Cargill warns on self-sufficiency

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Financial Times | November 10 2009

By Javier Blas in London

The drive towards self-sufficiency in response to last year's food crisis will fail, a top executive at Cargill has warned, adding that the idea that countries "can be self-sufficient in every single food is a nonsense".

The warning by the world's largest trader of agricultural commodities comes ahead of next Monday's UN World Summit on Food Security in Rome, the first since 2002. The summit was prompted by the surge in the price of staples such as rice and wheat, which last year hit record highs, sparking food riots in countries from Bangladesh to Haiti.

Countries in Asia, Africa and the Middle East have moved towards self-sufficiency in response to the crisis, either by boosting agricultural production at home through subsidies and import tariffs or acquiring overseas farmland.

The so-called "farmland grabs" gained notoriety after an attempt by South Korea's Daewoo Logistics to secure a huge chunk of farmland in Madagascar, which contributed to the collapse of the African country's government.

Paul Conway, senior vice-president at Cargill, said: "Promoting a free and open trading system whereby countries can produce what they are best able . . . and surpluses can be traded across international boundaries is the right way to go.

"Not all countries can single-handedly be selfsufficient in all food commodities," he added, also dismissing attempts to outsource agriculture production overseas.

Mr Conway warned that host countries were likely to impose export bans in the event of a local or global food crisis. In a rare interview, he said food security had become a key global challenge. "It is a high, high political item," said Mr Conway, who is in charge of Cargill's food security initiatives.

"Food security, which was not on the agenda of anyone but agriculture ministries only three years ago, is now very central to governments," he said, noting that the interest was at its highest level since late 1970s or early 1980s.

In the US, the food security agenda, usually left to the Department of Agriculture, has become one of secretary of state Hillary Clinton's strategic projects.

Archer Daniel Midlands, Bunge, Cargill and Louis Dreyfus - the world's top food trading houses - are at the centre of agricultural trade and their wide business and government relationships allow them to see changes in food policy.

"The whole world had got very relaxed about food security and, yes, probably unduly complacent," Mr Conway said.

He warned that rising populations and wealth in developing countries and governments' targets for biofuel production were likely to continue to put upward pressure on food prices for years to come.

Mr Conway said the world's food security would be improved if countries reached a deal on the Doha trade round.

The Food and Agriculture Organisation forecasts that global trade of food staples will surge to 300m tonnes by 2050, up from the current 135m tonnes.
Original source: Financial Times
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