From a Network of Public Silos to International Food Speculation

In the last months we have spent many hours traveling across fields and towns throughout the grain production areas of Catalonia and Aragón in Spain. During this fieldwork we have come across many empty and abandoned silos and granaries, which got us wondering about the changes in agri/culture that have lead to their fall into disuse. These silos are typically huge concrete constructions (frequently being the highest buildings in the area) and are located in producer cooperatives or in villages. They are also now often adorned with magnificent stork nests.

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In the Spanish State, there is the Grupo de Investigación Silos y Graneros (a research group on silos and granaries) devoted to studying these constructions as rural historical heritage. This group promotes the restoration of these buildings as both an opportunity for creating new uses for them (e.g. as storage spaces for different products or as public equipment, business incubators or museums) and thus revitalising the local economy of rural areas.

The Spanish network of silos and granaries was created during the Franco dictatorship, with the aim of storing the grain harvest and thus, assuring its supply for the population and alleviating market irregularities by guaranteeing prices for farmers. A total of 663 silos and 275 granaries were built between 1945 and 1986. They were built to shorten the distances between farmers and storage facilities and between storage facilities and flour mills. At the beginning of their existence, these Spanish silos were only storing wheat, but later were also used to store other grains and legumes. During those initial years, a monopoly of silos and granaries was established with the idea that the Franco regime could control both grain production and consumption. Several years later, this collection of storage infrastructures was renamed to the National Network of Silos and Granaries and was reformed to manage the national stocks. The inclusion of Spain into the European Union in 1986 marked the beginning of the decline of these public silos and the transfer of their management responsibilities to regional governments.

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The current situation shows an almost complete abandonment of the public silos and granaries (with only 142 of them still active). The old network of public silos has now been replaced by the construction of new private silos and granaries owned by multinational companies operating within the international commodities market. As one of our interviewees explained, not only has the cereal been privatised, but also now the control of the information regarding grain stock levels. This has catalysed certain speculation processes dominated by an oligopoly of companies connected to investment and pension funds. According to Olivier de Schutter, the special rapporteur of the United Nations for the Right to Food, these companies are behind the speculative bubble that resulted in the devastating food crises of 2007/2008 and 2010/2011. In fact, international agricultural prices doubled during the period between 2002 and 2013.

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Price volatility relates to multiple complex factors, such as the rise in demand for resources from the so-called emerging economies and from changing political situations (both in the short term but also linked to long term factors such as climate change). Factors such as the interdependence of energy and agricultural prices, and the expansion of agrofuels, have made speculation by investment funds possible, which have increasingly started to shift their investments into the agricultural sector after the crisis in the real estate market.

As a response to this situation, the European Parliament agreed to reform the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID) that regulates the financial services in the markets of the European Union. The new agreement aims, among other goals, to limit speculation on raw materials by investors and to impose sanctions for breaches. These aspects were positively viewed by a number of civil society organisations seeking to limit food speculation. However, many other aspects of the Directive remain highly criticised, such as the designation of member states as the competent bodies to set these limits, despite the threat of downward competition. It is also uncertain what the impact of these agreements will be if the TTIP (Transatlantic Trade and Investment Partnership) is approved. If this happens, it may involve a weakening of trade and investment regulations as well as a lifting of obstacles to food speculation by the financial sector.

These abandoned silos therefore tell us interesting stories about the shifting culture of agriculture over time and its increasing entanglement in the investment and speculation practices of international actors and markets.

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