Tell me if this sounds about right.
There are billions of starving people worldwide. The main reason is that our population is growing faster than our food supply. Without surplus food donated by wealthier nations, many people would die, especially in sub-Saharan Africa.
You've heard this story before, no?
Well, according to a massive report (pdf link) from the United Nations Conference on Trade and Development, much of this story is patently false. And when it comes to guaranteeing food security throughout the world, there are a handful of companies that stand in the way of achieving this crucial goal.
The real reason people go hungry
We'll get to those companies in a second, but first, let's investigate the claim that the world doesn't have enough food for everyone.
In 2002, the Food and Agriculture Organization of the U.N. estimated that there was more than enough food produced in the world to meet our global needs. Specifically, the group believed that, if divided evenly, available arable land could offer the global population 2,720 calories per person per day. People don't go hungry because the world is running out of food.
Many people, especially urban-dwelling Americans, assume that hunger is most prevalent in the slums of major cities in Asia and Africa. While hunger is certainly no stranger in these areas, a full 70% of the one billion undernourished people in the world actually live in rural areas.
So how do these predominantly Chinese, Indian, and sub-Saharan farmers become so impoverished? For years, they have been encouraged by their governments to produce cash crops for export—often in an unsustainable manner—to provide themselves a steady income. Over time, however, global markets have been flooded with an overabundance of these crops, and these farmers now only receive a pittance of what they need to purchase a balanced diet for their families. Farmers from wealthier countries—generally the ones supplying this overproduction—"can usually call on their governments for compensation (which, for many, represents up to 60 percent of their income)," according to the U.N. report.
In other words, because the world's wealthy countries dump their oversupply in poorer countries, urban elites get access to cheaper foods while massive rural populations are pushed even deeper into poverty.
A plan for sustainable productivity
Though a slew of potential solutions have been proposed, one came up again and again in the U.N. report: sustainable, organic agriculture. Not only would its proliferation provide poorer rural farmers in the third world a more balanced diet, but when applied to industrialized nations the use of sustainable and organic agricultural practices would mitigate many of the effects of climate change.
According to Swiss researchers at the Research Institute of Organic Agriculture, this type of farming has five key benefits: it is highly adaptable to local variabilities; it increases water retention in the soil, making it less susceptible to water stress; biodiversity increases, mitigating the total damage pests and weeds can do; damage from extreme weather events is less extensive; and the chance of total crop loss is virtually eliminated, as nature's inherent balancing helps ensure the survival of at least some of each year's harvest.
Just as significantly, adoption of sustainable and organic farming methods in developed countries would -- by necessity -- create a more diverse base of crops available. While this would drive up the costs of food -- currently at all time lows -- it would also dramatically increase the nutritional value of food, and help mitigate the rampant obesity epidemic in America, one that is caused in part by cheap by-products of corn and soy.
Who's standing in the way?
Now, back to the companies identified in the U.N. report as standing in the way of achieving food security. Monsanto (NYSE:MON), BASF, Bayer, Cargill, DuPont (NYSE:DD), Syngenta (NYSE:SYT), and Dow Chemical (NYSE:DOW) are all called out by name.
It would take too long to go through each and every offense named in the report, but take this as an example: "Monsanto and its affiliates lobbied Indonesian legislators in the 1990s to support genetically engineered (GE) crops. In 2005, the firm was fined $1.5 million by the United States Department of Justice for violating the Foreign Corrupt Practices Act by bribing a senior Indonesian Environment Ministry official."
The view from 30,000 feet is clear: these companies represent the majority of worldwide agribusiness.
Though some of those names might be hard to read, the biggest chemical companies on the list are Monsanto, DuPont, Syngenta, Bayer, Dow, and BASF -- in that order. These companies obviously have a huge financial motivation to maintain the status quo.
The problem is that the status quo is largely responsible for the environmental degradation and starvation we have today. Because these companies have enormous resources to influence public policy, they will continue to lobby for what is in their own best interest, to the detriment of poor rural farmers worldwide. The bottom line: None of these companies stands to benefit from a proliferation of organic, sustainable agriculture.
Is there a light at the end of the tunnel?
There aren't any easy answers when trying to untangle what will work best to create a healthier global population. One thing is clear, however: Food will be important in investors' portfolios for decades to come.