Argentina v ABCD Four

The world's four largest grain traders, responsible for the vast majority of global corn, soya and wheat trading and processing, have been accused of large-scale tax evasion in a landmark series of cases being brought against them by the Argentinian government.

In an interview with the Guardian, Ricardo Echegaray, the head of Afip, the country's revenue and customs service, has given a detailed account of the charges his department is bringing against ADM, Bunge, Cargill and Dreyfus.

"These companies have gone into criminality," Echegaray said. "2008 was when agricultural commodities prices spiked and was the best year for them in prices, yet we could see that the companies with the biggest sales showed very little profit in this country."

The Guardian has learned from separate sources that Afip is seeking to claim $476m (£290m) for what it says are unpaid tax and duties from Bunge, $252m from Cargill and $140m from Dreyfus. The companies have all denied all the allegations and have said they will defend themselves vigorously.

With the global food system and who controls it under intense scrutiny in recent weeks, thanks to record prices, the legal battle between Afip and the "ABCD four", as they are known, has taken on heightened significance.

Oxfam, in a report earlier this week, warned of spiralling prices and a huge increase in global hunger over the next two decades, and said that corporate concentration in the global food trade was a structural flaw in the system.

Echegaray said he had begun investigating Argentina's large business taxpayers towards the end of 2008, cross-checking information given to his authorities with that from other countries where their exports were destined, by making use of tax information exchange treaties – some of which have been newly signed. He also cross-checked declarations made to Argentinian customs with corporate income tax returns.

He said he had evidence from his detailed inquiry that all four traders had submitted false declarations of sales and routed profits through tax havens or their headquarters, in contravention of Argentinian tax law.

He also alleged they had on occasion used phantom firms to buy grain. He further alleged that they had inflated costs in Argentina to reduce taxable profits or claim tax credits there.

The Afip inquiry has focused on the traders' sales to Uruguay, among other low-tax jurisdictions.

Echegaray said Bunge had set up an office in the tax-free zone of Montevideo through which it began routing its exports after 2007, from which point it declared no gains in Argentina. He alleged his checks had revealed that Bunge employed only a handful of people in Uruguay's capital, and that it had no real imports or exports from that office other than small items for those staff. Bunge was expelled from the Argentine exporters' register last week.

Bunge denied the allegations absolutely and was adamant it had broken no laws or tax rules. "We believe that we have done nothing wrong and that our past tax payments are complete. This is an issue that is not unique to Bunge, or even our industry. We will continue to take the appropriate legal steps to defend ourselves," it said in a statement.

Echegaray alleged that Cargill had also used Uruguay and Swiss subsidiaries to evade taxes in Argentina. Cargill, ADM and Dreyfus were suspended from the exporters' register by the government earlier this year as a result of the investigation.

Cargill said: "All the allegations made about Cargill are false. Cargill complies with all Argentine tax and customs regulations. We are vigorously defending various tax and customs audits and litigation."

ADM responded that it "conducts business in accordance with the laws, including those governing tax obligations, in the countries where we operate. We are cooperating with Afip to successfully resolve this situation."

Dreyfus declined to comment, but according to Ciara, the grain exporters' trade association in Argentina, it too denies all the charges.

Ciara's president, Alberto Rodriguez, described the government's claims of tax evasion as political posturing.

Waste Of Food

MANCUR OLSON, an American economist, talked about $100 bills lying on the sidewalk to express the idea of easy gains. The amount of food that is wasted represents a gigantic stack of $100 bills. Both in rich countries and poor, a staggering 30-50% of all food produced rots away uneaten. According to Josef Schmidhuber of the FAO, in Africa the post-harvest waste largely explains why many smallholders are net purchasers of food even though they grow enough for their families to eat.

In poor countries most food is wasted on or near the farm. Rats, mice and locusts eat the crops in the field or in storage. Milk and vegetables spoil in transit. These might be considered losses rather than waste. Kanayo Nwanze, the head of the International Fund for Agricultural Development, reckons that such losses could be reduced by half. That would be the equivalent of a rise in output of 15-25%, which would go a long way to providing the extra food needed by 2050.

Unlike in rich countries, much of the waste in poor ones is a matter of money, not behaviour. Grain is often heaped on the ground and covered with a sheet: no wonder the rats get at it. Losses could be reduced by building new silos and better roads and providing more refrigeration, but those things are expensive. The African Development Bank is financing a seven-year programme to reduce waste by 3% a year. Given the scale of the losses, says Divine Njie of the FAO, who worked on the scheme, “we were surprised at how modest the targets were.” But 3% a year adds up to a 20% reduction in waste over seven years, a good start.

In this special report

• Not just calories
• The 9 billion-people question
• How much is enough?
• No easy fix
• Plagued by politics
• » Waste not, want not «
• Doing more with less
• Our daily bread
• A prospect of plenty

There is likely to be more of this sort of investment in future. To meet demand in the emerging megacities, more processed food is being sold in supermarkets and less raw food in markets. Nutritionists worry about the resulting loss of quality, but there are big gains in quantity. Food processors and retailers use modern silos, proper trucks and refrigeration—the very things the rural poor lack.

Rich pickings

Rich countries waste about the same amount of food as poor ones, up to half of what is produced, but in quite different ways. Studies in America and Britain find that a quarter of food from shops goes straight into the rubbish bin or is thrown away by shops and restaurants. Top of the list come salads, about half of which are chucked away. A third of all bread, a quarter of fruit and a fifth of vegetables—all are thrown out uneaten. In America this amounted to 43m tonnes of food in 1997; in Britain to 4m tonnes in 2006.

If all rich countries waste food at the same rate as Britain and America, very roughly 100kg per person per year, the total waste adds up to 100m tonnes of food a year, equivalent to one-third of the entire world’s supply of meat—an astonishing quantity. If Western waste could be halved and the food distributed to those who need it, the problem of feeding 9 billion people would vanish.

But it can’t. Western spoilage is a result of personal habit and law. Education or exhortation might make a difference, but the extent of waste is partly a reflection of prices: food is cheap enough for consumers not to worry about chucking it out, and prices seem unlikely to rise by enough to change that attitude.

Predictions - Food

When experts talk about the coming food security crisis, the date they fixate upon is 2030. By then, our numbers will be nudging 9 billion and we will need to be producing 50% more food than we are now.

By the middle of that decade, therefore, we will either all be starving, and fighting wars over resources, or our global food supply will have changed radically. The bitter reality is that it will probably be a mixture of both.

Developed countries such as the UK are likely, for the most part, to have attempted to pull up the drawbridge, increasing national production and reducing our reliance on imports.

In response to increasing prices, some of us may well have reduced our consumption of meat, the raising of which is a notoriously inefficient use of grain. This will probably create a food underclass, surviving on a carb- and fat-heavy diet, while those with money scarf the protein.

The developing world, meanwhile, will work to bridge the food gap by embracing the promise of biotechnology which the middle classes in the developed world will have assumed that they had the luxury to reject.

In truth, any of the imported grain that we do consume will come from genetically modified crops. As climate change lays waste to the productive fields of southern Europe and north Africa, more water-efficient strains of corn, wheat and barley will be pressed into service; likewise, to the north, Russia will become a global food superpower as the same climate change opens up the once frozen and massive Siberian prairie to food production.

The consensus now is that the planet does have the wherewithal to feed that huge number of people. It's just that some people in the west may find the methods used to do so unappetising.

Jay Rayner

Big Boys: Food

La Tour D´Argent, Paris (Est. 1582)

established 1582