Monthly Archives: January 2017

UK’s ‘development for profit’ private equity arm set to grab £6 billion of aid funds

Big agribusiness in Zambia

In 2016, CDC invested $65 million in Zambeef, one of the largest meat producers in southern Africa which is listed on the London Stock Exchange and exports in Africa and also to China, India, the UK and Italy. Zambeef is also one of the largest landholders in Zambia, with more than 100,000 hectares. [51]

Those supporting the company have previously been accused of facilitating the concentration of land in the country into just a few hands, while the vast majority of the population are subsistence farmers and have on average just 0.6 hectares per household. [52] The company’s stock reportedly soared by more than 50% as a result of CDC’s investment. [53]

Opaque investments through intermediate fund managers

CDC also continues to channel millions of pounds through intermediary investment funds. [54] It says this “remains a key part of what we do” and “allows us to reach small and medium-sized businesses.” [55]

This is despite extraordinary rates of return being made by some CDC-backed funds. One of CDC’s major funds, Actis, formed in 2004 following the restructuring of the CDC, has revealed that it has made $2.2 billion from the $867 million it has invested in infrastructure and other projects since then. [56]

A 2014 report from the parliamentary Ombudsman meanwhile said that CDC still has limited oversight of investments funds that receive its money and that even after CDC required fund managers to sign up to its new investment code, it has only “limited rights” to their records and accounts. [57]

CDC also continues to invest in funds and businesses domiciled in well-known offshore secrecy jurisdictions. Analysis of CDC data shows that since 2012, it made 38 new investments through funds – at least 28 of which are in Mauritius, the Cayman Islands, Guernsey, and Luxembourg. These investments account for 49% of the total $1.8bn committed to funds over this period. [58]

Most of CDC’s direct investments are in fact domiciled in developing countries. But some of these direct deals involve companies based in offshore jurisdictions and rich countries too – for example its $41m investment in Feronia Inc, which operates in the DRC but is domiciled in Canada, and its $25m investment in Garden City which operates in Kenya but is domiciled in Mauritius. [59]

CDC says: “We never use offshore financial centres to avoid tax. We use them so that we can invest alongside other international investors.” It says: “many developing countries do not yet have stable administration and legal systems necessary.”

Elsewhere it has acknowledged that “certain investments may include structures that reduce the tax burden on investors”, and said that it “will only acquiesce to such structures in order to facilitate a developmental impact.” [61]

But investing through offshore entities doesn’t help developing countries build the stronger administrative and legal systems that CDC says are lacking. It enables secrecy, and if CDC cannot convincingly prove its development impact, it is hard for it to justify investment through offshore jurisdictions based on that impact.

Diverting aid to private business

The UK has enshrined in law its commitment to spend 0.7% of Gross National Income as official development assistance (ODA), the OECD’s term for aid. [62]

Under little-noticed but important changes to how the government reports its aid spending, any new capital increase for CDC could count as ODA and come out of the aid budget – meaning less money for other projects. [63] This is concerning given CDC’s own admission that it is “not designed to solve all development challenges.” [64]

It is also concerning as, in the past, not all of CDC’s activities have themselves met the OECD’s criteria for aid spending. According to a report prepared for the House of Commons, between 2012 and 2015, only 68% of CDC’s new commitments were eligible to be counted as ODA. The remainder did not count usually because loans lacked the required grant element of at least 25%. [65]

This suggests that, in some cases, CDC has been lending at rates more similar to a commercial bank than a development agency.

Inviting scandal

Serious questions remain about CDC’s supposed development impacts. Meanwhile it has not yet published its investment strategy for 2017 to 2021, and it does not have a new CEO in place. CDC itself says it’s too early to tell what impact its reforms have had. “It is relatively early days”, it has said, “as results from new investments…will typically take five to ten years to materialise fully.” [66]

CDC’s direct investments continue to include examples of projects with questionable impacts for poor communities – the intended beneficiaries of UK development spending – and its continued investments through intermediary investment funds, many of which are located in well-known offshore secrecy jurisdictions, continue to pose severe challenges to transparency and accountability.

At the bill’s second reading in Parliament, UK Development Secretary Priti Patel said: “We will shortly be setting out a new investment policy for the CDC, covering the next five years. That will include a new reporting framework to better capture the broader impact of investments on development.” [67] Any consideration of increased taxpayer funding for CDC is, at this stage, clearly premature.

DfID is essentially asking MPs to pre-approve a quadrupling of funding for its controversial investment arm – before presenting a worked through strategy or plan for how this money will be spent, and how taxpayers will be assured that it helps meet the official mission of this spending: ending global poverty.

This raises serious concerns as this bill could clear the path to a massive diversion of public aid money towards private businesses – without sufficient transparency, accountability, or proof of impact.

Proposals to expand CDC also ignore the controversial experiences of other development finance institutions, including the World Bank’s International Finance Corporation whose investments have been linked to land rights violations and violence against peasants in Honduras, and numerous cases of evictions and forced displacement worldwide. [68]

In CDC’s own 2015 Annual Review, it suggested it struggles to find businesses that can meet both of its official objectives, “having a development impact as well as providing a financial return.” It said the “pool of potential investments” is small. [69]

Poverty alleviation or corporate enrichment?

The obvious question is: what would CDC do with billions of pounds in extra taxpayers’ money and how will it ensure this funding helps the intended beneficiaries of UK aid? Assumptions of trickledown development – that the accumulation of wealth by the richest will also benefit the poorest through consumption, investment and employment – are not good enough.

Public money must be used to help the poorest and most marginalised, and to tackle inequality – not finance private businesses for the sake of it. Increasing CDC’s size and influence is not a recipe for sure-fire development impact: instead, it is an invitation for scandal.

We call on MPs not to pass the Commonwealth Development Corporation Bill. We further believe that DfID’s relationship with CDC be opened to a fundamental review as we do not believe that CDC is currently performing a justifiable role in the eradication of global poverty.

This article is based on a briefing by Global Justice Now with news updates by The Ecologist.

References

1. Commonwealth Development Corporation Bill 2016- 2017, Parliament UK, http://services.parliament.uk/ bills/2016-17/commonwealthdevelopmentcorporation. html

2. See section: CDC’s reform promises. The requirement that UK development assistance be focussed on reduction of poverty is enshrined in the 2002 International Development Act: http://www. legislation.gov.uk/ukpga/2002/1/section/1

3. “It is relatively early days, as results from new investments…will typically take five to ten years to materialise fully.” “New CDC Bill: our briefing”, CDC Group, 22 November 2016, http://www.cdcgroup. com/Media/News/News-New-CDC-Bill-ourbriefing/#sthash.ott7WOQM.dpuf

4. “Diana Noble to Step Down as CEO of CDC Next Year”, CDC Group, 13 September 2016, http://www. cdcgroup.com/Media/News/Press-release-DianaNoble-to-step-down-as-CEO-of-CDC-next-year/

5. Commonwealth Development Corporation Bill – Explanatory Notes, http://www.publications. parliament.uk/pa/bills/cbill/2016-2017/0093/ en/17093en03.htm

6. CDC was previously known as the Commonwealth Development Corporation and before that: the Colonial Development Corporation. It is the world’s oldest DFI, established by the 1948 Overseas Resources Development Act which first set it up as a statutory company to invest in British colonies.

7. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.23

8. The Development Secretary does, however, in circumstances of consistent or extreme underperformance, have the power to make changes to CDC’s structure and management and to review the Board’s composition. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www. nao.org.uk/wp-content/uploads/2016/11/Departmentfor-International-Development-through-CDC.pdf, p.13

9. CDC’s Board, CDC Group, http://www.cdcgroup. com/Who-we-are/Our-People/Board-and-CEO/ 10 Commonwealth Development Corporation Act 1999, http://www.legislation.gov.uk/ukpga/1999/20/ introduction 11 In 2015-16, DfID invested the first of two tranches (£450m) and will invest the balance (£285m) in 2016- 17. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.13

12. Commonwealth Development Corporation Bill, introduced in Parliament on 16 November 2016, http://www.publications.parliament.uk/pa/bills/ cbill/2016-2017/0093/17093.pdf

13. CDC for example has explained: before additional funds are provided “a robust business case will be prepared and agreed by CDC’s Board and DFID.” New CDC Bill: our briefing, CDC Group, 22 November 2016, http://www.cdcgroup.com/Media/News/NewsNew-CDC-Bill-our-briefing/#sthash.ott7WOQM.dpuf

14. Commonwealth Development Corporation Bill, Delegated Powers Memorandum, 16 November 2016, Parliament UK, http://www.parliament.uk/documents/ commons-public-bill-office/2016-17/delegatedpowers-memoranda/Dept-for-InternationalDevelopment-16-November-2016.pdf, p.3

15. Andrew Mitchell MP, ‘A Safer and More Prosperous World’, 2013, the Legatum Institute http://www.li.com/ about/press-releases/private-sector-holds-the-key-tothe-future-of-british-aid-says-andrew-mitchell-mp

16. Commonwealth Development Corporation Bill, Delegated Powers Memorandum, 16 November 2016, Parliament UK, http://www.parliament.uk/documents/ commons-public-bill-office/2016-17/delegatedpowers-memoranda/Dept-for-InternationalDevelopment-16-November-2016.pdf, p.3

17. Commonwealth Development Corporation Bill, 29 November 2016, Volume 617, Parliament UK, House of Commons Hansard, https:// hansard.parliament.uk/commons/2016-11-29/ debates/4CA6B2D4-A665-4444-A4C1-DEF42368EDCD/ CommonwealthDevelopmentCorporationBill

18. Commonwealth Development Corporation Bill 2016-17, Parliament UK, http://services.parliament.uk/ bills/2016-17/commonwealthdevelopmentcorporation. html

19. For example: In 2008 the National Audit Office raised concerns about excessive remuneration packages and the Department’s ability to demonstrate how CDC investments contributed to poverty reduction. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.5. In 2010, then Development Secretary Andrew Mitchell said CDC “became less directly engaged in serving the needs of development”, Speech at the London School of Economics, 12 October 2010, http://www.lse. ac.uk/publicEvents/pdf/20101012_AndrewMitchell.pdf

20. “DfID and CDC announce new business plan for CDC”, CDC Group, 31 May 2011, http://www. cdcgroup.com/Media/News/DFID-and-CDCannounce-new-business-plan-for-CDC/

21. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.47

22. CDC Group plc 2015 annual accounts, CDC Group, http://www.cdcgroup.com/Documents/2015%20 Annual%20Accounts.pdf, p.4

23. CDC Group plc 2015 annual accounts, CDC Group, http://www.cdcgroup.com/Documents/2015%20 Annual%20Accounts.pdf, p.3

24. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.42

25. 35 employees make more than £150,000. “Remuneration data, year ending 31 December 2015”, CDC Group, http://www.cdcgroup.com/ Documents/2015%20remuneration%20data.pdf

26. CDC Group plc 2015 annual accounts, CDC Group, http://www.cdcgroup.com/Documents/Annual%20 Reviews/CDC%20Annual%20Accounts%202015.pdf, p.13

27. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/pressrelease/department-for-international-developmentinvesting-through-cdc/, p.9

28. See for example: Key Facts, CDC Group, http://www. cdcgroup.com/Who-we-are/Key-Facts/

29. 1,005,000 of the new jobs “created” were indirect jobs. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p4

30. 2015 Annual Review, CDC Group, http://www. cdcgroup.com/Documents/2015%20Annual%20 Review.pdf, p.14

31. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.7

32. Data disclaimer, CDC Group, http://www.cdcgroup. com/Corporate-information/Data-disclaimer/#sthash. qEsETnM8.dpuf

33. In 2015, fewer than 80% of companies reported employment data to CDC: 46% said jobs had been created, 28% said there’d been no change, and 25% reported job losses. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao. org.uk/wp-content/uploads/2016/11/Department-forInternational-Development-through-CDC.pdf, p.28

34. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.30

35. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.29

36. CDC Group plc Annual Report and Accounts 2015: http://www.cdcgroup.com/Documents/Annual%20 Reviews/CDC%20Annual%20Accounts%202015.pdf ;

37. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-International- Development-through-CDC.pdf, p.20

38. “CDC and the Abraaj Group to invest in Rainbow Hospitals”, CDC Group, 13 August 2013, http:// www.cdcgroup.com/media/news/cdc-and-theabraaj-group-to-invest-in-rainbow-hospitals-aleading-women-and-childrens-healthcare-chain-inindia/#sthash.qG8OzN3F.dpuf

39. See for example: Yarlini Balarajan, S Selvaraj, and SV Subramanian, “Health care and equity in India”, Lancet, February 2011: https://www.ncbi.nlm.nih.gov/ pmc/articles/PMC3093249/

40. Reghu Balakrishnan, “Why are PE funds interested in Indian labour rooms?” LiveMint, 28 July 2016, http:// www.livemint.com/Companies/864qpK55gWLpJiUQt VTIWN/Why-are-PE-funds-interested-in-Indian-labourrooms.html

41. “Maternity and Child Care MCC Hospitals Market in India 2015-2020”, PR Newswire, 30 May 2016, http://www.prnewswire.com/news-releases/ maternity-and-child-care-mcc-hospitals-market-inindia-2015–2020-300276642.html

42. “CDC Supports Expansion of Bridge International Academies with $6 million Investment”, CDC Group, 21 January 2014, http://www.cdcgroup. com/Media/News/CDC-supports-expansion-ofBridge-International-Academies-with-US6-millioninvestment/#sthash.lKzuIr0y.dpuf

43. “Judge orders closure of low-cost Bridge International schools in Uganda”, The Guardian, 4 November 2016, https://www.theguardian.com/ global-development/2016/nov/04/judge-ordersclosure-low-cost-bridge-international-academiesuganda

44. See: CDC Direct Investment Information, as of September 2016: http://www.cdcgroup.com/ Documents/Direct%20investment%20information%20 as%20at%2030.09.16.pdf, and GEMS Cambridge International School, GEMS Education website, http:// www.gemseducation.com/choosing-a-school/find-aschool/gems-cambridge-international-school-cin/

45. See: CDC Direct Investment Information, as of September 2016: http://www.cdcgroup.com/Global/ CDC%20Direct%20Investment%20Information%20 as%20at%2030.09.15.pdf

46. “Land Conflicts and Shady Finances Plague DR Congo Palm Oil Company Backed by Development Funds”, GRAIN and others, 2 November 2016, https:// www.grain.org/es/article/entries/5564-land-conflictsand-shady-finances-plague-dr-congo-palm-oilcompany-backed-by-development-funds, p.3

47. “CDC and Feronia”, CDC Group, http://www. cdcgroup.com/Global/Statement%20and%20QA%20 on%20Feronia%20for%20CDC.pdf, p.2

48. “Land Conflicts and Shady Finances Plague DR Congo Palm Oil Company Backed by Development Funds”, GRAIN and others, 2 November 2016, https:// www.grain.org/es/article/entries/5564-land-conflictsand-shady-finances-plague-dr-congo-palm-oilcompany-backed-by-development-funds, p.2

49. “CDC and IFC Invest in Garden City to Create Jobs and New Business Opportunities in Nairobi”, CDC Group, 15 January 2014, http://www.cdcgroup.com/ Media/News/CDC-and-IFC-Invest-in-Garden-Cityto-Create-Jobs-and-New-Business-Opportunities-inNairobi-/#sthash.s5x9DYfZ.dpuf

50. Garden City Mall Nairobi, Twitter, https://twitter.com/ GardenCityNbi

51. “Fast track agribusiness expansion, land grabs and the role of European private and public financing in Zambia”, Hands off the Land, December 2013, http:// www.fian.org/fileadmin/media/publications/13_12_ FIAN_Zambia_EN.PDF, p.14

52. “NGOs blame Berlin for feeding big business land grabs”, Euractiv, 17 June 2014, https://www.euractiv. com/section/development-policy/news/ngos-blameberlin-for-feeding-big-business-land-grabs/

53. Mike Verdin, “Zambeef shares soar more than 50% on $65m CDC investment”, Agrimoney.com, 4 August 2016, http://www.agrimoney.com/news/zambeefshares-soar-more-than-50percent-on-$65m-cdcinvestment-9811.html

54. According to the National Audit Office, CDC’s plan is that by 2021 the composition of its portfolio will be as follows: 54% equity; 24% debt; and 22% funds. “Department for International Development: investing through CDC”, National Audit Office, 28 November 2016, https://www.nao.org.uk/wp-content/ uploads/2016/11/Department-for-InternationalDevelopment-through-CDC.pdf, p.21

55. “Our Partners”, CDC Group, http://www.cdcgroup. com/Who-we-are/Our-Partners/

56. See for example: Actis on MatchDeck: https://www. matchdeck.com/company-profile/1068-actis#/inde

57. “Handling allegations of corruption: A report by the Parliamentary Ombudsman on an investigation into a complaint about the Department for International Development”, Parliamentary and Health Service Ombudsman, 25 February 2014, http://www.ombudsman.org.uk/__data/assets/ pdf_file/0009/24300/FINAL_Handling-allegations-ofcorruption.pdf, p.16

58. Global Justice Now calculations based on: CDC Fund Investment Information, as of September 2016, looking only at funds for which “vintage” = 2012 or later http://www.cdcgroup.com/Documents/Fund%20 investment%20information%20as%20at%2030.09.16. pdf

59. CDC Direct Investment Information, as of September 2016: http://www.cdcgroup.com/Documents/ Direct%20investment%20information%20as%20at%20 30.09.16.pdf

60. “New CDC Bill: our briefing”, CDC Group, 22 November 2016, http://www.cdcgroup.com/Media/ News/News-New-CDC-Bill-our-briefing/

61. “Policy on the Payment of Taxes and Use of Offshore Financial Centres”, CDC Group, March 2014, http://www.cdcgroup.com/Documents/ESG%20 Publications/cdctaxpolicy.pdf, p.2

62. “UK commitment to 0.7% aid budget enshrined in law”, 9 March 2015, Bond UK, https://www.bond.org. uk/news/2015/03/uk-commitment-to-07-aid-budgetenshrined-in-law Take action To find out how you can help tackle corporate power and become part of a movement for real change visit globaljustice.org.uk or call 020 7820 4900. Global Justice Now campaigns for a world where resources are controlled by the many, not the few. With thousands of members around the UK, we work in solidarity with global social movements to fight inequality and injustice. Global Justice Now, 66 Offley Road, London SW9 0LS t: 020 7820 4900 e: offleyroad@globaljustice.org.uk w: globaljustice.org.uk

63. Until 2015, new CDC investments counted as positive ODA, and returns to CDC as negative ODA. Now, what counts is the capital flow from the government to CDC. Thus, last year the UK reported its £450m capital increase as aid. See: Steven Ayres and Rob Page, Commonwealth Development Corporation Bill 2016-17, House of Commons Briefing Paper Number 7809, 25 November 2016, http://researchbriefings. parliament.uk/ResearchBriefing/Summary/CBP-7809, p.8

64. FAQs, CDC Group, http://www.cdcgroup.com/ Corporate-information/FAQs/

65. Steven Ayres and Rob Page, Commonwealth Development Corporation Bill 2016-17, House of Commons Briefing Paper Number 7809, 25 November 2016, http://researchbriefings.parliament.uk/ ResearchBriefing/Summary/CBP-7809, p.8

66. “New CDC Bill: our briefing”, CDC Group, 22 November 2016, http://www.cdcgroup.com/Media/ News/News-New-CDC-Bill-our-briefing/

67. Commonwealth Development Corporation Bill, 29 November 2016, Volume 617, Parliament UK, House of Commons Hansard, https:// hansard.parliament.uk/commons/2016-11-29/ debates/4CA6B2D4-A665-4444-A4C1-DEF42368EDCD/ CommonwealthDevelopmentCorporationBill

68. See: “Evicted and Abandoned: The World Bank’s Broken Promise to the Poor”, The International Consortium of Investigative Journalists, https://www. icij.org/project/world-bank

69. 2015 Annual Review, CDC Group, http://www. cdcgroup.com/Documents/2015%20Annual%20 Review.pdf, p.11

Indonesia’s plans to protect its peatland forests are fatally flawed

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Earlier this month, the Indonesian government made a decision which was hailed as a major step forward in the fight against climate change.

President Joko ‘Jokowi’ Widodo’s administration issued a long-awaited revision to regulations designed to protect the nation’s fragile peatlands.

The Washington Post said the move “could help prevent wildfires” and with it stop “billions of tonnes of carbon emissions” entering the atmosphere.

And the news was a welcome relief to the tens of millions of people forced to breathe the smoke from peat fires which follow the clearing and draining of peatland. There were an estimated 100,000 premature deaths resulting across three countries from last year’s devastating Indonesian peat and forest fires.

But others are yet to be convinced. Jokowi’s promise has been undermined by perplexing compromises based on industry-sponsored science.

Simply put, the new regulations won’t fulfil the President’s stated goals – or those of the Paris agreement.

The ‘ban’ that will allow the peatland destruction to continue

Existing plantation licenses for peatland cultivation remain valid under the new regulations, meaning that commercial exploitation can presumably continue for the 30-plus years that land use permits remain valid – with the potential for extensions up to roughly a century.

What’s more, the regulations place only a temporary moratorium on new peat development, lasting a maximum of around two years.

That’s also the longest time allowed before the government must complete its planned ‘peat zoning’ process, which will separate areas to be protected from those that can be drained for plantations.

The regulations require just 30% of each peat system to be zoned for protection, along with any further area in which the peat has a thickness of over 3m. Adopting the industry-supported ‘eko-hidro‘ model, this 30% is to be located over the slightly raised ‘dome’ of thicker peat which occurs in the centre of many peat systems. The remaining area is to be zoned for production, where clearing and drainage are permitted.

This model has been soundly rejected by peat scientists and Indonesian environmental groups alike. The whole peat dome is hydrologically connected, so draining the perimeter will inevitably result in the collapse of the centre in any case. Wetlands International has likened this policy to “allowing smoking in the left side of a plane and forbidding it on the right side”.

Still a risk of fires

Indonesia’s peatlands formed over thousands of years through a process where a continuously high water table prevents the breakdown of organic material, locking carbon into deep deposits.

The regulations allow plantation companies to reverse this process, draining these crucial water tables so that non-wetlands species such as oil palm and pulpwood acacia can be grown in the peat swamps.

The regulations limit the depth of drainage to 0.4 meters below the surface of the peat. Allowing the top 40cm of peat to dry out means millions of hectares of peat will remain at risk of fire. Peat degradation will also continue: experts estimate that the 40cm policy will only reduce the speed of peat subsidence by around 20% compared with unfettered drainage.

As the top layer of drained peat oxidises and collapses, fresh peat is exposed within the 40cm permissible drainage zone, and so it goes on. Over the longer term, essentially the same amount of carbon will be emitted as if unlimited drainage were permitted. Modelling predicts that over a number of decades, drained peatlands will collapse, become flood-prone and unusable for plantations.

Ultimately, the 40cm drainage rule is a flawed compromise. Firstly any drainage will still have the negative impacts above, and secondly, according to industry, oil palm and acacia require deeper drainage to grow in peat soils.

On the plus side

Despite the overall disappointing business-as-usual approach of the regulations, there have been a number of positive initiatives introduced.

The previous regulations prohibited using fire to clear peatlands. Now landholders are expressly prohibited from allowing fires to take place, even if they did not light them. Although landholders’ strict liability for fires is already established under other environmental instruments, it is good to see it reiterated here.

The establishment of a continuous air quality monitoring system and public fire reporting system could also be a boon. Hopefully this will include monitoring of the most dangerous element of pollution, ie PM 2.5 particles, which are currently absent from Indonesian air quality regulations.

We are waiting to hear about government plans for monitoring and law enforcement, and how the regulations will dovetail with the work of the new Peatland Restoration Agency (BRG).

Paris agreement

The Indonesian government is looking to improved forest management to deliver over half of its Paris agreement emission reduction commitment.

Forestry sector reform is expected to deliver over half of the 29% promised reduction against predicted business-as-usual growth in emissions by 2030.

Peatland management, and these regulations in particular, are crucial to achieving that goal. But as they stand now, they have no hope of doing so.

Yuyun Indradi is a Greenpeace Indonesia forest campaigner.

This article was originally published on Greenpeace Energydesk.

Escaped GMO ‘Triffid grass’ defies eradication

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After more than a decade of unsuccessful efforts to eradicate the genetically modified grass it created and allowed to escape, lawn and garden giant Scotts Miracle-Gro now wants to step back and shift the burden to Oregonians.

The federal government is poised to allow that to happen by relinquishing its oversight, even as an unlikely coalition of farmers, seed dealers, environmentalists, scientists and regulators cry foul.

The altered grass has taken root in Oregon, of all places, the self-proclaimed grass seed capital of the world with a billion-dollar-a-year hay and grass seed industry at stake.

Hay is Oregon’s number three crop, worth over $604 million a year, while grass seed comes in at number five, with sales of almost $384 million a year. Sales of both commodities could suffer badly if they are contaminated with the GMO grass seeds.

The situation is particularly tense in Malheur County, where Scotts’ altered grass has taken root after somehow jumping the Snake River from test beds in Idaho. The grass has proven hard to kill because it’s been modified to be resistant to Roundup, the ubiquitous, all-purpose herbicide.

“Imagine I had a big, sloppy, nasty Rottweiler, and you lived next door in your perfectly manicured house”, said Bill Buhrig, an Oregon State University extension agent in Malheur County. “Then I dump the dog in your backyard, I take off and now it’s your problem.”

The battle pits farmer against farmer, regulator against regulator, seller against buyer. Scotts spokesman Jim King insists the company has done its part and significantly reduced the modified grass’s territory.

The US Department of Agriculture, which for 14 years had refused to deregulate the controversial grass on environmental concerns, suddenly reversed course last fall and signaled it could grant the company’s request as early as this week.

An international market in non-GM seeds at risk

Many find the prospect alarming. The Oregon and Idaho departments of agriculture oppose deregulation, as does US Fish and Wildlife, which predicted commercialization of the grass could drive endangered species to extinction.

“We don’t understand the ecological or the economic impact of this”, said Katy Coba, former director of the Oregon Agriculture Department. “We need to figure out the extent of the contamination.”

Some growers and dealers fear it’s only a matter of time before the altered seed reaches the Willamette Valley, the heart of Oregon’s grass business. “That would be a catastrophic event for Oregon’s grass seed industry”, said Don Herb, a Linn County seed dealer. “We don’t need Scotts or others to put our industry at risk.”

Many international buyers will not buy genetically modified products, citing potential safety concerns. Some countries ban them outright. It was just three years ago that some Asian buyers suspended purchases of Northwest wheat after traces of genetically modified strains were detected.

The modified grass has so far been confirmed only in Jefferson and Malheur counties, where it escaped earlier field trials. But The Oregonian / OregonLive has learned that the altered grass has already been grown in the valley. Scotts confirmed that it conducted small-scale field tests in Gervais and Corvallis in the 2000s.

A new and improved grass

Genetic modification dates back to the 1970s and really took hold in agriculture in the 1990s and 2000s. The ability to alter a plant’s genes offered the promise of species that are more productive, more resistant to disease, even immune to herbicides. Today, more than 90% of US soybeans, cotton and corn are genetically engineered.

Scotts hoped gene modification would help it revolutionize the front yard. It invested $100 million to develop a better, more sustainable grass in the 1990s and 2000s largely through the new technology. In partnership with Monsanto, it created a type of creeping bentgrass unaffected by Roundup.

The initial target market was the golf course industry, King said. Creeping bentgrass is commonly used on greens and tees because it can survive being mowed down practically to the dirt.

“It was incredibly attractive to the golf industry”, King said. “Creeping bentgrass is probably as good a playing surface as you’ll ever find in the northern US. But it’s also really subject to infestation from other grasses.”

The allure of the new grass was simple: Golf course greens keepers could use a single herbicide – Roundup – to kill everything but the desired bentgrass. Scotts launched field trials throughout the country, including in Canyon County, Idaho, and Jefferson County, Oregon.

The great ‘escape’

On two occasions in August 2003, hot afternoon winds whipped through the fields north of Madras, scattering the modified seed seed for miles, including into the Crooked River National Grasslands. Signs of the altered grass were found 13 miles away from the test fields, according to federal documents.

The timing couldn’t have been worse for Scotts. It had sought the blessing of the US Department of Agriculture just the year before to sell the altered seed commercially.

It was an extraordinary request. Scotts’ grass was one of the first genetically modified perennials. Unlike annual food crops, perennials typically survive the cold months and can expand via its seeds and the shoots it sends out. Its tiny seed is easily propelled by wind, water and hungry birds.

In 2007, the agriculture department fined Scotts $500,000 for allowing the escape and held Scotts responsible for controlling and eradicating the engineered grass. Then came news the grass had spread further.

In 2010, significant patches of altered grass were found along irrigation canals in Malheur County. No one is quite sure how or when it got there, though it’s believed to have come from a test field in nearby Parma, across the Idaho border. The seed somehow jumped the Snake River and has established itself intermittently from the tiny town of Adrian, north to Ontario and beyond to the Malheur River’s junction with the Snake, a total distance of nearly 30 miles.

The runaways weren’t Scotts’ only problem. US Fish and Wildlife determined that commercialization of the modified grass could actually “jeopardize the continued existence“ of two endangered plant species and would “adversely modify” critical habitat of other endangered species, including Fender’s Blue Butterfly, found only in the Willamette Valley.

There were other unexpected developments. Scientists from Oregon State University and the Environmental Protection Agency found that the modified grass had crossed with feral grasses, passing along its Roundup resistance.

Controversial deal

As chair of the Malheur County Weed Board, Jerry Erstrom has become an outspoken player at the center of the Scotts controversy. The Vale native is a retired Bureau of Land Management employee and still grows hay.

Erstrom says he learned in February 2016 that Scotts had reached a deal with the US Department of Agriculture six months before. Scotts was abandoning its plan to commercialize its altered grass. The waning popularity of golf had convinced Scotts their grass was no longer a viable product, King said.

Erstrom had reason to worry. He sells his hay largely to foreign buyers, who won’t hesitate to find another supplier if there’s any sign of genetically modified material. But what really got Erstrom riled was this $2.8 billion-a-year corporation planning to phase out its lead role in the effort to eradicate the grass. “Instead, they want the good people of Malheur County to clean up their mess”, he said.

That will not come cheap. In its 2014 10-K filing to the US Securities and Exchange Commission, Scotts “recognized $2.0 million in additional ongoing monitoring and remediation expense for our turfgrass biotechnology program.” King said the company’s been spending about $250,000 a year to control the grass.

King contends Scotts has agreed to remain involved in the cleanup for 10 years. But for the latter seven years, Scotts is required only to operate an informational website on how to deal with its grass.

Curiouser and curiouser …

There were other curious developments. Though it was abandoning efforts to commercialize the grass, Scotts still wants it deregulated. And the federal agency, which had refused for 14 years to sign off the new grass, suddenly seemed eager to do so.

Dr. Michael Firko, deputy director of the Animal and Plant Health Inspection Service, a department within the US Department of Agriculture, said Scotts’s decision not to bring the grass to market changed the equation. “Based on the 2002 petition, we were anticipating hundreds of thousands of acres of (the altered grass) on golf courses across the country.”

In a move that shocked some in Malheur County’s conservative agricultural community, Erstrom called in the Center for Biological Diversity, a fierce environmental group with an office in Portland best known for its work on endangered species issues. Erstrom hired Lori Ann Burd, director of the center’s environmental health program, as his personal attorney.

Scotts countered by bringing in Paulette Pyle, former director of Oregonians for Food and Shelter, a pro-herbicide agriculture lobbying group. Pyle, who declined to be interviewed, warned local residents against getting involved with the environmental group, said Erstrom and others.

Dan Anderson, a Malheur County rancher and official with the Oregon Farm Bureau, said the presence of the environmental group escalated tensions. He said the spread of the grass has been blown out of proportion by the critics.

“It’s true, the altered grass’s range now stretches for nearly 30 miles”, he said. But the plants are widely dispersed. “If you take every bentgrass in the county, you could put it on one quarter acre.”

As for Burd, she confirmed her group is considering suing the US Department of Agriculture over its handling of the altered grass and is highly critical of both the agency and Scotts. She said she’s skeptical that Scotts actually will end its effort to sell the new grass. Even if it does, Scotts’ patent on the technology expires in 2023, potentially paving the way for someone else to pick up the effort.

Firko, of the USDA, defended the agency’s handling of the case. “I think we did a great job getting the commitments we did from the company”, he said.

‘This GMO grass must be declared a pest, and eradicated’

In a Kansas City federal courtroom last year, Midwest corn growers launched a massive class-action lawsuit against Syngenta AG, claiming the company’s genetically modified corn contaminated their fields of non-GMO corn, costing them billions of dollars in international sales.

Similar shock waves reverberated through the Northwest wheat industry in 2013 when Asian buyers temporarily suspended purchases after genetically modified grain was detected in locally produced wheat. Officials were at a loss to explain how the contamination occurred.

In 2011, Bayer Crop Science paid $750 million to settle similar complaints filed by Southern US rice growers. In 2006, trace amounts of the genetically modified Liberty Link rice, developed by Bayer but at the time not approved for human consumption, were found in US long-grain rice stocks.

As consumers make their own decisions about genetically modified agricultural products, it is farmers dealing in non-GMO crops that claim the biggest financial losses due to inadvertent contamination.

Until Scotts’ modified grass, Oregon’s grass seed industry was a GMO-free zone, a great comfort to the many European and Asian customers who refused to buy genetically altered products. At the same time, Scotts was an important customer and partner for many of the state’s 1,500 growers.

Herb, owner of OreGro Seeds Inc., called upon state regulators and lawmakers to protect the industry. “We need to get out in front of this”, he said. “This is an invasive weed that in my opinion you can’t control.”

Jefferson County grass seed growers have already been dealing with contamination. The altered grass has at times sprouted in their fields of Kentucky bluegrass, requiring them to implement laborious seed cleaning processes.

Mike Weber, of Central Oregon Seeds in Madras, said local growers jumped at the chance to try growing the new grass. Scotts was and is a long-time customer and trusted partner. “The growers were enthused”, Weber said. “Maybe we rushed into things. If you asked us now whether we would ever want to get involved again in production of a GMO seed crop? The answer would be no! No way!”

Herb said the state needs to do what the feds refused to do: declare Scotts’ altered grass a plant pest and take steps to eradicate it once and for all.

But can it ever be contained?

Carol Mallory-Smith is a weed scientist at Oregon State University who’s been monitoring the new grass since its initial plantings. It was Mallory-Smith who first confirmed the altered grass had established in Malheur County.

As the issue began to heat up last year, she returned to Jefferson and Malheur counties to see for herself. She found the altered grass in both sites in just hours, which reinforced her view that while Scotts has decreased the number of plants, they are still present in significant volume.

“It was an ‘aha’ moment”, she said. She followed up with a letter to the US Department of Agriculture urging the agency not deregulate the grass, one of hundreds to do so.

“I always had the opinion that if they released it they would not be able to contain it.”

Jeff Manning is an investigative journalist at The Oregonian / Oregon Live, where he has worked since 1994, specialising in ‘watchdog reporting’ and corporate accountability. See more of his stories here.

This article was originally published by The Oregonian / Oregon Live and is reproduced here by kind permission.

Climate change and farming: let’s be part of the solution!

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“I think it’s time to change my farming system”, said my client. “A switch from dairy to rice paddies.”

Looking at his sodden fields, it wasn’t hard to imagine.

When you work with farmers, conversations about the weather are inevitable. Their livelihoods are intrinsically linked to the climate, and very often they and their animals are at the mercy of the elements.

As a consultant I work with long-term financial projections and business plans. In light of rising global temperatures it would be foolish to overlook the impact that climate change may have on my dairy farming clients in the dampness of West Wales.

The last decade has seen record-setting wet years for Britain, and the risk of flooding and the problems associated with sodden ground look likely to be an increasing challenge for farmers. The Environment Agency state that precipitation in the West of the country is expected to increase by up to 33%, a significant rise for an area that already experiences some of the highest rainfall in the UK.

When the fields are wet it becomes difficult to conserve forage for winter consumption. So in the future may bring problems with lack of good-quality silage, resulting in lower milk yields and poorer cow health.

Another problem on the horizon: the South of England, source of much of the straw that is used to feed and bed Welsh dairy herds, is expected to see drier, hotter weather. This too could negatively impact crop production, putting further pressure on cow nutrition.

Good news as well as bad

Conversely warmer weather, if coupled with sufficient dry periods and if access to fields is not limited, could lengthen the grazing season for grass-fed animals. This would aid sustainable agricultural practices and lower the cost of feeding concentrate feed. And that could be very helpful if there were shortages of imported feed due to desertification and drought overseas.

Warmer weather could also improve grass growth in upland areas, allowing these parts to be grazed with a mixture of species rather than just sheep. This would promote a more diverse range of flora and fauna – provided of course that species variety has not already been lost to climatic stress.

But warmer weather may bring problems too. The bluetongue virus first entered the UK in the mid-2000s. Although its spread cannot wholly be attributed to climate change, warmer weather could certainly have played a role in the proliferation of its Culicoides midge vector. Its emergence is significant because it heralds an age where more and more previously exotic diseases could become endemic in the UK cattle herd.

Vector-borne diseases are the obvious risk when considering that climate change could extend suitable habitats for various biting insects. It is also worth considering that warm, wet conditions are perfect for other already common pathogens and pests. The consequences of climate change could increase fly numbers, increasing the incidence rate of summer mastitis and fly-strike.

All of these health challenges could have serious impacts on herd management and performance. Bluetongue may be just the beginning in an unprecedented change in disease prevalence.

The one certainty – disruption

While paddy fields may be a step too far, climate change may bring the opportunity for some farmers to diversify into new enterprises, and force others to change their system. In some cases, this will be good for individual businesses and for certain sectors, for example an increase in domestic wine production or the lengthening of grazing seasons.

However, it will also necessitate a change in consumption patterns and an upheaval for farmers who have invested heavily in a particular sector.

Climate change overseas could potentially disrupt global supplies of grain, for both human and animal consumption. Droughts, like those seen recently in Australia, may hit important growing regions.

This would increase the price of cattle feed, again forcing farmers to move towards more extensive grass-based systems. In the long term this will provoke more sustainable production systems and possibly mitigate some of the damage associated with greenhouse gas emissions.

Making farming part of the solution

While agriculture is just one player in the system that has precipitated climate change, it has to take its share of the task of reducing its effects. Resource saving practices and renewable energy sources such as rainwater collection, solar panels, and wind turbines have already cropped up on farms and their use should increase.

Cattle can be fed in ways that minimise methane production. Regular soil sampling can optimise the use of nitrogen, potassium and phosphorous, reducing fertiliser bills and environmental impacts.

Innovative pasture management practices like ‘mob grazing’ on herbal leys can deepen plants’ root systems, sequestering carbon in soils, and capturing water and nutrients that would otherwise go to waste. The use of ‘companion planting’ and cover crops can bring similar benefits in arable farming systems, while improving soil structure and fertility, and raising resilience to changing conditions.

Climate change brings extreme challenges to the agricultural sector, along with opportunities that will be exploited by those who feel that the situation won’t be reversed in a hurry. The industry must take responsibility for its emissions and work with stakeholders to minimise them. At the individual farmer level there will be difficulties in adaption.

Farmers feed us all. My job will be to help them continue to do so.

Anna Bowen is an agricultural consultant working mostly with grass- based dairy systems. She has an MSc in Sustainable Agriculture and Food Security from the Royal Agricultural College and was the 2013 winner of the Guild of Agricultural Journalists / John Deere Training Award. Her blog can be found at askauntannie.com and covers a range of rural topics. Outside of work she helps on her family’s dairy farm and is a keen side saddle rider and athlete.

Metrology for Earth Observation and Climate (MetEOC-2) is a project led by the National Physical Laboratory (NPL) to reduce the measurement uncertainties of Earth observation satellites. The project is part of a broader movement in the European measurement science community to provide ever more accurate Earth observation data to climate scientists. Ultimately, this work will allow the development of more sophisticated climate models, which are used to inform policy and develop strategies to mitigate climate change.

As part of this project, NPL ran a competition encouraging 16 to 25-year-old ‘citizen scientists’ to write about how they think climate change will impact their life and what they think should be done to combat it. They were encouraged to present an evidence-based argument, written with passion and conviction.

This winning piece was chosen based on these qualities as well as its excellent reflection of the current scientific understanding of climate change and the importance of accurate measurement.