a corrupt and dictatorial elite, but also against 170,000 ordinary farmers who now use more of the land than the white farmers they displaced. Table of Contents: Abbreviations 1) Veterans and Land 2) Starting Points 3) Land Apartheid 4) Independence and the First Land Reform 5) Adjustment and Occupation 6) The Second Land Reform 7) Tomatoes, Maize, and Tobacco 8) New Smallholders 9) New World of Commercial Farming 10) Women Take Their Land 11) Cutting Down Trees 12) Workers, Water, and Widows 13) Conclusion: Occupied and Productive Bibliography Index “Land and farming rights have been the most powerful issue in Zimbabwe for over 100 years, as I discovered when I wrote my MSc thesis on this subject in the 1960s. While white farmers were evicted in a brutal fashion and many of Mugabe’s cronies were the beneficiaries, this is not the whole story. This excellent book describes how agricultural production is now returning to the level of the 1990s. If tens of thousands of poor Zimbabwean farmers are now able to make a livelihood from the land, some significant good will have emerged from a terrible period of Zimbabwe's history.” - Sir Malcolm Rifkind, MP, Former UK Defence Secretary and Foreign Secretary “This book provides a panoramic assessment of the land question in Zimbabwe over the last century, tracing how European settler land grabbing and farming was built through state subsidies and protection against black peasants and external markets. It examines how land reform since 1980 has reversed this trajectory of land ownership and agrarian development, and provided live narratives on the struggles of various classes of people to secure land and farm inputs, and gain access to markets, while revealing their hopes and pride as new farmers. Although it is critical about various deficiencies of the fast track land reform process and the subsequent agrarian reforms, it represents one of the few comprehensive renditions of the multi-faceted progressive outcomes of these reforms, which bring life to the social transformation underway and the challenges that remain. The authors combine various research approaches in their investigation, with an extensive reading of the relevant literature cutting across the ideological and political divide of the narratives, before independence and since 2000. It is a must read for scholars and lay people alike.” - Professor Sam Moyo, Executive Director of the African Institute for Agrarian Studies (AIAS), Harare This post was written by Ian Scoones and originally appeared on Zimbabweland The news from Zimbabwe is usually unremittingly bleak. Perhaps no issue has aroused such ire as the land reforms in 2000, when 170,000 black farmers occupied 4,000 white farms. A decade later, with production returning to former levels, the land reform story is a contrast to the dominant media narratives of oppression and economic stagnation.Zimbabwe Takes Back it Land offers a more positive and nuanced assessment of land reform in Zimbabwe. It does not minimize the depredations of the Mugabe regime; indeed it stresses that the land reform was organized by liberation war veterans acting against President Mugabe and his cronies and their corruption. The authors show how "ordinary" Zimbabweans have taken charge of their destinies in creative and unacknowledged ways through their use of land holdings obtained through land reform programs. US and European sanctions are a key political issue today, and the book points out that sanctions are not just against a corrupt and dictatorial elite, but also against 170,000 ordinary farmers who now use more of the land than the white farmers they displaced. Table of Contents: Abbreviations 1) Veterans and Land 2) Starting Points 3) Land Apartheid 4) Independence and the First Land Reform 5) Adjustment and Occupation 6) The Second Land Reform 7) Tomatoes, Maize, and Tobacco 8) New Smallholders 9) New World of Commercial Farming 10) Women Take Their Land 11 )Cutting Down Trees 12) Workers, Water, and Widows 13) Conclusion: Occupied and Productive Bibliography Index “Land and farming rights have been the most powerful issue in Zimbabwe for over 100 years, as I discovered when I wrote my MSc thesis on this subject in the 1960s. While white farmers were evicted in a brutal fashion and many of Mugabe’s cronies were the beneficiaries, this is not the whole story. This excellent book describes how agricultural production is now returning to the level of the 1990s. If tens of thousands of poor Zimbabwean farmers are now able to make a livelihood from the land, some significant good will have emerged from a terrible period of Zimbabwe's history.” - Sir Malcolm Rifkind, MP, Former UK Defence Secretary and Foreign Secretary “This book provides a panoramic assessment of the land question in Zimbabwe over the last century, tracing how European settler land grabbing and farming was built through state subsidies and protection against black peasants and external markets. It examines how land reform since 1980 has reversed this trajectory of land ownership and agrarian development, and provided live narratives on the struggles of various classes of people to secure land and farm inputs, and gain access to markets, while revealing their hopes and pride as new farmers. Although it is critical about various deficiencies of the fast track land reform process and the subsequent agrarian reforms, it represents one of the few comprehensive renditions of the multi-faceted progressive outcomes of these reforms, which bring life to the social transformation underway and the challenges that remain. The authors combine various research approaches in their investigation, with an extensive reading of the relevant literature cutting across the ideological and political divide of the narratives, before independence and since 2000. It is a must read for scholars and lay people alike.” - Professor Sam Moyo, Executive Director of the African Institute for Agrarian Studies (AIAS), Harare This post was written by Ian Scoones and originally appeared on Zimbabweland

Class and rural differentiation after land reform

A new paper in the Journal of Agrarian Change by the team that wrote the Zimbabwe's Land Reform book examines the processes of rural differentiation that have occurred following land reform in 2000, and their political and economic consequences.

The paper points out that "acquiring land through reform processes… and allocating it to a mix of largely land and income poor people from nearby rural areas is not the end of the story. As new livelihoods are established, investments initiated and production, business, trade and marketing commence, processes of differentiation begin – within households, between households in a particular place and between sites".

A simplistic, populist back-to-the-land narrative is therefore insufficient. Rural economies are always dynamic – some win, some lose. So what happened across the 16 sites studied over a decade in Masvingo province?

The story is interesting – and complex. The paper shows how, among 400 households, 15 different livelihood strategies are observed, classified into four broad groups (stepping up, stepping out, hanging in and dropping out, following Andrew Dorward and Josphat Mushongah). These can be broadly associated with rural classes. These include an emergent rural bourgeoisie, and a larger group of petty commodity producers doing quite well by stepping up through agricultural production and stepping out through diversified livelihoods, and often a combination of both. There are worker-peasants who farm but also sell their labour, and the semi-peasantry who are struggling.

Linking the diversity of livelihood strategies – what Karl Marx in his treatise on the method of political economy called 'the rich totality of many determinations' focusing on real life on the ground – and broader patterns, tendencies and class formations ('the concrete – the unity of the diverse') is not an exact science, but the paper makes an attempt.

Why is this important? First, it is vital to realise that the new resettlements are not static or homogenous. The instability of class formations, and the overall fluidity of social and economic relations is emphasised. Efforts to support the new resettlement areas must take this into account. Who to back? The new emergent middle farmers or the poor and struggling? Second, the dynamic formation of class – cross-cut by differences of gender, age and ethnicity – has implications for political dynamics in the countryside. Again, who will have the political voice in the future? Will it be the 'chefs' who are small in number but who have grabbed land, or a larger group of emerging farmers who are doing well? And will workers, poorer peasants and others ally with them in pushing for a better deal?

These political dynamics are discussed at the close of the paper. Much is speculation, but informed by an understanding of emerging patterns of socio-economic differentiation. If political parties in forthcoming elections want to know a bit more about their constituencies, then the paper offers some food for thought.

This post was written by Ian Scoones and originally appeared on Zimbabweland

A growing evidence base: yet more inconvenient truths

Last week in the latest of the Sokwanele “land debate” contributions, Dale Doré used his slot to critique our work in Masvingo. Since the publication of the book, Zimbabwe's Land Reform: Myths and Realities, exactly two years ago we have had plenty of reviews, and a number of critiques. Most common is the refrain, that Masvingo is different to other areas (of course it is: see the blog on Masvingo exceptionalism). Others have focused on the credentials and backgrounds of the research team, while others have questioned our sampling and methodology. Still others have called us names familiar to the discourse from the liberation struggle (sell-outs, collaborators, sympathisers, liberals, apologists and so on). Others have been plain bonkers or simply abusive, and I won't share these, in case there is a family readership of this blog.

All this shows the heated nature of the debate, and frustrations felt. Doré's piece focuses on methodology, while offering no new data to counter our arguments. He questions our approach to the study of complexity in particular which aimed at discovering emergent patterns from diverse data, arguing instead for a model-driven reductionism. In this regard he has problems with our chapters on labour and markets, suggesting that they are neither novel nor revealing. Well, others disagree, and so do I. This data offers, I would argue, fundamentally new insights into labour regimes and market processes, which have not been discussed before, and certainly both chapters analyse the processes and outcomes in great detail. The frustrations Doré feels may be due to disciplinary preferences (he’s an economist), but exploring patterns and processes on the ground in great detail, I believe has important merits, and reductionist approaches may do violence to the complexity observed.

Also, as part of his methodological assault, he disputes our use of baselines against which change is measured. But if you read the book you can see we were careful on this – using data on nearby communal areas, the past work of Bill Kinsey and colleagues on old resettlements, and the limited available data on the production and economics of commercial farms. And in relation to the baseline costs on investments, I am afraid he missed the detail in the footnotes which contains all the assumptions: the analysis cannot thus so easily be dismissed as 'sheer nonsense' Doré goes on to accuse us of simply creating 'straw men' myths to ease the flow of our narrative. This is an argument I have heard before. Surely, people have argued, no-one ever believed these myths! Well, just take a look at any media commentary, donor document and many academic pieces and you will see these myths (and many more) are alive and well. A particularly pure form appeared in the press recently penned by UZ Professor Tony Hawkins if you need convincing further. Later, in the piece Doré also accuses us of lack of triangulation, an approach to probing the robustness of data. Triangulation may be of methods (and we used every method, qualitative and quantitative, we found appropriate) or of cases (and again the site comparisons, within and between clusters, was central in the book), although we do admit that we did find it difficult to gain perspectives from former farm owners and workers, despite many attempts. Finally, Doré accuses us of making 'egregious' 'false claims' about the process of land reform. Again, I beg to differ. Our book offered the stories of what happened on 16 farms – all were different (as is clear from studies from elsewhere). The simplistic picture Doré paints, backed up not by empirical information but by broad proclamations, is not enough to understand the diversity of settings, processes and outcomes of Zimbabwe’s land reform.

Two years on (and why did it take this long for this review to emerge?), we actually have many more cases to compare with, improving possibilities of triangulation. In several talks last week in Harare I presented the following map, showing all the studies I know about which have looked at what has happened in the new resettlements since 2000. These include our Masvingo studies (green), the African Institute of Agrarian Studies district level research (purple), the Ruzivo Trust studies (now a book, yellow), the Livelihoods after Land Reform small grant studies (light blue) and a growing number of PhD studies (pink), some which were reported on in the Journal of Peasant Studies special issue. It is an impressive array, with pretty good geographical coverage, although clearly still some gaps. This is definitely an incomplete picture, so please let me know if you are doing something that is not captured here, as it is an important base for comparative analysis and reflection, both on commonalities and differences.

While there are important variations across sites, there is an emerging, common story that Doré and others still find difficult to accept. These are indeed inconvenient truths. The accumulating and converging evidence points to the following:

• A1 farms are doing relatively well (although could do better), with a solid 'middle farmer' group within them who are reinvesting profits from agriculture in their farms. By contrast, A2 farms have struggled, although things have improved since the end of hyperinflation and in the multicurrency environment since 2009. They have been greatly assisted by contract farming arrangements that have provided much needed capital and inputs.
• Private and community investment in the resettlement areas is significant, especially in the A1 sites. But more needs to be done, with clear needs for public investment in infrastructure.
• Capture of farms by high level, politically-connected elites has taken place, and this varies between different parts of the country, especially in relation to proximity to Harare. However even in these areas, the dominant story remains small and medium scale A1 and A2 farmers. A1 farmers, particularly on land that was invaded and occupied, are largely from nearby communal areas and small towns, while A2 farmers are predominantly former or serving civil servants, teachers and business people, with urban connections.
• The potential for production across the resettlements is far from being realised due to inefficiencies in input markets, a lack of credit and rural finance and the high costs of transition in infrastructure, and up and downstream industries. However, production has not collapsed, and is booming in some commodities and areas. Markets may be informal, but they generate employment and spin-off benefits from economic linkages in an area.

There are nuances and variations – yes complexity – but the picture is increasingly clear, as are the policy challenges. The now infamous five myths we set out to examine in Masvingo are rejected countrywide, although with important qualifications – as indeed we offered in the 288 pages of small type in our book for Masvingo.

In stark contrast to the Dale Doré diatribe on the Sokwanele site, at the SAPES Trust Policy Dialogue I spoke at last week, I was pleasantly surprised by the tone of the discussions. A sense of pragmatism and realism prevailed (mostly). The room was packed, with over 100 people attending from all sides of the debate – the CFU was represented in force, including the current President, as was the MDC, with the Director of Policy and Research, Charles Mangongera, offering the discussant's comments. And representatives from the Ministry of Lands were there too, including the Minister, Herbert Murerwa. Mandi Rukuni chaired the debate superbly, and it was clear that there was more agreement than many would expect.

As Zimbabwe moves into a new phase, and a new election settlement some time next year, the more consensus building and solid debate around facts and evidence that occurs the better. Ibbo Mandaza's SAPES Dialogues are good examples of such fora. Sadly unfounded accusations and gratuitous swipes, as in some of Doré's piece, are not.

This post was written by Ian Scoones and originally appeared on Zimbabweland

Appropriate technologies? Why neither tractors nor conservaton agriculture may be the right solution for Zimbabwean agriculture

A few weeks back I had the opportunity to discuss technology options for Zimbabwean farming with two different groups. They had very different ideas about what was appropriate. And neither seem to have asked farmers themselves. Nor have they taken account of the particular technological challenges of Zimbabwe’s agrarian structure. Both, for different reasons, seemed, to me at least, inappropriate technologies for the vast mass of Zimbabwean settings.

The first was a discussion around ‘Conservation Agriculture’ (CA) in Wondedzo Extension, a villagised A1 scheme in Masvingo district where CA is being promoted by an NGO, Hope Tariro. This low-till approach, involving digging planting pits by hoe in small areas to concentrate moisture and fertility inputs, is being pushed by donors in Zimbabwe in a big way. It is central to programmes led by the FAO, as well as across numerous NGOs. It is supported by the EU and DFID among other donors, and is backstopped by a range of technical support agencies. These include the River of Life Church and the Foundations for Farming, where CA is inspired by ‘callings from God’ and the Sustainable Agriculture Trust, led by a group of former white farmers and supported by substantial EU-FAO funds, as well as CGIAR Centres like CIMMYT and ICRISAT.

I talked to the local extension agent in the area who was preparing for the planting season with his demonstration farmers. He estimated he spent around 60% of his time during the farming season on supporting CA activities in the area. He was politely equivocal about the approach, but he was clear it was diverting his time from other activities. It is an extremely intensive gardening approach, which requires an area to be fenced off and all crop residues returned to the land. Farmers refer to it as ‘dig and die’ due the back breaking work involved, but they are glad of the free seeds (and in some cases fertiliser too). But is this an appropriate technology for the new resettlements?

On very small areas, with substantial labour inputs, yield increases are clearly possible, but this is not an approach which will deliver sustained growth in farm production in the larger arable plots of the new resettlements. Designed for micro garden plots, it may be appropriate for some areas, but not many. In a discussion at the nearby irrigation scheme, we raised the idea of testing out CA there. A woman immediately jumped up and exclaimed: “No! We will not do this! This is our cooperative irrigation. If we have the NGO here, they will make us irrigate with buckets!” There was general agreement: the NGO imposed ideas were fine to get hold of seed and could be done on small areas near the villages, but they should not disrupt their core economic activities on the irrigation scheme. The discussion moved to the problems of CA, and the usual list spilled out. Too much labour, small areas, burning of crops with concentration of fertiliser and so on.

The next opportunity to discuss farm technology came a few days later at the China Agricultural Technology Demonstration Centre , recently built by the Chinese Government on the campus of Gwebi College just outside Harare. This is being run by the agricultural machinery company, Menoble, an offshoot of the Chinese Academy of Agricultural Mechanisation Sciences. The facility is impressive as is the shiny machinery in the courtyard. The Centre hosts regular training programmes for Zimbabwean farmers and extension officials. But with some exceptions, the machines are only useful for massive farms – of the order of 1000ha or so. The model, it was explained, is the large-scale commercial farms of NE China, where the company has its major market. What about the famous small-scale farms of China?, I asked. No, this is backward farming, not the future, it was argued by one official. Although later I was shown there are some maize and potato planters and harvesters appropriate to 20-30ha plots to show that ‘small-scale’ farming had not been forgotten.

Neither group had, it seems, thought about the demands of the new agrarian structure. Today, 90% of Zimbabwe’s farmers are smallholders, representing 80% of the farmed land. This is a dramatic change from the past. The argument of the donors and NGOs pushing CA is that many of these farms in the communal areas are very small – perhaps only one or two hectares. Here an intensive gardening approach may be appropriate, if the labour is available. But what about the new resettlements? The average holding per household in the A1 schemes is 30-40ha, with cultivated areas in our study sites in Masvingo increasing, now averaging 5-10ha. CA does not make sense in these areas. But nor does most of the Chinese machinery on offer at Gwebi. The Chinese company officials argue that production should occur on large, modern, efficient farms, equipped with the latest machinery (huge cultivators, combine harvesters and planters pulled by 15HP tractors). A familar tale about the supposed superiority of large-scale farming, and the need to transform a backward smallholder sector, forgetting of course how Chinese economic growth was supported by millions of smallholder farms following the reforms.

Neither the western donors and NGOs nor the Chinese seem to have thought hard enough about the contexts into which their technologies are supposed to fit. Nor have they discussed properly with their clients and customers. Of course Zimbabwean farmers are very polite, and will not turn away an NGO, in case its work can be redirected towards something useful. They are happy to take free inputs (worth around USD$40 per household), but, as with the outburst at the irrigation scheme and the derogatory nick-name for CA, they are reluctant to see this as a solution. Equally, extension workers and farmers alike will attend the Chinese training courses and marvel at the big machines, but will they take up the suggested technical options? Even if they could afford them, this is extremely unlikely. Only a small proportion of farmland is now over 1000ha, representing only a few farmers. Is this the target market for Chinese machinery, and could be basis for a long term business plan for Menoble? I doubt it.

So here we have two sets of inappropriate technology being pushed by two very different sets of donors, driven by particular perceptions and assumptions. Technology transfer has come back into fashion in the aid world, but all the critiques that Robert Chambers and others made way back on the problems with this paradigm still apply. In a new agrarian setting, there are some real technological challenges, but these will have to be met together with inputs from farmers and a much better sense of scale requirements and farmer needs and priorities. Perhaps the Chinese, the Brazilians (also offering tractors) and the ‘traditional’ donors could support this – focusing on rehabilitating Zimbabwe’s agricultural R and D capacity.

This post was written by Ian Scoones and originally appeared on Zimbabweland

After the land reform: what next?

This was the title of a talk I gave at the SAPES Trust in Harare on 13 November, as part of the SAPES Policy Dialogue series organised by Ibbo Mandaza.

It was a well attended event, and it generated some interesting debate. The session was chaired by Mandivamba Rukuni and the discussant was Charles Mangongera, Director of Policy and Research of the Movement for Democratic Change. The dialogue was attended by the Minister of Lands, Herbert Murerwa, as well as the President of the Commerical Farmers Union, Charles Taffs. In addition, there were many researchers, activists, donors, diplomats and others present.

I mentioned this event in a recent blog responding to Dale Dore, and a number of people have asked if it was recorded. It fortunately was, and the audio recording can be listened to here. This starts with my 45 minute presentation (after a few seconds of noise!). The discussant’s comments follow and then there is an open discussion, which concludes with some comments from the minister.

My powerpoint slides can be viewed also (zimbabwe land reform Harare SAPES Trust Nov 12), and if you listen to the audio, you can probably guess when the next slide is due.

The presentation aims to lay out a vision for ‘what next?’ after land reform, and provides the outline of an agenda for investment and support by government and donors alike.

Let me know what you think.

This post was written by Ian Scoones and originally appeared on Zimbabweland

Growth in jeopardy? Reflections on Zimbabwe’s 2013 budget statement

Minister of Finance Tendai Biti recently presented the 2013 budget. It was, in his words, the most difficult yet. He revised growth projections downwards to only 4.4%, because of continued depression in the global economy and uncertainty about Zimbabwe's economic and political prospects.

But there were some bright spots. The minister has presided over a remarkable period of recovery. Some basic graphs in his budget statement illustrate the point (copied below). Zimbabwe has grown faster than any other country in the region, and mining and agriculture have been the greatest contributors to growth. By 2010 mining contributed a massive 18% to overall economic output as measured by formal GDP indicators, and nearly 50% of export revenue.

Growth in agriculture was stronger than expected in 2012, as both tobacco and cotton performed better than projections. Maize was however heavily affected by drought. The treasury expects a continued pattern of growth in the sector, around 5-6%.

But the success of agriculture has been overshadowed by the growth of mining, with annual growth rates of around 30%. Exports increased by a massive 230% in the period from 2009-2011. By the end of 2011, mineral exports accounted for 47% of total exports, made up of platinum (43%), gold (28%), and diamonds (20%) in particular. Furthermore, the average share of mining to GDP has grown from an average of 10.2% in the 1990s to an average of 16.9% from 2009–2011 overtaking agriculture. Diamond output is expected to increase to 16.9 million carats in 2013, largely driven by enhanced production from the major diamond mining houses at Marange Diamond Fields. Platinum output is expected to rebound to 11.5 tons in 2013.

However, while growth has occurred at impressive levels since dollarization in 2009, it has not continued at such rates. Zimbabwe's seemingly miraculous recovery from the dire doldrums of the late 2000s may have stalled, a concern raised in the budget. With continued investment uncertainty, and the prospects of yet more disruption during and following elections, question marks are raised about the robustness of the economy. While minerals and agriculture can continue to underpin some growth, the levels required for recovery to earlier levels are still not being achieved.

How can the economy be revived for the longer term? This will require investment, including by the state. The 2013 budget offered US$3.8bn in government expenditure. But this is a pathetically small amount in relation to needs, and much of it already accounted for in terms of salary obligations. Government taxation and revenue collection is improving, but the economic base remains small. Tendai Biti is in a bind. He is right when he says there is no more cash – not even to finance an election, let alone forge a recovery.

Next week, I will look at some future scenarios, making the case for a greater focus on agriculture, and avoiding an overly strong reliance on minerals, despite their allure.

This post was written by Ian Scoones and originally appeared on Zimbabweland

An unbalanced economy: why mining should not dominate, and why agriculture needs support

Last week I reviewed some of the facts and figures in the recent 2013 budget statement. There are some definite bright spots, and the rebound since 2009 is impressive. But can Zimbabwe's economy continue to grow sustainably and inclusively on the back of mineral revenues without a more balanced economy?

In his budget statement, Finance Minister Tendai Biti argues for moving beyond an 'enclave economy' towards what he calls a 'cheetah economy'. Where is the investment for this transition going to come from? And what would such an economy look like?

Unfortunately, there is not much room for manoeuvre. The total budget committed for 2013 was only US$3.8bn, much of which was taken up by already committed salaries. Commitments to agriculture were only US$160m, 'regrettably' 6% below the Maputo Declaration target. Donor and multilateral support remains small in relation to overall need, and focused on welfare, humanitarian emergency and social services. As one commentator cruelly pointed out Zimbabwe's total budget is much smaller than the turnover of Pick n' Pay, a large South African retailer. So where is the strategic investment in a 'cheetah economy' going to come from?

One scenario is to rely on mineral revenues. But, as Cambridge Professor Haa-Joon Chang points out, this is risky. The current buoyancy of African economies is very contingent on high commodity prices and continued demand from the developed world, and perhaps especially China. A downturn elsewhere will see a sharp downturn in Africa. Even leaving aside the risks associated with the capture of mineral revenues by elites (the 'resource curse'), reliance on even an array of minerals to finance the rebuilding of an economy may be foolhardy.

Another scenario would see agriculture more in the limelight. Rather than offering the paltry sums seen in the 2013 budget a much braver, more substantial agricultural rehabilitation initiative is required. This will inevitably require external support – including donors, multilateral banks, finance houses and the private sector – but it must be lead by government, and backed by the state. Agriculture has a different demand profile to minerals, and so different economic elasticities. It employs people in potentially larger numbers per unit of output, and the growth potentials are significant, given Zimbabwe's comparative advantages. There remain outstanding issues of issuing leases and offering compensation, but planning for such a mission-style effort should start now.

The alternative will indeed be the take-over by Pick n' Pay, and other elements of South Africa, Chinese, and Euro-American capital. You only have to go over the border to Zambia to see what a mineral led economy can offer. Growth, yes, but perhaps not more broad based development. This is not the sort of 'middle income' country that Zimbabwe wants to become. Instead it needs a firm national economic base, owned and controlled by Zimbabweans. Perhaps surprisingly for many (including Mr Biti I suspect), the land reform has provided just this platform for growth and recovery, if only the imagination, vision and of course finance are in place.

However it seems clear the Minister of Finance is currently backing the first, risky mineral-led scenario. The budget statement is replete with statements about the dramatic potentials of the mining sector. We have heard this since Cecil Rhodes, who ultimately was disappointed. And indeed in Minister Biti's own words:

"The mining sector is a tiny enclave with little connectivity with the rest of the economy and, therefore, despite its high rentals, it has not been able to sustain growth or socio-economic development".

He argues for a "major rethink" to allow forward, backward, spatial and other linkages with the rest of the economy, but does not reflect on the political economy of such a rethink. Mining capital is in Zimbabwe for a reason – minerals can be extracted and exported at a cheap price for profit. An enclave economy suits them just fine.

While Zimbabwe should not ignore its considerable mineral wealth, and it should tap it for maximum benefit, through appropriately balanced indigenisation policies, effective taxation and maximising local processing and value addition, it should also focus on its other sources of wealth: land and people, and give agriculture the boost it needs. The turn-around in tobacco, sugar and cotton, has shown the potential. In my view, agriculture following land reform can not only deliver growth, but pro-poor, inclusive growth if supported in the right way.
 

This post was written by Ian Scoones and originally appeared on Zimbabweland

The sweet smell of success: the revival of Zimbabwe’s sugar industry

A recent report by the USDA's Global Agricultural Information Network has shown that Zimbabwe's sugar industry is rebounding fast on the back of a 6% increase in area cultivated mostly by private outgrowers who are part of the A2 land reform allocations.  Sugar output in 2012/13 is expected to increase by almost 16% to 430000 tonnes from the 372000 tonnes in 2011/12 season, with 160000 tonnes expected to be exported, earning important revenue for the country.

Much of this is happening in the lowveld of Masvingo province, and in the large estates, including Hippo Valley and Mkwasine where we have been studying sugar production on A2 outgrower plots since 2000 (see video here). The Hippo Valley story reflects the wider picture.

Towards the end of last year the Zimbabwe newspapers carried a double page spread reporting the annual results of Hippo Valley Estates Ltd, which are wholly owned by the South African conglomerate Tongaat Hulett. The highlights were: revenue up by 30% at USD90m, with an operating profit of over USD17m. The commentary was upbeat: "The relatively stable operating environment continues to provide a platform for the recovery, growth and development of the sugar industry … The Company remains focused on its goal to achieve full milling capacity utilization of more than 300000 tons annual sugar production over the next three years".

Although a way off the target in 2012 at just over 160k tons, total deliveries of cane were up 40% on 2011, with 1.349m tons of cane produced by private growers and the company. Private growers' deliveries were up 55% on the previous year, and an additional 178k tons was delivered by Green Fuel Ltd, the biofuel company linked to the infamous Billy Rautenbach. With the integration of the once separately controlled estates at Triangle and Hippo Valley, the company envisages a total combined capacity of 4.8m tons of cane production, resulting in 600k tons of sugar.

With both company funds and external support, channelled through the EU, there has been considerable investment in cane production on 'uncontested' private land (mostly in the Chipwa and Mpapa areas). Private cane growing has expanded dramatically from the relatively small outgrower arrangements that existed in the past. The company report notes that "in the current season, 611 indigenous private cane growers, farming 11138ha and employing 5569 people will supply 772000 tons of cane generating for them US$50 million in revenue".

The company estimates that private growing could increase substantially on the basis of existing mill capacity. They estimate an additional 661 growers farming 12742 ha could supply 1.4 million tons of cane each year to the Hippo Valley mill, creating employing for 12000 and additional revenue of US$150m. This would amount to a total employment in the sugar industry of 30000, and a revenue of around US$250m. This would surely be the sweet smell of sugar success.

The rebounding of the Zimbabwe sugar industry is attracting attention in the business press in South Africa clearly seeing the investment value for South African companies. Interestingly and typically, the Business Day report failed completely to mention that the growth of production is being driven by a revived partnership between South African capital and new land reform beneficiaries.

But to achieve such ambitious targets, and to continue the impressive growth, will require much new investment, not least in rehabilitating and replanting cane fields, and supply new water resources for newly cleared land. Sugar has long been a central part of Zimbabwe's agricultural economy, providing stable revenues for the treasury, and earlier when part of ACP agreements, benefiting from a guaranteed and profitable market. Rather overshadowed by the success of the tobacco sector, sugar has not been much in the spotlight, but deserves to be. Just as in tobacco, but in a more organised, estate linked production system, an increasing proportion of production is now coming from outgrower areas allocated as A2 plots as part of the land reform.

As we showed in our book, production in these sites in Hippo Valley in the remote lowveld area of Chiredzi district (and also in Triangle and Mkwasine estates) increased over time from the establishment of A2 plots in 2002. In parallel these farmers accumulated equipment, transport and invested in their land. They also employed considerable amounts of labour. As we documented, they had at that time an uneasy relationship with the core estate. The estate management did not know how to deal with the new outgrowers. They had been used to dealing with a relatively few white and Mauritian outgrowers, but now there were hundreds (around xx plots are registered in Chiredzi district as A2 farms across Hippo Valley and Mkwasine). Many new farmers felt they were being squeezed, with low prices offered, quality controls dubiously applied and transport being supplied late. They thought, perhaps correctly, that the estate management was waiting for them to give up, so the old regime which was easier to manage and control could be reinstated.

From around 2007 when the economy was in freefall sugar production collapsed. Payments being offered in Zimbabwe dollars were meaningless and credit arrangements and cheque payments were wiped out by hyperinflation. Many did indeed give up, ripping out their cane and planting other crops, including maize and tomatoes. But with the stabilisation of the economy through dollarization in 2009, the situation changed. The incentives to reinvest in sugar production returned, and the estate management changed its tune. Now they needed cane desperately so they could break even running the huge mills and vast estates. They belatedly realised that they had to accept private outgrowers, and encouraged them to reengage. And in the period from 2009 they have done on a massive scale as the company figures show.

Now the company is more upbeat about the new outgrower model. It is not as if this is alien to them, as in other operations in the region, this sort of relative smallholder model is dominant. Indeed compared to operations in Zambia and South Africa the new A2 plots are large, average 20-30ha, enough to produce a substantial amount of cane, and some other crops besides. Cane farmers in our study sample in Hippo Valley are much more optimistic now. We are currently doing a resurvey of the small sample we investigated in 2007-08, and I will report back the results in due course.

However there are constraints. The company report alludes to these obliquely mentioning the performance has been "despite the prevailing liquidity and socio-economic challenges". These are many of course, not least the on-going uncertainty over tenure arrangements in the outgrower areas. Leases have been promised, but only offer letters exist. More significantly there has been a rumbling of discontent among the Shangaan political elite from the area, complaining that 'outsiders' got the prime sugar areas. Some influential people have barged others out of their plots, asserting their 'indigenous' rights. Most A2 sugar farmers are indeed from outside the area; many are (or were) civil servants, many from the ministry of agriculture. In the scramble for A2 plots through a chaotic and patronage-influenced allocation system, sugar plots were seen as prime targets for those in the know, and they carefully filled their forms and 'business plans' to ensure they were successful. By the mid-late 2000s many regretted this move, but now they are much more happy, which is why the land is become contested again.

Questions of finance (or 'liquidity') are also significant, as the company notes. It is not cheap to farm sugar: you need equipment, significant amounts of inputs, a lot of labour, irrigation and expensive transport. And you need to replant on a sustainable rotation: crops planted one year may not yield significantly for several years hence. At the farm level cash flow is the perennial challenge, and without effective credit and banking systems in rural Zimbabwe, this is tough without company support. Yet reliance on a single company, just as any contract farming arrangement, puts the grower at a disadvantage in terms of negotiating a good deal. But there are also other pressing financing issues in the sugar sector. The infrastructure was originally built in the 1950s and 60s, and much of it is decrepit and in need of repair. Irrigation canals need constant attention, as do rail lines and mill machinery. Extending farmed areas requires clearing, levelling and laying of canals. None of this is cheap. With profits being scarce in recent years, the company has not invested. External strategic investments financed by the EU under the post ACP regime Adaptation fund are constrained. Euro 45m have been allocated, but only 10m euro have been released to date via the Canelands Trust, a body controlled by the company. Due to sanctions, only areas which were not part of the 'fast-track' land reform programme are eligible, meaning that most new private outgrowers – the largest producers today of Zimbabwean sugar – cannot benefit from the industry rehabilitation programme (at least officially – there is course there is considerable leakage and wider investments benefit everyone). These anomalies created by the political stand-off between the EU, and other western donors, and the Zimbabwean government, despite much evidence that sanctions do more harm than good, continue, and are likely to at least until after the next elections.

Meanwhile, and despite these constraints, the sugar industry continues to grow, providing livelihoods, income and employment for many, and much needed revenue for the government exchequer too.

This post was written by Ian Scoones and originally appeared on Zimbabweland

The limits of ‘evidence’: Evidence-Based Policy-making for African agriculture

By James Sumberg, Martha Awo, John Thompson, George T-M Kwadzo and Dela-Dem Doe Fiankor, Researchers, STEPS Centre Livestock project

Photo: Cavorting Chickens from rachelstrohm's photostream on Flickr

Agricultural policy makers in Africa are now being dragged into the era of 'evidence-based' policy (EBP) making. But the quality and availability of evidence in some countries - and debates about what even counts as evidence - create some interesting challenges.

Globally the proponents of EBP have been criticised for adopting a simplistic, linear understanding of the relationship between evidence and action, and for their normative approach to the desirable relationships between research-based knowledge and policy formulation. However, the literature on EBP, and particularly that associated with the 'realist synthesis', increasingly recognises that there are in fact different 'evidence bases'; that the notion of evidence can be quite slippery and contested; and that different kinds of evidence can be interpreted and valued differently by different groups and individuals. (That's a theme that will be explored in detail at the STEPS Centre's symposium on scientific advice in a couple of weeks' time.)

Despite the varied view of evidence in the literature, the idea that policy makers should take more account of 'evidence' (e.g. of what worked where, for whom and under what conditions) is now generally accepted. Many governments and donor agencies emphasise the central importance of EBP in improving development interventions and outcomes and in holding the policy actors to account. Of course, before the point of evaluating the impacts of various policy options, 'evidence' is also critical for establishing basic trends, constraints and dynamics within a sector or around a particular problem of interest.

But do African policy makers have access to good evidence? The challenges around the availability and quality of baseline data relating to food and agriculture in Africa (e.g. crop areas, yields, livestock populations and offtake levels) are long-standing and well recognised. More often than not, policy analysts, advocates and programme and project developers rely on national data series available through government statistics offices and FAOSTAT from the U.N. Food and Agriculture Organization because it is 'the best data available' (or more often because it is 'the only data available').

The coverage and quality of these data vary, depending on the importance and nature of the crop or species in question, the production systems used, or the market arrangements that are in place.  As one might expect, the data that relate to minor crops and livestock species, those dominated by small-scale producers and mixed cropping systems, or where there is little government intervention, are often more limited and/or of lower quality. It goes without saying that these 'evidence issues' have critical implications for efforts to establish evidence-based agricultural policy-making in Africa.

As our project on the 'livestock revolution' in West Africa is finding, chicken meat seems to be an increasingly important part of diets in Ghana (though in truth it's difficult to support this statement with 'hard' evidence, even if it's well supported anecdotally) so it is not surprising that the origin, availability, price and quality of chicken meat – and the state and future of the domestic poultry sector – are issues of intense public concern and policy debate in the country.

The main lines along which policy is argued in Ghana have remained relatively constant for at least a decade. These include the restriction (or not) of imports of frozen chicken meat through higher tariffs or an outright ban; the provision (or not) of direct support to domestic producers; the desirability (or not) of national self-sufficiency in poultry products; and the pros and cons of supporting commercial versus backyard producers.

The arguments that are used to support policy advocacy in relation to poultry highlight national food security (made more poignant by the food price spikes since 2007); the potential for employment generation (and more recently specifically for young people); product quality and public health concerns; the increasing importance of 'biosecurity'; the link often made between small-livestock like poultry and poverty alleviation, especially for women; and the Government of Ghana's willingness (or not) to stand up to international financial institutions.

While contestation around evidence – in terms of quality, relevance and meaning – is central to most policy processes, what is striking in the case of poultry in Ghana is the absence of credible information about even the most basic trends in chicken meat consumption or about the structure, health, growth (or demise?) of the domestic poultry sector. There are good reasons to believe that data available through FAOStat and those from the Statistics Research and Information Directorate (SRID) of the Ministry of Food and Agriculture (MOFA) (on which the FAOStat data are based) are so fundamentally flawed as to be of little if any value for policy making.

In principle, this absence of credible empirical evidence about the poultry sector creates a situation where policy debates and processes are dominated by claims and counter-claims that are repeated and embellished, and few of which can be tested. While there are many signs that the consumption of imported frozen chicken parts has increased, there is little data with which to address some key questions (is the domestic poultry sector really in a 'severe slump' and 'on its knees'? Would higher tariffs on the importation of frozen chicken really result in an additional 500,000 jobs in the domestic poultry sector? Is locally produced chicken meat really safer, more nutritious and tastier than frozen imported chicken?)

While claims and counter-claims, and narratives and counter-narratives, often play important parts in policy debates and processes, and while the 'meaning' of various bits of evidence can be hotly contested, those promoting evidence-based policy always assume the existence and availability of something akin to meaningful and systematic evidence. It would appear that for policy questions relating to poultry production and consumption in Ghana this assumption does not hold, and certainly not if we look primarily to readily available official statistics for that evidence.

In the relative absence of 'good' evidence, then, what should governments do?

One possible response is for government (perhaps with the help of development partners and the poultry industry) to invest in better systems for the collection and analysis of official statistics. Without doubt this is both logical and necessary, but will also be expensive and methodologically challenging, and will not yield results for many years. In any case, much strategic thinking is needed to determine which data are most essential and how these can be collected, stored and analysed in as systematic and cost-effective manner as possible.

Another is to look to non-traditional sources for 'evidence'. But what are these sources? How can they be tapped in a cost-effective manner? And what might be the implications of their collection and use for commercial confidentiality in what is a very competitive sector?

A third response is to reflect critically on the relevance of the EBP agenda in such situations: if EBP is the new gold standard, how can policy outcomes be improved when the traditional evidence vault is empty? This is not to suggest that the policy process should be simply cut free from the anchor of evidence. Rather, it is to be realistic about the contexts and circumstances in which agricultural policy is argued in Africa today, and more open about the need for new and creative approaches to the problem.

But this is a false choice: ultimately all three can help. Statistical systems need to be improved, new sources of evidence need to be developed and a more critical and politically informed understanding of the interplay between evidence and policy needs to be promoted.

In the meantime, policy processes relating to poultry consumption and production in Ghana will be prey to claim and counter-claim, narrative and counter-narrative. In such a situation, heuristics such as 'cheap food', 'national self-sufficiency' or 'food sovereignty' may provide the best basis for consistent policy.

For more information about the STEPS Centre's project on poultry in Ghana, visit the Livestock project page on our website.

Why we should worry about speculation in food markets

By Stephen Spratt, Research Fellow, Institute of Development Studies

 

"Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation.” (John Maynard Keynes)

 

On the day that a consortium of NGOs launches a global campaign to eliminate global hunger, what about the role of financial speculation on food prices? A look at recent history reveals a growing understanding of the impacts of speculation on prices and therefore on the livelihoods and wellbeing of poor people.

2012 saw the worst drought in 50 years in the United States. Other major food producers also experienced an unusually dry year, severely affecting harvests. As prices began to move upwards last summer, many predicted a price ‘spike’ like those seen in 2008 and 2010. In an attempt to avert this, the French President called a meeting of the G20 Agriculture Ministers for mid-October under the banner of the Rapid Response Forum (RRF), established after the last price spike.

Rather than continuing to rise as expected, however, the prices of key food commodities either stayed flat or were falling by September. Some pointed to the role played by the new Agricultural Market Information System (AMIS) in providing accurate information on supply conditions, arguing that this prevented markets becoming spooked. Major producing countries did not impose export bans, and the chunk of the harvest gobbled up by biofuels was also less than in previous years. Collective sighs of relief were heard. The crisis was averted. The emergency RRF meeting was cancelled as ‘it was unnecessary’ – food commodity markets were, we were told, ‘functioning well’.

2012 also saw the US Commodity Futures Trading Commission (CFTC) seek to impose restrictions on financial ‘speculation’ in food markets. The focus was the introduction of ‘position limits’, which limit the proportion of the market that can be held by any one institution. Although the limit still allowed up to a quarter of the market to be so controlled, it was still met with fierce lobbying from the financial sector. This culminated in a Federal District Court judgement in September, which went against the CFTC. The ruling was that the CFTC needed to show that position limits were needed to reduce market instability and volatility, and had failed to do so.

For some, the lack of the expected food price spike means we can relax: measures taken after the last food crisis work – those who had predicted a crisis in 2012 were wrong; critics who suggested that the huge increase in financial speculation in commodity futures markets in the last decade had driven up the level and volatility of prices were also wrong; all that what was needed for markets to work well was better information (i.e. AMIS) and coordination to prevent things like export bans (i.e. the RRF). Controls on financial speculation were unnecessary and likely to be counterproductive: far from increasing volatility and moving prices away from ‘fair values’, speculators stabilises markets by increasing liquidity, and aid ‘price discovery’ by buying undervalued, and selling overvalued, assets.

While some accept this view in its entirety, most are less sanguine. The CFTC is appealing against the court ruling, arguing that position limits are designed to prevent market manipulation, which is crucial for markets to function properly. The European Union plans to implement a similar measure in its review of the Markets in Financial Instruments Directive (MiFID). Outside of the financial lobby, almost everyone agrees that controls on the ability of institutions to exert too large an influence – and potentially manipulate – markets are desirable. Others would go further.

If one thinks, for example, that markets are prone to periodic bouts of ‘irrationality’ – even with good information, and in the absence of abuse – further measures are likely to be required. In September 2012, for example, Members of the European Parliament voted to impose short delays on computerised, high frequency trading in food commodity markets, arguing that this kind of trading is likely to increase volatility. Others, such as the World Development Movement (WDM), have called for the total amount of financial ‘speculation’ in the market to be restricted. The argument is the same as that used by Keynes in the quote at the start of this blog post: too much financial speculation relative to trading based on ‘real’ economic activity is likely to destabilise markets.

The UN’s Special Rapporteur on the Right to Food made a similar argument in 2010:

A significant contributory cause of the price spike was speculation by institutional investors who did not have any expertise or interest in agricultural commodities, and who invested in commodities index funds because other financial markets had dried up, or in order to hedge speculative bets made on those markets.

In a series of papers, UNCTAD have pointed to the increasing correlation between commodity prices and those of other financial assets. Ten years ago, there was little relationship between movements in European stock markets, the price of crude oil in the US, and a global diversified commodity price index. The picture today is very different:
...the financialization of commodity markets reveals a dramatic change. Despite the similarities in 2002 and 2012 in terms of real shocks – insecurity in West Asia, the aftermath of a stock market crash and a difficult cereals harvest – the evolution of the three indices could not be more different. Ten years ago each market had its own dynamics, but in 2012 they are moving in nearly perfect tandem.
UNCTAD Policy Brief 25, September 2012 (pdf)

UNCTAD’s point is subtle but important. Rather than being driven by supply and demand conditions in the real economy, food prices are increasingly determined by events in other markets. The common factor is finance.

So who is right, and does it matter? Despite the circumstantial evidence, it has not proved possible to prove a link between increased speculation in food futures markets and spot market prices. People who work in these markets, however, are generally in no doubt that such a link exists. Even if there was a link, however, would this be a problem? Well, this comes back to your view of how financial markets work. Financial speculators could help stabilise market prices around ‘fair values’ that accurately reflect economic fundamentals, or they could increase volatility and drive prices away from these values.

On this question, the evidence presented in the new FAC Working Paper Food price volatility and financial speculation (pdf), suggests that UNCTAD may be right: the risk of heightened volatility and inaccurate price signals resulting from the financialization of food markets is very real, even if markets appear to be working well today. After all, before the crisis of 2008 there was much talk of how sophisticated and efficient global financial markets had become, and how market prices could now instantly adjust to accurately reflect changing ‘economic realities.’

The final question is whether more volatile or inaccurate prices matter much. Here the answer is clear. Food markets are different to other financial markets. Stable prices that send accurate signals are of fundamental importance to the lives of billions, and are a crucial element in protecting against hunger and poverty. Set against this, the ‘costs’ of placing some curbs on speculation, which in the end may be no more than a reduction in the profitability of some financial institutions, are trivial.

 

Deadline approaching to submit abstracts to the Private Sector in Health Symposium

Two heads and cogs motif from Private Sector in Health logo

The deadline for submitting abstracts to the upcoming Private Sector in Health Sympsium is just over two weeks away, 22 January 2013.
The one-day symposium wil take place before the iHEA World Congress in Sydney, Australia on 6 July 2013. The symposium 'will be a dialogue between researchers, implementers, donors, and policy makers with the goal of moving forward discussions on the performance of health markets in low- and middle-income countries and of interventions aimed at improving this performance.'
Abstracts should be no longer than 500 words, and should fall under at least one of the key thematic areas for the symposium, which are:

1. Paying for private care: The private sector and health financing
2. Good, bad, or indistinguishable: Quality of care in the private sector
3. Building institutions for influencing private sector performance
4. Health markets and the poor: Moving towards universal access?
5. The evolution of the global health marketplace: Implications for health systems
6. Using metrics to understand the role of the private health sector as part of the health system
7. Juxtaposing private health care in low-income and high-income countries

Limited scholarships will be made available from selected abstracts whose authors are from a low- or middle-income country and who can demonstrate need. Find out more on the Private Sector in Health website.
Members of the Future Health Systems consortium, David Bishai and Gerry Bloom, have taken up the stewardship of this year's symposium. Historically, the leadership has rotated among scientific committee members. To receive updates about the Symposium, register on their website.