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A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.

Part 1 || Part 2 || Part 3 || Part 4 || Part 5

In 1999, Egypt came under the structural reforms regime of the World Bank and IMF, but for some reason, they didn't push it. Maybe because the ministers of that time were a little smarter.

2004 - Mubarak sacks most of his cabinet, brings in guys, trained - where else? - land of the free, home of the brave. Brings them in, and they ruthlessly implement the economic reforms and you've got chaos. You've got 80% of those below 30-35 unemployed.

Ya, so democracy is a very important issue. Unlike in say, India, they did not have the option of voting out governments. Please know this, just so that you understand this, how important the food issue is. Election after election in India, many elections in India, I can't even count for you how many, the price of bread has been the price of power.

In 2009 elections, all those governments that provided cheaper rice to their public won those elections. Whether the BJP in Chattisgarh and Madhya Pradesh, BJD in Orissa under Navin Patnaik, the DMK in Tamil Nadu... it made a huge difference, because the public were reeling under food prices.

Understand how important. In Egypt or Yemen, the public did not have the option of using the electoral route of protest.

So yes, the democracy thing was an important driver, but incredibly important was the food issue.

Here we are.

Let's take each one of these countries. So I've given you the Egyptian stats. In the 6 years between 2004 and 2010 the rate of accumulation and concentration of wealth in Egypt is even higher than in between 1999 and 2004. Inequality is a theme. Deepening inequality is a huge driver.

And we come to the United States. Egypt IS the world's biggest importer of wheat. Take Yemen.

According to the World Food Programme... Yeme is by the way one of the very poor countries of the world. 15.7% of Yemen's population lives on less than a dollar a day. 43% live on less than 2 dollars a day. And in three months this year, in three months of 2011 , 6% of Yemen's population went below the poverty line, driven by food prices and drought.

Are we beginning to get the idea that food matters? 6% of Yemen's entire population in the first three months of this year. January, February, March. That's the estimate of the World Food Programme, which has declared that they are broke, because the budget that they had made for Yemen was destroyed by the price rise.

They had a very large budget for Yemen and now estimate they are 28 million dollars short. Those 28 million dollars measure for you the rise in food prices. So they're saying, we are going to have to drop from our list more than 300 thousand hungry people if we are to continue in the same budget.

Let's get to Syria. You know, Assad. President Assad, drew a quick lesson from what was happening in Egypt, drew a quick lesson from what was happening in Tunisia and immediately declared that he would bring down the prices of the staples. But you know what, it didn't work. The crowds are getting bigger.

But it is interesting to me that he recognized it, as always too late. Mubarak also. Too late.

In Yemen, it did not start with Twitter or Facebook, it started in the south with a bunch of students bringing out a public declaration against high food prices. School students. High school students. They took out a protest against... and they were astonished by the number of people who joined them.

When they went out to... because their meals in the canteen, everything was cut by these extremely high prices. That's so much for Yemen.

Take You know, in Syria, immediately after the crisis started, Syria lowered taxes on olive oil by 53% , on taxes on sugar by 25%, lowered taxes across the board on foodstuffs, but the price increase is so high, that it's not having that much of an impact. In fact, the announcement that they would do it, led to rapid hoarding and speculation of food grain, and that has also bitten into the crisis very severely.

The Food and Agriculture Organization estimates that in the year 2008 64 million people went below the poverty line, driven by food prices. The FAO has a food insecurity atlas that you can look at. 2008 was 64 million people. When they bring out their 2011 issue, you will find that it was exceeded in 2010 because much much greater stress on pricess came up in 2010.

Here's an interesting thing. As always, after the horse has bolted the stable the IMF comes out with the study saying that there is a serious link between food prices and political unrest. Gee! We needed to know that. And only the IMF could tell us. They did a study between 1970 and 2007 which said that a 10% increase.... I haven't quite understood ... very written in the jargon of the economists. But what it basically says is that it adds a factor of 0.5 in a given year, in the next year of raising the prices in political unrest. In terms of the average political unrest, that is an increase of 100% - that's basically what they're trying to say is what I understand.

Often, this seems to unfold against not just food price increase, but double digit inflation overall. In India, food price inflation has been ranging between 13 and 18 percent for the last year, year and a half. And overall inflation has been close to double digit, but it's up and down, within a band of 2%.

Now let's take a look at my favorite magazine and website - Forbes.

Was all this an issue of demand and supply? Was all this chaos over riots and food was it entirely an issue of demand and supply? Yes, those were factors. The collapse of the Russian harvest, the drought in Australia had an impact, but nothing like the impact that speculation on commodities is having on world food prices.

Do you remember in 2008 the price of petrol went from 40 dollars a barrel to 170 dollars a barrel and then came down to 120? production didn't change so fast, did it? Food prices if you remember shot up in 2008 and toward the end of 2008 fell dramatically.

Why does that happen?

It's called futures trading. It's called speculation in food grain. The difference about speculating in food grain and.... see now some of the wealthiest investors... I've got to read you a quote from Wall Street Journal on this. What are they...? They are not even acquiring a physical commodity. They are not acquiring so many tons of rice. They are just betting on the price of rice.

They are just betting and they have a very simple bet. Food price goes ... up.

So its driving the prices of food way beyond what the public of many, many nations can afford. That's what's happening. Okay?

So it's really going dramatically up, and Fortune advises its investors ... it says "this is a bet worth dipping into." It's going up.

So I... today I looked at Fortune's list of fastest growing industries of 2009. What was number 1? Food Production. Fastest growing in revenues, food production. Number 2 is Energy, number 3 is petroleum refining, but Number 1 is food production.

In the top 20 there are two other food related... food processing is number 15, and another food related item is in the top 20, but food production is the number 1 in revenues, and in terms of growth of profit, the fourth most profitable industry in the world.

According to Fortune 500, whom I trust implicitly, because they tell me correctly how many billionaires we have each year.

And it's very... Fortune's 2009 results are very important. In a way they tell us what happened and what follows in 2010. When we look at those numbers today, we get a much better understanding of the food crisis.

Here are some of the biggest beneficiaries of that boom. Number 1 company in the world. Profiting from the largest expansion. Number 1 industry in the world and the fourth highest profit making industry in the world is Archer Daniels Midland - ADM.

If you look at it in terms of percentage change in profits, the food industry 2008-09 48% increase 42.8% increase. The next highest is some 14% behind and that is energy.

Here is how Archer Daniels Midland - an American company did. I'm quoting from Wall Street Journal "It not only reported record third quarter profits and windfall as all other food companies including Monsanto did, in the seeds sector, but Archer Daniel's profits included a seven-fold increase - a net increase in its unit that stores transports and trades in grain. Not produces grain.

The highest profits were in the units in those companies storing grain. You can the enhance speculation. You're not producing one morsel of grain. You are trading in it, you are hoarding in it, you're speculating in it, you're storing it and that unit has the highest profits of the fastest growing industry in the world.

Tells you how important food is.

Welcome to the ultimate profit zone. I'm surprised Warren hasn't found it yet or maybe he has investments we don't know about. It's called food and water. You know, if the world has to do without petroleum, it will. Humanity lived without it for millenia, but you can't live without food and water.

The countries that control food grain in the next twenty years will run the world.

The countries that control food grain or the food grain trade, they have the world by its belly. It's literally having the world by its belly. Now if that was Archer Daniel's profits, you know, I won't go into the whole list. the profits became so much, that the United States Senate set up a commission.... what was it called... the commodity futures trading commission. It held a session in Washington with Congressmen participating, I think, because of the kind of damage it was doing.

Today, the point of it is that hedge funds and index funds control between an estimated 50-60 percent of wheat traded on the world's largest commodity markets. So hedge funds and index funds are driving food prices. In India, the volume of futures trade - it's not possible to calculate how many percent it has increased in 18 to 24 months. The percentage and level it has increased in a very, very brief time.

So that's what's happening.

By the way the food production industry increase - I said 42.8% - I'm wrong, it is 48.8%.

Now the fast growing investment is coming. It is moving to another area. Farmland. How many of the Indians sitting in this - or the people of Indian origin sitting in this audience are aware that India is buying vast tracts of farmland in Kenya and Ethiopia. Are you aware of this? [inaudible audience response] Two people. Not bad. That's about the National average.

We're locked in a race with China and we're damned irritated because they've bought more land than us. And what are we buying this land for? To grow food in India. Having destroyed India's food production capabilities over 20 years of neo-liberal economics.

And we're buying... we're going to be buying hundreds and thousands of acres - we've invested 4.3 billion dollars in Ethiopia as a country. We're going to be buying tens of thousands of farmland in Ethiopia - for God's sake, don't you think they have enough problems without us landing up there?

[contd in Part 4]

2

P. Sainath on Mass Media v. Mass Reality: From Farm and Field to Wall Street Deals

A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.

Part 1 || Part 2 || Part 3 || Part 4 || Part 5

Seeing so many students in the audience always provokes the teacher gene. So I'm going to begin with a question.

Who do you think is the world's biggest importer of wheat?

I'm not doing it as a test for you, it is a measure of your media. One of the most important processes is unfolding in Africa. How much of the discussion have you seen around the African uprisings that tells you that one of the big drivers of those uprisings is food prices.

The biggest importer of wheat in the world is Egypt. 20 million tons in the last twenty months 2 years. 20 million tons. So, when food prices soar, people pay an incredible price.

In Egypt, the average Egyptian citizen spends far more as a share of his or her income on food than people in comparable countries. For instance, in Brazil. If you were in Brazil, you would spend 17% of your income on an average - national average - on purchasing food. If you live in Egypt, you will spend much more than twice that. 40% of your income goes on food.

How important do you think has been the emphasis of the media on food prices as a major problem in these countries. Did you get that impression from your media? You can't. I don't blame you. But it is... don't you think it adds some perspective to what's going on? To know that that country is the biggest importer of wheat? That food prices have gone up 30.. 40.. 50% over a couple of years?

Also one of the last things Mubarak did in desperation, six weeks before he was ejected, was to reintroduce price controls, which he had removed under the orders of the structural adjustment programme put on him by the World Bank and the IMF with renewed vigor in 2004.

So there you are. Food prices were and are a major...

Have we forgotten already that in 2008... because I think the meltdown wiped out everybody's memories... 2008 was the year of food riots across the world. Remember? They were the highest.. First time you saw the Western middle classes worrying about the food prices in April to June 2008. Or have we forgotten that?

There were food riots in Kenya. There were food riots in Somalia. I think at least some of you might remember the food riots in Haiti.

2008 the food and agriculture organization of the United Nations tells us was the record highest price rise on the FAO food price index. But you know something? It got obliterated. In 2010, it was even higher. Midway through 2010, the food price index registered a 32% increase in a matter of months. And that was much higher.

2008 produced food riots. 2010 produced regime change.

It's not that these were the only factors. Not at all. There were many political factors, compelling internal factors, but they need a spark. They needed something.

Don't write off what food prices and the role of food is, and I'll explain why.

Now...

Incidentally another country... How many of you can name the African country that was completely self-sufficient in cereals in the 1970s and becomes one of the most major importers of food in the world?

Yemen.

1970s - completely self-sufficient in cereals. 2010 - one of the world's biggest importers of food.

I could name 20 countries like this and you'd see half of them in that situation you are seeing now in Africa. So it is not that... yes, democracy is very important, the politics of it is very important, but there was a major driver called hunger. Food prices.

If you look at the Arab streets, you will see people out on the streets who never ever stepped out in demonstrations and protests. Very conservative sections who never participated in protests and demos. They were there on the street. They still are on the street. Because the problem is not solved.

Ok, we'll come back to the food issue, because what's my.. this is titled as... Wages of inequality, food crisis, farm crisis and the media. We are already into two of those.

The media told you nothing about this... from what you are telling me. You did not glean from the media coverage that food prices were a major factor in what's going on.

You know, every year, the United Nations Development Programme ... and in fact, the UN has been doing this even before the UNDP became active... it's been for 30 years, the United Nations has been presenting us every year with a menu - a bill of fare. We don't see it as a consolidated menu, but we do see it in little bits and blobs.

Don't we... haven't you read somewhere, you vaguely remember... "The Secretary General of the United Nations said that if we spend 15 billion dollars a year additionally, additional expenditure on hunger, we could eliminate hunger. Have you read those sort of little items all over the newspapers? Ya... this you have.

Now what I do is, these different little items that appear, I add them up as a menu, and try figuring out what they come to.

  • Hunger - 15 billion dollars a year the Secretary General tells us will eliminate the extremes of hunger.
  • 10 billion dollars additional expenditure a year, and ever person on the planet has got sanitation.
  • 15 billion dollars a year and every child... additional expenditure. We're talking about additional expenditure, ok? 15 billion dollars additional expenditure a year, and every child on the planet will be in school.
  • 12 billion dollars additional expenditure a year, or something like that, and everyone's got access to basics like water.

You put these together and you get something like between 60 billion and 80 billion dollars. Right? So what is the UN telling you? It is telling you that 60 to 80 billion dollars additional expenditure you can solve the most pressing problems of the human race.

Its never happened in all those 30 years. Why?

What did the government say? No money. There's no money, we can't solve this problem. Where's the money? You put up the money. But we can't do it. You know? Let charitable foundations and the UN and philanthropic... let Gates and Buffett do it and all that stuff. But we can't do it, because we don't have any money.

So for 30 years, this amount of 60 to 80 billion dollars the governments could not find.

Then, 2008 September, Wall Street hits the fan. And the guys and the governments who couldn't find 60 to 80 billion dollars for 30 years find a trillion dollars inside of a week. Along with their friends in Europe, they find 3 trillion dollars in the next three or four months and God knows how much more since then, and what do they find it for? They find it to give it to the very guys who tanked the world economy.

Who wrote your bailout plan? Goldman Sachs.

You collect trillions of dollars, public dollars to give it to the very guys who tanked the world economy, and you have the money!

All these years you didn't have 60... you didn't have 8% of that money, to solve the basic problems of the human race, but you have twelve times that money to hand over to the banks and the trusts and the corporations that completely destroyed the global economy.

Incidentally, a little piece of statistical trivia, if you will: In 2008 - the year they blew the global economy, American CEOs took home 18 billion dollars in bonuses - for that fiscal. For the fiscal in which they blew the global economy.

Well, I suppose it was very modest, because the previous year, it was 34 billion, but they still took home 18 billion dollars in reward. And remember where those dollars came from. It came from a public dollar bailout. It came from public tax dollars which bailed them out.

Giant corporations, having brought the world economy to its knees, in a drama scripted for the last two or three decades by neo-liberal economists and corporations have benefited massively from the ruins and the wreckage. As I said, you destroy the world economy, you take home 18 billion dollars in bonuses. But remember this, in the world we live in, and the economics we follow, and the moral philosophy of that economics, every misery is an opportunity. I assert. Every misery is an opportunity.

Let me quote for you, the sage of Omaha - Warren Buffett. Whose reaction to the Tsunami and nuclear meltdown in Japan is that it provides a unique buying opportunity of Japanese stocks. This is Reuters quoting Warren Buffett. Here he is "Immediately after the nightmare... after Japan's tragedy, he said, if I owned Japanese stocks, I would certainly not be selling them. frequently something out of the blue like this an extraordinary event creates a buying opportunity." And he advised his friends to invest, because the Japanese companies are on their knees, the stock prices are down, this is the time to buy!

Actually, he's right. I don't know... I think six years ago, Bob, when I spoke here, soon after the Tsunami, I pointed out... I don't know if any of you were here. You look too young to have been around then... Ever since the Tsunami - struck me then, and ever since then, in every natural calamity, I - a non-financial journalist - follow the stock markets when something terrible happens, because they start doing very well after a week.

Buffett was right. One week after the Tsunami, as the damage was really unfolding. We knew for instance, that Indonesia had lost nearly a quarter of a million people... you know 11 countries were devastated by the tsunami - eleven. Out of those 11 countries, 5 have significant stock exchanges - India, Indonesia, Sri Lanka, Thailand and Malaysia.

Malaysia, Thailand, Sri Lanka, India and Indonesia.

Now what happens? One week, everything is devastated and at a standstill. Then these very stock exchanges register the highest gains of stock exchanges anywhere. Why?

The smell of reconstruction dollars. The smell of the money that comes out of the misery. When Warren Buffett says invest in Japanese stocks, he knows what he is talking about. He's talking about that pace of rapid reconstruction that's going to take place. Millions and billions of dollars in contracts.

So if you are smart, you're going to put money where the Japanese stocks are, because the reconstruction will be beginning and we all know that the Japanese are very good at it, they are very efficient people. When the reconstruction starts, it will be massive. So he says, buy those shares now.

In 2004 December 26th, the Tsunami hit those 11 countries. Those 5 countries were devastated. And you know what happened after the devastation? From the first week after the devastation, the sensex, which had never broken out of the 4 thousand bracket - the Sensitive Index of the Bombay Stock Exchange, which had never broken out of the four thousand bracket crossed six thousand and never looked back. Today scaling around twenty thousand.

It never looked back. That was the breach point. The Composite Share Index of the Colombo Stock Exchange - the CSE - reached within 16 points of the highest - which was the year of its founding. Indonesia - the worst affected nation - quarter of a million people dead, the Stock Exchange is rocked by the earthquake and Tsunami.... [contd in part 2]