Historical deforestation in Madagascar may not be as bad as commonly believed

The long-held assumption that Madagascar has lost 90 percent of its forest cover due to fire and slash-and-burn agriculture may be overstated, argues new research published in Conservation Letters.

Analyzing 6000-year pollen records in four sites, Malika Virah-Sawmy of Oxford University found evidence that vegetation in southeast Madagascar has for millennia been a mosaic of forests, woodlands and savannas, rather than continuous forests as generally believed.

"Dry woodlands were once connected to humid forests in southeast Madagascar but disappeared in response to extreme dryness over the last 6000 years," Virah-Sawmy told mongabay.com. "By contrast, the humid forests were more resilient to these climatic shifts. Thus the current distribution of forest types in Madagascar may well be a function of climate change, rather than necessarily the product of human activities."

Virah-Sawmy nonetheless notes that deforestation on the California-sized island has been extensive, with forest cover falling from 27 percent in 1950 to around 16 percent in 2000. Deforestation today is primarily driven by subsistence agriculture and fuelwood collection by Madagascar's desperately poor rural communities, although industrial activities like mining are increasingly a threat in key forest areas.

Virah-Sawmy says the findings demonstrate the importance of conserving Madagascar's remaining ecosystems as a buffer against climate change.

"These remnant forest patches have served as critical reservoirs for biodiversity during past climate shifts, but today they are at risk from mining and local subsistence activities," she explained. "Therefore conservationists must make these forest remnants a top priority."

Madagascar is famous for its biodiversity — roughly 90 percent of its plants and animals are found nowhere else on the planet. Madagascar is home to such evolutionary oddities as the fossa, a carnivorous mammal that looks like a cross between a puma and a dog but is closely related to the mongoose; the indri, a cat-sized lemur that leaps from tree to tree with ease and sings whale-like songs; the sifaka, a lemur, that curses but dances like a ballet performer; and the streaked tenrec, a spiny yellow and black insectivore that resembles a miniature hedgehog and makes grinding-chirping noises when threatened. It has baobab trees, which look like they've been planted upside down; the rosy periwinkle, a delicate flower used to cure pediatric leukemia and Hogkin's disease; and an entire desert ecosystem consisting of just spiny plants. But Madagascar's wildlife and ecosystems have been significantly impacted since the arrival of humans some 2000 years ago from southeast Asia. The island lost all of its mega fauna — including giant species of birds, lemurs, and carnivores — and vast tracts of land have been altered by fire and conversion for agriculture and pasture.

Malika Virah-Sawmy. Ecosystem management in Madagascar. Conservation Letters. Published Online: Jun 3 2009. DOI: 10.1111/j.1755-263X.2009.00066.x


Rhett A. Butler, mongabay.com
August 12, 2009

Maputo Summit: A final solution for Madagascar’s political crisis

Andry Rajoelina, Marc Ravalomanana, Didier Ratsiraka and Albert Zafy, leaders of four major political parties in Madagascar began roundtable negotiations Wednesday in Maputo, Mozambique at the Southern African Development Community summit on the crisis in Madagascar. The objective of the summit is to advocate for an end to hostilities that have rocked the island since the beginning of the year through signing of a charter. They also wish to encourage the transitional government to hold new elections in the earliest possible time.
Whilst many political analysts believe that this is a crucial moment, others think that this meeting is possibly the last chance to heave Madagascar out of the political crisis that has rocked the country’s foundations since the overthrow of President Marc Ravalomanana, last March. Under the auspices of the International Contact Group (ICG) headed by former Mozambican President Joachim Chissano, the heads of the four main Malagasy political parties met Wednesday in Maputo, the Mozambican capital, for a three-day summit. For the first time, Andry Rajoelina (the current leader of Madagascar) and his rival Marc Ravalomanana (now in exile in South Africa), Didier Ratsiraka (ousted by Marc Ravalomanana after a very controversial presidential election in 2002) and former President Albert Zafy, are meeting to negotiate at first hand.

"This meeting is very important because the crisis in which we live today in Madagascar is very grave. We hope to find a solution at the Maputo meeting," Albert Zafy said on Tuesday.

Indeed, since the forced departure of Marc Ravolomanana, Madagascar has returned to the cycle of violence, which has seemingly become the trademark for leadership change since 2002. In defiance of an administrative ban, supporters of deposed president Ravalomanana, defining themselves as "legal defenders of the rule of law", show up to demonstrate in the capital, Antananarivo, almost on daily basis. Andry Rajoelina, former mayor of the city and now leader of the country, has not been able to garner the necessary majority support to help calm tensions despite a general support from the military who installed him as president of the High Transition Authority.

The outcome; hundreds dead coupled with a harsh economic downturn. The new power has carried out dozens of arrests within the support base of Mr. Ravolomanana. It is therefore from his prison cell that Manandafy Rakotonirina, nominated as "prime minister" by Ravalomanana from his exile base in South Africa, is expected to monitor the developments of the Maputo summit.

The international community

It is in this light that the International Contact Group (ICG), established by the international community, began a series of discussions with representatives of the four main Malagasy political parties in April. To bring the together under the same umbrella, Joachim Chissano, President of ICG, designated by the Southern Africa Development Community (SADC) got strong backing from Tiébilé Dramé, United Nations representative, Ablassé Ouédraogo, representative of the African Union and Edem Kodjo, representative of the Organisation internationale de la Francophonie. Together they worked to invite Marc Ravolomanana and Andry Rajoelina, the two main players in the current Malagasy crisis, as well as Didier Ratsiraka and Albert Zafy, two former presidents.

The successful openining of the Maputo summit is as a result of these discussions. The different parties should work on five major issues: "peaceful transition, amnesty, transitional leader, a consensus government and the return of President Ravalomanana," says Tiébilé Drame.

If successful, the Maputo summit would allow Madagascar to emerge from the crippling crisis. "It is now up to the Malagasy political stakeholders to make the concessions necessary to conclude the Malagasy transitional charter," said Drame. The charter is expected to facilitate a smooth ride towards a new presidential election, in which each party may present their own candidate.

According to Didier Ratsiraka, after it is signed, the charter should be applied and respected by all. It should be in "the best interests of the nation and not for partisan or selfish interests", Mr. Ratsiraka said. Mr. Rajoelina also believes that the search for consensus should override resentment. "Negotiating with Mr. Ravalomanana, or Admiral Didier Ratsiraka, or Professor Albert Zafy is not a problem, as long as the subject focuses on the future of Madagascar," Rajoelina said, shortly before leaving for the summit in Maputo.

If the summit fails its core purpose, the political crisis could worsen and contribute to Madagascar’s international isolation.


Top Malagasy politicians meet face to face

Daewoo Logistics Corp

Daewoo Logistics Corp. has established "PT Daewoo Logistics Indonesia" in Indonesia for partaking in such natural resource development as Palm Plantation, Gum Plantation, Corn Farm, Coal Mining, CDM(Clean Development Mechanism) business.

Through investing huge investment for Palm Oil, recognized as leading future food & energy source, PT Daewoo Logistics is trying to secure a competitive edge at the leading group in the market and intending to maximize profits in the development. In addition, PT Daewoo Logistics plans to establish Palm Oil manufacturing factory at the sight, scheming the vertical integration of planting and manufacturing of the natural resource.


Daewoo Logistics Corp. will participate in Gum Tree Plantation Project with the scope of 500,000 ha project agreed upon between Korean and Indonesian government.

PT Daewoo Logistics Indonesia in Indonesia is pursuing a Corn Farm Development plan to secure & develop a major food resource. Test Cultivation has been successfully finished. PT Daewoo Logistics Indonesia in Indonesia is now ready for mass production. And it plans to expand the cultivation area substantially with time.


CDM is the carbon dioxide emission regular system with effect of the Kyoto Protocol in 2005, and now it creates new business criteria of spotlight with the launching of the National Carbon Market in 2007. Through its Indonesia branch, DWL is setting up the right of land for forestation and other related project.

Madagascar, Daewoo and neocolonialism

What have Madagascar and South Korea got in common? On the face of it, nothing. The former is a country in development, the second is an economic power. One is in Africa, the other in Asia. The Malagasy have uncontaminated land. The Koreans lack cultivatable land. Madagascar has 28 inhabitants per square kilometre. South Korea has 493 inhabitants per square kilometre.

Two countries that are different from each other but that today have Daewoo in common as well as neocolonialism without capital. Tronchetti and Colaninno have been leading the way even abroad.
Once upon a time they gifted necklaces and shining stones to indigenous people in exchange for every type of good. Today not even that.
South Korea needs corn, palm oil and agricultural goods. Madagascar has land. Daewoo signed an agreement with the Malagasy government. The handing over of 1.3 million hectares of cultivatable land for 99 years. More than half the cultivatable land in the country (2.5 million hectares).

It’s all for FREE. In exchange, Daewoo is committed to taking on the Malagasy as peasants.

According to Mr Hong, a Daewoo manager: “It is land that is totally not developed, and uncontaminated. And we will provide work and make it cultivatable, and this is good for Madagascar.”
The produce of the 1.3 million hectares from Madagascar will be sent to South Korea for its needs and it is probable that not even a cob of maize will remain for the Malagasy.
Madagascar is part of the World Food Programme from which it receives food for 600,000 people who live at subsistence level. People on the bread line to which can be added thousands of small farmers and their families.

The 1.3 million hectares are mostly forests. They will be destroyed with severe effects on the climate. The Malagasy peasant has his land taken away from him, the food is sent abroad, his environment is destroyed. In exchange he can work for Daewoo. What luck!
Those who have resources have no money. Those who have money, buy resources. But what is money? Where does it come from? Guess. From the resources of those without money.
Africa has the greatest amount of uncultivated fertile land in the world and the greatest number of starving people. There must be a reason.

Titanium dioxide a ‘good business to be in’

Rio Tinto’s titanium dioxide-ilmenite business extends back to the 1950s and has been part of its long-standing strategy within the industrial minerals area.

The company sees titanium dioxide as a good business to be in.

It is a low-cost producer and roughly produces a third of the world’s titanium dioxide feedstock capacity.

Rio Tinto recovers more than a third of the sector’s cash flows and net incomes, which is consistent with the company’s strategy.

The company sees its titanium dioxide business as continuing to develop for decades.

In 1989, Rio Tinto acquired Quebec Iron & Titanium (QIT), which for long has been the leading producer of titanium oxide feedstocks for the pigment industry. About 95% of titanium oxide goes into paints and plastics as pigment.

During the course of the 1950s, QIT came up with a new process for producing a feedstock, referred to as slag, for the pigment sector.

During the 1960s, regulations forbade the use of lead carbonate in paint and at that time titanium dioxide, which is benign to the human body and nonhazardous, became the mineral of choice in paints and products that enter the body, like toothpaste.

From the 1960s onwards, the use of titanium dioxide for the purpose of pigmentation has continued to grow.

During the course of the 1970s, QIT identified ilmenite sands in South Africa, near Richards Bay, which, at that stage, had been generally undeveloped.

QIT established Richards Bay Minerals and brought in the then South African mining company, Gencor, which evolved into BHP Billiton, which holds 50% of Richards Bay Minerals.

Richards Bay Minerals has both a sand-mining process and it also has ilmenite smelting facilities.

The sands in South Africa and Madagascar, where Rio Tinto will be producing ilmenite before the end of the year, have small black ilmenite particles, which represent titanium and iron in an oxide form.

The particles of ilmenite are melted, the oxygen is removed, as much iron as possible recovered and a titanium dioxide product is produced.

Generally, the ilmenite contains between 85% and 94% titanium dioxide.

That goes into the chemicals industry to produce a pure titanium dioxide, which then goes into the paint sector.

QIT obtains ilmenite from rock containing 3% to 35% titanium dioxide. The ilmenite at Richards Bay Minerals is about 42% titanium dioxide

What makes QIT Madagascar Minerals (QMM), in Madagascar, unique is its high quality at 60% titanium dioxide.

This high quality also means that there are fewer residues when this titanium dioxide is used in paint making.

Generally, paint factories are in industrialised areas and are limited by permit conditions for their residue produced.

There is thus a great expansion in value of use beyond the increase in grade.

QMM was thus identified in the 1980s as an attractive resource and began to develop slowly over a period of 20 years, along with biodiversity science around operating in Madagascar, a sensitive location for biodiversity.

For the past ten years, Rio Tinto has been establishing best biodiversity practice on Madaga-scar.

Editor: Shannon O’Donnell


By: Martin Creamer

Daewoo Corn

I would like to raise another point that may be worth considering (putting all
the environmental problems that may result from this deal aside for awhile):

I might have been misinformed but from what I understand, the corn planted in
these lands are not going to be destined for local consumption alone. If this
is true, Madagascar may benefit from this deal in the short term (e.g. job
creation, reduced independence from the imported corn) since we are not using
the land right now (I assume this is the case and that we are not taking fertile
land away from people or cut forests to grow these corns and palm trees). The
question is, what will happen when we will have the technology in the future and
will need the land to grow our own food to meet our demands?

By that time, these lands will be so used up and will not be fertile anymore.
We also need to be aware that this is how some countries try to use
irreplaceable resources from other countries to help sustain the consumption
need of their large populations. These countries are often so populated that
they do not have enough land and water anymore to grow food and feed their
people. That is why they are investing in finding these resources elsewhere.

We have two main issues at hand: the need to curtail this crushing poverty and
the need to leave something behind for the next generations. In my opinion, this
deal is not necessarily bad or good. We just need to make sure that it is
carefully studied, both the short term and long terms costs and benefits, and
not only from an economic standpoint. We need to internalize potential costs of
restoring the ecosystems that may be affected by this project.

Both the efforts of those who try to do something to deal with our crushing
poverty and those of who are concerned about the long term environmental and
economic impacts of these projects are commendable. I do not think we can
simplify this into a wrong and right issue. To just close our eyes and let
people die in poverty would be cruel. But also, to bargain the life of the next
generations just for the sake of short term economic benefits would be selfish.


But this does not have to be a dichotomy. We just need a sense of balance
between both. The key is: where that balance should be? This is a difficult
question but one way to get there is to get everyone involved and be open to all
ideas. Then, collectively decide what that balance should represent. Only in
this way, we can make sure that nothing is overlooked and that we know exactly
what we get into when we make that decision...whatever that is.

Anyway, just sharing thoughts on this issue,

Eric

Daewoo

Thank you for the interesting reactions. It just shows how much we would stand for the benefit of this beloved country of ours. I would like to congratulate the reaction of our President; if it is got into effect. I think that he should need further assistance and voice out from Malagasy development agents.

In fact, it seems that we are too quick to be lured by "FDI" Foreign Direct Investments. We should ask one very important question: why all of these FDI are rushing to get land in our country and mostly and only lands??? And the corollary questions behind it: what are the status of land market in those countries? That is to say how much money would it take them to acquire these vast tracks of land? Could they access and possess such vast track of land? How are the land taxation systems in those countries? What advantages are we offered to them that they would either find in their own countries of origin?

How many of these so called FDI bring about positive changes to our country and our fellow citizens? Take an objective look at Tolagnaro and Moramanga? Are we capable of monitoring and conter act the perverse effects of such land /ressources acquisition?

In fact, in my opinion, these just demonstrate the outstanding needs for investments – private investments in agricultural sector and natural resource management in Madagascar. It just demonstrates that there is market s out there that needs to be responded to for our small farmers to earn a better income and to improve their livelihoods. I totally agree that there is a need to add value and cultivate these vast land tracks. Based on best available statistics, there are over 35 million hectares of uncultivated lands in Madagascar “tanety lava misy hisainana” and year in and year out subject to wildfire because that is the cheapest tools for our rural people to manage bushes and have a meager forage for rooming zebu herd. These lands need hard investments and indeed techniques and technologies to value them. However, I am telling you I am dreadfully worried that someday we will all wake up in reservation like the Native Americans. European have used and abused their land but both in North and South America? Native Americans are left to marginal land and more and more pushed to these marginal lands. They remain in the best picture just hand laborers that have hard time to join the two ends. Adding to that we have other big private interest from other parts of the World, China, India, Japanese, Korean, Arabs, and still the European...

These international private investors have money to be used and get the best and outstanding return… They are here for that. They are not to socialize with us and do our proper development, they are once again here, we need to realize it, to earn money and if that could be done big bangs in short term... the risks are too high and impromptus…

My recommendations:
Yes we need FDI, but these private entities should not access more than 10% of land tracks. That would be as vast as the equivalent of 3.5 Millions hectares.
They must be required to set aside hard funds for the public – government and/or private entities the bank to be used as development and investment funds by our poor multitude small farmers and/or our young people striving to establish Agricultural SME to produce goods that they seeks and/or all Private SME in civil engineerings to improve productive infrastructures such as roads dams and irrigation systems. That would quickly reverse the disinvestment in our rural areas from sustainable funding. Given that private investment are the major sources of sustainable funding. Our private SME and agriculturalist need to produce and make a profit if not they are out of business, however, they need a lift from our government. I would state here a comment from a french technical assistant - how could Madagascar dare to think about development while 82% of its population have not access to any tangible assistance? Just compare, in Europe and US investment interest rate are at less than 5% how much is it here, between 24 to 43%. There is no way Madagascar would ever overcame its poverty. Indeed and unfortunately, you are making richer and richer the banks and misfit foreigners that seek easy fortunes in your country.

Finally, there is a need for open process to establish and finalize the territory management plan. If not and believe me these FDI, will someday wake up with social unrest… just remind yourself the “OPKS”…

Adele Rahelimihaja [mailto:rahelimihaja2003@yahoo.com]

The Breadbasket of South Korea: Madagascar

Tenant farming was popular in rural America until the Dust Bowl years of the Depression, but the practice is making a comeback on an epic scale in much of Africa. This time, however, the "tenants" are not simply family farmers down on their luck and willing to work land they don't own; they're major international corporations and governments looking to compensate for shortages of arable land in their own countries by setting up massive industrial farms abroad. South Korea's Daewoo Logistics this week announced it had negotiated a 99-year lease on some 3.2 million acres of farmland on the dirt-poor tropical island of Madagascar, off southern Africa's Indian Ocean coast. That's nearly half of Madagascar's arable land, according to the U.N.'s Food and Agricultural Organization, and Daewoo plans to put about three quarters of it under corn. The remainder will be used to produce palm oil — a key commodity for the global biofuels market.

A Daewoo manager, Hong Jong-wan, told the Financial Times that the crops would "ensure our food security," and would use "totally undeveloped land which had been left untouched." Land is scarce and expensive in South Korea, which makes it the world's third-largest importer of corn. Daewoo says the Madagascar land will be leased for a price of around $12 an acre, which is a fraction of the price for farmland in the corporation's home country.

Not everyone is convinced that Daewoo's move is the most effective way of promoting food security. Riots have shaken dozens of countries across the world over the past year as poor people have found themselves unable to pay the rocketing prices for staples such as rice, corn and sugar. The U.N.'s World Food Program runs school-feeding schemes for children in Madagascar, where about 70% of the country's 20 million people live below the poverty line. The island's residents also rely on WFP emergency food relief programs because of the frequency with which they're struck by cyclones and droughts. Given those hardships, the prospect of a corporate giant growing hundreds of tons of food to be consumed by people and animals in Korea raises "ethical concerns," says David Hallam, head of the FAO'S Trade Policy Service in Rome. "If we have another world food crisis, and you have a poor country where food is produced by foreign investors, and then repatriated, that is ethically and political tricky," Hallam warns.

Those ethical quandaries have not prompted restraint on the part of other outside investors moving into Africa to exploit its agricultural potential. Several European companies have leased land during the past two years to grow crops for food and biofuels (although on a far smaller scale than Daewoo plans in Madagascar) including the British company Sun Biofuels, which is planting biofuel crops in Ethiopia, Mozambique and Tanzania.

Africa's fertile soil certainly appeals to the countries of the oil-rich Persian Gulf, whose vast deserts force them to import most of their food. "The Gulf states have an incredible surplus to invest and now that the old economies are facing recession they are looking at Africa," says Marie Bos, an analyst at the Gulf Research Center in Dubai. Although such wealthy countries as South Korea and the Gulf states are easily able to pay for food imports, this turmoil on global food markets may have increased the incentive for food-importing countries to secure their own sources of supply.

"[Food-importing countries] have lost trust in trade because of the price crisis this year," says Joachim von Braun, director of the International Policy Food Research Institute in Washington.

For African governments, the incentive to sign deals such as the one between Madagascar and Daewoo is equally clear. Millions of African farmers lack money for fertilizer, basic tools, fuel and transport infrastructure to efficiently grow crops get them to market. While international organizations have plowed billions into health and education, agriculture in Africa has lagged badly, hugely exacerbating the food crisis of the past year. "These governments are desperate to get capital into agriculture," says von Braun, who believes the drive by giant companies to lock up land deals could benefit poor African countries whose governments negotiate wisely. Although Daewoo plans to export the yield of the land it is leasing in Madagascar, it plans to invest about $6 billion over the next 20 years to build the port facilities, roads, power-plants and irrigation systems necessary to support its agribusiness there, and that will create jobs thousands of jobs for Madagascar's unemployed. Jobs will help the people of Madagascar earn the money to buy their own food — even if it is imported.


By Vivienne Walt

Argentinean priest receives award for work with the poor in Madagascar

Vatican City, Nov 18, 2008 / 05:54 pm (CNA).- The president of the Pontifical Council for Justice and Peace, Cardinal Renato Martino, has announced the recipients of the St. Matthew Foundation Awards for outstanding service in solidarity and social justice. One of the recipients this year is the Argentinean Fr. Pedro Opeka, who has worked with the poor in Madagascar since 1989.

The St. Matthew Foundation was created in memory of the late Vietnamese Cardinal Francois Xavier Van Thuan, who died in 2002, and whose cause for beatification is underway. The foundation promotes initiatives that encourage the presence of the Church in society through study and the spreading of the Church’s social doctrine.

Father Opeka’s life



The AICA news agency reports that Argentinean writer Jesus Silveyra, in his book “A Trip to Hope,” written after visiting Madagascar, says the following about Father Opeka:

He was ordained a priest in 1975 and returned to the African island to be pastor of the parish of Vagaindrano Mission in the southeastern jungle of the island. For fifteen years he was devoted to the education of hundreds of young people. As he became accustomed to living among the poor and the needy, and because of the inhospitable nature of the region, he contracted various stomach ailments, as well as malaria.

In 1989, with the help of many of his former university students who had been taught by him, he founded the Akamasoa Humanitarian Association, which in Malgache means, “good friends,” in order to serve the marginalized and excluded.

Silveyra explains that after sixteen years of service, some 17,000 people live in the five villages created by the Association; 8,500 children attend its schools; and 3,500 people are employed by the Association.

“Each town has a food bank and has opened a hospital. More than 200,000 people (1.5% of the country’s entire population) have passed through its Support Center, where they have received temporary assistance and guidance in redirecting their lives,” Silveyra wrote.

South Korea's Daewoo to grow corn in Madagascar

SEOUL (Reuters) - South Korea' S Daewoo Logistics will seedling corn in Madagascar, has company official said one Tuesday, with has length-term aim to replaces more than half the corn it currently imports from mostly the United States.

The move to develop year area off Madagascar larger than Qatar follows has smaller deal in July to seedling corn in Indonesia and reflects the region' S latest push to lock in cropland abroad.

Soaring food prices earlier this year and has shortage off farm Land At home has prompted several countries, including Saudi Arabia, Kuwait, Malaysia and South Korea to seek agricultural assets abroad to grow crops.

Daewoo Logistics has secured rights in Madagascar to develop 1.3 hectares million. It plans to seedling 1 hectares million in the western leaves off the country with corn and 300,000 hectares in the east will Be dedicated to oil palm planting, said Shin Dong-hyun, who is in load off the project for the company.

“We plan to start planting corn one 2,000 hectares next year and aim to produce around 5 tons off corn per hectare the following year,” He said.

Plane According to the, Daewoo will produce 10,000 tons off corn in 2010, which will Be worth $2 million At current off importation prices U.S. corn to South Korea off around $200 per ton.

Daewoo -- which plans to directly manages its plantations and uses ploughing from South Africa -- would develop the cropland over 15 years and may produce around 5 tons million off corn year, more than half off South Korea' S year corn needs and 5 bore the off total corn trade.

The U.S. is the biggest corn to export supplying nap 60 bore to the world markets.

SHARE OFF HAS TREND

The move by Daewoo Logistics follows similar deals by other countries shorts off arable Land.

Saudi Arabia' S Savola Group, the world' S largest producer off branded edible oil, wants to buy minority shares in agribusiness firms in Sudan, Egypt and Ukraine while Malaysia' S biggest palm to plant is looking to develop plantations in Africa.

Kuwait has leased rice fields in Cambodia and plans to importation food from the Asian country which has plenty off ideal Land for growing food crops.

South Korea is the world' S third-largest corn to import and connect to heavily one imports to meet its corn requirements.

“We plan to improve productivity to produce 10 tons off corn per hectare drank it will take quite has long time to reach that level,” Shin said.

Corn, which is mainly used in making feed for animals and poultry, has lost half off its been worth since peaking in June when floods threatened crops in the signal growing U.S. Midwest area.

Goal analysts expect the prices to bounce back in 2009 aces farmers cut production due to lower prices and growing uses corn in making ethanol off.

Daewoo is talking to potential investor partners such ace South Korea' S biggest feedmaker Nonghyup Feed, with which it agreed in July to jointly develop has 20,000 hectare corn farm in Kalimantan in Indonesia starting in 2009.

Goal yew the negotiations fail, Daewoo plans to tap overseas partners such ace Clouded National Cereals, Oils & Foodstuffs Imports and Exports Corp (COFCO) and Thailand' S CP Group, Shin said.

© Reuters 2008. All Rights Reserved. | Learn more Reuters butt

West Is in Talks on Credit to Aid Poorer Nations

WASHINGTON — With the financial crisis engulfing developing countries from Latin America to Central Europe, raising the specter of market panic and even social unrest, Western officials are weighing coordinated action to try to stabilize these economies.

The International Monetary Fund, which is in negotiations with several countries to provide emergency loans, is also working to arrange a huge credit line that would allow other countries desperate for foreign capital to borrow dollars, according to several officials.

The list of countries under threat is growing by the day, and now includes such emerging-market stalwarts as Brazil, South Africa and Turkey. They have become collateral damage in a crisis that began in the American subprime housing market.

The fast-growing economies of the developing world depend on money from Western banks to build factories, buy machinery and export goods to the United States and Europe. When those banks stop lending and the money dries up, as it has in recent weeks, investor confidence vanishes and the countries suddenly find themselves in crisis.

Details of the arrangement are still being worked out, but it could be supported by Japan and several oil-producing countries, a fund official said. The fund has not yet approached the Federal Reserve, according to officials, although the Treasury Department has expressed interest.

Two weeks ago, the Fed set up unlimited swap agreements with the European Central Bank, the Bank of England and other central banks to ease the severe credit turmoil in Western Europe.

This time, the focus would be on emerging markets, with good economic records, which are having trouble borrowing dollars.

“There needs to be some action to help these countries,” said Neil Dougall, chief economist for emerging markets at Dresdner Kleinwort in London. “There has been a severe drying up of liquidity there, and it is early days. The tsunami has only just reached their shores.”

The monetary fund has about $250 billion available for all types of loans. That could be supplemented by funds from central banks, officials said, though they dismissed a rumor that circled the globe on Thursday that the fund was arranging a $1 trillion credit line.

Whatever the amount ultimately pledged, it would represent the most concerted international response yet to what economists warn could be a volatile, dangerous new phase in the crisis.

“We view it seriously,” said Clay Lowery, assistant Treasury secretary for international affairs. “There are a lot of emerging markets that have come under increased pressure recently.”

Unlike in the United States and Western Europe, banks in these countries bought few of the mortgage-related securities that undermined the financial system. But as banks stopped lending — either to each other or anyone else — that credit squeeze has hit emerging markets hard.

Stock markets and currencies have plunged, foreign capital has fled, trade flows have slowed, and in an echo of past financial crises, investors have begun to worry about governments’ defaulting. Many have heavy debts in foreign currencies, but the cost of repaying that debt has increased as their home currencies’ values have declined. To compensate, they are seeking dollars to repay the loans.

On the list of endangered countries, economists put: Hungary, Russia, Ukraine, Pakistan, Turkey, South Africa, Argentina, Iceland, Estonia, Latvia, Lithuania, Romania and Bulgaria.

The economic woes of these countries could reverberate back to the United States, experts say, because many of them are trading partners, at a time when exports are one of the few bright spots in the American economy.

“Our whole economic prospects are going to turn on whether the emerging markets keep growing,” said C. Fred Bergsten, the director of the Peterson Institute for International Economics. “It could be the difference between a moderate downturn and a deep downturn.”

The crisis has been indiscriminate in its victims. It has worsened the problems in countries like Iceland, Ukraine and Argentina, which had festering economic or political troubles. Argentina, in particular, has drawn criticism from economists for its decision this week to nationalize the country’s private pension funds, worth $30 billion.

But the turmoil also hit South Africa and Turkey, which economists had praised for their sound policies.

Among the earliest victims have been countries, like Hungary, where companies and even individuals borrowed heavily in foreign currencies. As credit dried up and their local currencies plummeted, they have been unable to roll over those loans. In even healthy countries, near panic has ensued — leaving people bewildered by the sudden reversal in their fortunes.

“We were not an obvious target,” said Peter Akos Bod, a former governor of the Hungarian central bank. “I could not see major problems in Hungary’s economic outlook. But there is sort of a panic.”

Economists say the inability to borrow foreign currency is dangerous because it can quickly turn healthy economies into sick ones, as companies and even potentially governments default on loans.

“Right now, it’s a liquidity problem, but if it goes on long enough, it can become a solvency problem,” said Yusuke Horiguchi, the chief economist of the Institute for International Finance.

Mr. Horiguchi said that developed economies bear responsibility for easing this problem, because it stems from the crisis in their banking system.

Indeed, the financial rescue packages announced by the United States and European countries have aggravated the problem. Safeguards like attempts to stabilize their banks and government guarantees behind some bank lending have made banks in developing countries look less secure.

In a gesture to the precarious situation, President Bush made an unscheduled appearance this month at a meeting of finance ministers from the Group of 20 countries, organized by the Treasury secretary, Henry M. Paulson Jr. Mr. Bush also agreed to convene an emergency meeting of the group on Nov. 15 to develop responses to the crisis.

Beyond reassuring words, there is a limit to what the United States can do to solve the problems of these countries. Mr. Paulson is overseeing the largest economic rescue program since the Great Depression. He cannot devote anywhere near the amount of time that a predecessor, Robert E. Rubin, devoted to the Asian and Mexican crises during the Clinton administration.

“The most important thing the United States can do is stabilize its financial system,” Mr. Lowery, of the Treasury, said. “The other thing we can do is to support the actions taken by emerging-market countries.”

On Thursday, the central banks of Brazil and Mexico intervened heavily in the foreign exchange market to support their currencies. Hungary obtained a loan of up to 5 billion euros from the European Central Bank.

And Hungary — along with Iceland, Pakistan, Belarus and Ukraine — has overcome deep reluctance and begun negotiations with the International Monetary Fund for emergency loans. Countries are traditionally averse to such loans because they come with strict conditions.

“I’m totally unhappy about having to borrow from the I.M.F.,” Mr. Akos Bod, the Hungarian central banker, said. “I thought in my lifetime, we would never have to borrow from the I.M.F.”

As the largest shareholder in the fund, the United States can exert influence on its policies. Administration officials said the highest-ranking American at the fund, John Lipsky, the first deputy managing director, would lead the fund’s effort to extend loans to a broader range of countries.

The idea, they said, was proposed at a board meeting on Wednesday by Dominique Strauss-Kahn, the French managing director, who is the subject of an internal investigation into whether he abused his power in conducting a brief affair with a worker at the fund.

Economists praised the idea of giving emerging markets access to dollars. But the key to the effort’s success, they said, is whether the fund can line up support from central banks.

“The I.M.F. has only $200 billion of its own resources, which is not enough collateral,” Simon Johnson, a former chief economist of the fund, said. “It would be spectacular if they could pull this off.”


By MARK LANDLER
Published: October 23, 2008