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Thursday, September 16, 2010

Speculating in Misery

Ambrose Evans-Pritchard brings us an interesting article dealing with the speculation of agricultural land.

Speculators like rich hedge funds and billionaires have been buying up large chunks of foreign agricultural land in order to speculate on the hunger that a growing and more affluent world population will bring. Combine this growing demand with the destruction of existing productive land by overproduction, aquifer depletion and climate change related disasters and we are going to suffer some huge food supply issues in the near future. Mozambique, the example given in the story is just one of many countries that will be hurt this year because of Russian crop damage and the export ban.

The backlash to this speculation will undoubtedly cause more nations to ban or restrict the foreign ownership of agricultural resources. This is move is very likely in contravention of TWO rules and could possibly lead to the the unwinding of globalization. There are big legal and ethical issues tied up in all this such as globalization vs. national interest and the ethics of growing food for fuel and food speculation, all of which will propel food security issues way up the agenda in coming years.

One of the most telling parts of this article is a quote acknowledging that the drive for endless growth may be about to hit a brick wall, or in this case the Great Wall.

Cheng Siwei, head of China's green energy drive, told me last week that eco-damage of 13.5pc of GDP each year outstrips China’s growth rate of 10pc. National wealth is contracting. "We have an intangible environmental debt that
we are leaving to our children," he said. So does India. Much of the globe is stealing food from the future.

Imagine that, China the country touted as the next super power, an economic juggernaut because of its impressive rate of growth is doing more ecological damage than real growth!!! The endless growth model is flawed and China is quickly eating through its ecological capital in its rush to build cities, dams, airports and roads. In a generation it will be an urbanized country without the rural resources to support itself.

Sounds like a very unstable future.

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