Global Food Crisis
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By Ian Angus
[First of two articles. Click here for part two.]
“If the government cannot lower the cost of living it simply has to leave. If the police and UN troops want to shoot at us, that's OK, because in the end, if we are not killed by bullets, we’ll die of hunger.” — A demonstrator in Port-au-Prince, Haiti
April 28, 2008 -- In Haiti, where most people get 22% fewer calories than the minimum needed for good health, some are staving off their hunger pangs by eating “mud biscuits” made by mixing clay and water with a bit of vegetable oil and salt.[1]
Meanwhile, in Canada, the federal government is currently paying $225 for each pig killed in a mass cull of breeding swine, as part of a plan to reduce hog production. Hog farmers, squeezed by low hog prices and high feed costs, have responded so enthusiastically that the kill will likely use up all the allocated funds before the program ends in September. Some of the slaughtered hogs may be given to local Food Banks, but most will be destroyed or made into pet food. None will go to Haiti.
This is the brutal world of capitalist agriculture — a world where some people destroy food because prices are too low, and others literally eat dirt because food prices are too high.
Record prices for staple foods
We are in the midst of an unprecedented worldwide food price inflation that has driven prices to their highest levels in decades. The increases affect most kinds of food, but in particular the most important staples — wheat, corn, and rice.
The UN Food and Agriculture Organization says that between March 2007 and March 2008 prices of cereals increased 88%, oils and fats 106%, and dairy 48%. The FAO food price index as a whole rose 57% in one year — and most of the increase occurred in the past few months.
Another source, the World Bank, says that that in the 36 months ending February 2008, global wheat prices rose 181% and overall global food prices increased by 83%. The bank expects most food prices to remain well above 2004 levels until at least 2015.
The most popular grade of Thailand rice sold for $198 a tonne five years ago and $323 a tonne a year ago. On April 24, the price hit $1000.
Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March.
These increases are catastrophic for the 2.6 billion people around the world who live on less than US$2 a day and spend 60% to 80% of their incomes on food. Hundreds of millions cannot afford to eat.
This month, the hungry fought back.
Taking to the streets
In Haiti, on April 3, demonstrators in the southern city of Les Cayes built barricades, stopped trucks carrying rice and distributed the food, and tried to burn a United Nations compound. The protests quickly spread to the capital, Port-au-Prince, where thousands marched on the presidential palace, chanting “We are hungry!” Many called for the withdrawal of UN troops and the return of Jean-Bertrand Aristide, the exiled president whose government was overthrown by foreign powers in 2004.
President René Préval, who initially said nothing could be done, has announced a 16% cut in the wholesale price of rice. This is at best a stop-gap measure, since the reduction is for one month only, and retailers are not obligated to cut their prices.
The actions in Haiti paralleled similar protests by hungry people in more than 20 other countries.
In Burkino Faso, a two-day general strike by unions and shopkeepers demanded “significant and effective” reductions in the price of rice and other staple foods.
In Bangladesh, more than 20,000 workers from textile factories in Fatullah went on strike to demand lower prices and higher wages. They hurled bricks and stones at police, who fired tear gas into the crowd.
The Egyptian government sent thousands of troops into the Mahalla textile complex in the Nile Delta, to prevent a general strike demanding higher wages, an independent union, and lower prices. Two people were killed and more than 600 have been jailed.
In Abidjan, Côte d’Ivoire, police used tear gas against women who had set up barricades, burned tires and closed major roads. Thousands marched to the President’s home, chanting “We are hungry,” and “Life is too expensive, you are killing us.”
In Pakistan and Thailand, armed soldiers have been deployed to prevent the poor from seizing food from fields and warehouses.
Similar protests have taken place in Cameroon, Ethiopia, Honduras, Indonesia, Madagascar, Mauritania, Niger, Peru, Philippines, Senegal, Thailand, Uzbekistan and Zambia. On April 2, the president of the World Bank told a meeting in Washington that there are 33 countries where price hikes could cause social unrest.
A senior editor of Time magazine warned:
“The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime has seemed impossibly quaint since capitalism triumphed so decisively in the Cold War…. And yet, the headlines of the past month suggest that skyrocketing food prices are threatening the stability of a growing number of governments around the world. …. when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose.”[2]
What’s driving food inflation?
Since the 1970s, food production has become increasingly globalised and concentrated. A handful of countries dominate the global trade in staple foods. Eighy per cent of wheat exports come from six exporters, as does 85% of rice. Three countries produce 70% of exported corn. This leaves the world’s poorest countries, the ones that must import food to survive, at the mercy of economic trends and policies in those few exporting companies. When the global food trade system stops delivering, it’s the poor who pay the price.
For several years, the global trade in staple foods has been heading towards a crisis. Four related trends have slowed production growth and pushed prices up.
The end of the `green revolution': In the 1960s and 1970s, in an effort to counter peasant discontent in south and southeast Asia, the U.S. poured money and technical support into agricultural development in India and other countries. The “green revolution” — new seeds, fertilisers, pesticides, agricultural techniques and infrastructure — led to spectacular increases in food production, particularly rice. Yield per hectare continued expanding until the 1990s.
Today, it’s not fashionable for governments to help poor people grow food for other poor people, because “the market” is supposed to take care of all problems. The Economist reports that “spending on farming as a share of total public spending in developing countries fell by half between 1980 and 2004.”[3] Subsidies and R&D money have dried up, and production growth has stalled.
As a result, in seven of the past eight years the world consumed more grain than it produced, which means that rice was being removed from the inventories that governments and dealers normally hold as insurance against bad harvests. World grain stocks are now at their lowest point ever, leaving very little cushion for bad times.
Climate change: Scientists say that climate change could cut food production in parts of the world by 50% in the next 12 years. But that isn’t just a matter for the future:
Australia is normally the world’s second-largest exporter of grain, but a savage multi-year drought has reduced the wheat crop by 60% and rice production has been completely wiped out.
In Bangladesh in November, one of the strongest cyclones in decades wiped out a million tonnes of rice and severely damaged the wheat crop, making the huge country even more dependent on imported food.
Other examples abound. It’s clear that the global climate crisis is already here, and it is affecting food.
Agrofuels: It is now official policy in the US, Canada and Europe to convert food into fuel. US vehicles burn enough corn to cover the entire import needs of the poorest 82 countries.[4]
Ethanol and biodiesel are very heavily subsidised, which means, inevitably, that crops like corn (maize) are being diverted out of the food chain and into gas tanks, and that new agricultural investment worldwide is being directed towards palm, soy, canola and other oil-producing plants. The demand for agrofuels increases the prices of those crops directly, and indirectly boosts the price of other grains by encouraging growers to switch to agrofuel.
As Canadian hog producers have found, it also drives up the cost of producing meat, since corn is the main ingredient in North American animal feed.
Oil prices: The price of food is linked to the price of oil because food can be made into a substitute for oil. But rising oil prices also affect the cost of producing food. Fertiliser and pesticides are made from petroleum and natural gas. Gas and diesel fuel are used in planting, harvesting and shipping.[5]
It’s been estimated that 80% of the costs of growing corn are fossil fuel costs — so it is no accident that food prices rise when oil prices rise.
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By the end of 2007, reduced investment in third world agriculture, rising oil prices, and climate change meant that production growth was slowing and prices were rising. Good harvests and strong export growth might have staved off a crisis — but that isn’t what happened. The trigger was rice, the staple food of three billion people.
Early this year, India announced that it was suspending most rice exports in order to rebuild its reserves. A few weeks later, Vietnam, whose rice crop was hit by a major insect infestation during the harvest, announced a four-month suspension of exports to ensure that enough would be available for its domestic market.
India and Vietnam together normally account for 30% of all rice exports, so their announcements were enough to push the already tight global rice market over the edge. Rice buyers immediately started buying up available stocks, hoarding whatever rice they could get in the expectation of future price increases, and bidding up the price for future crops. Prices soared. By mid-April, news reports described “panic buying” of rice futures on the Chicago Board of Trade, and there were rice shortages even on supermarket shelves in Canada and the US.
Why the rebellion?
There have been food price spikes before. Indeed, if we take inflation into account, global prices for staple foods were higher in the 1970s than they are today. So why has this inflationary explosion provoked mass protests around the world?
The answer is that since the 1970s the richest countries in the world, aided by the international agencies they control, have systematically undermined the poorest countries’ ability to feed their populations and protect themselves in a crisis like this.
Haiti is a powerful and appalling example.
Rice has been grown in Haiti for centuries, and until 20 years ago Haitian farmers produced about 170,000 tonnes of rice a year, enough to cover 95% of domestic consumption. Rice farmers received no government subsidies, but, as in every other rice-producing country at the time, their access to local markets was protected by import tariffs.
In 1995, as a condition of providing a desperately needed loan, the International Monetary Fund required Haiti to cut its tariff on imported rice from 35% to 3%, the lowest in the Caribbean. The result was a massive influx of US rice that sold for half the price of Haitian-grown rice. Thousands of rice farmers lost their lands and livelihoods, and today three-quarters of the rice eaten in Haiti comes from the US.[6]
US rice didn’t take over the Haitian market because it tastes better, or because US rice growers are more efficient. It won out because rice exports are heavily subsidised by the US government. In 2003, US rice growers received $1.7 billion in government subsidies, an average of $232 per hectare of rice grown.[7] That money, most of which went to a handful of very large landowners and agribusiness corporations, allowed U.S. exporters to sell rice at 30% to 50% below their real production costs.
In short, Haiti was forced to abandon government protection of domestic agriculture — and the US then used its government protection schemes to take over the market.
There have been many variations on this theme, with rich countries of the north imposing “liberalisation” policies on poor and debt-ridden southern countries and then taking advantage of that liberalization to capture the market. Government subsidies account for 30% of farm revenue in the world’s 30 richest countries, a total of US$280 billion a year,[8] an unbeatable advantage in a “free” market where the rich write the rules.
The global food trade game is rigged, and the poor have been left with reduced crops and no protections.
In addition, for several decades the World Bank and International Monetary Fund have refused to advance loans to poor countries unless they agree to “Structural Adjustment Programs” (SAP) that require the loan recipients to devalue their currencies, cut taxes, privatize utilities, and reduce or eliminate support programs for farmers.
All this was done with the promise that the market would produce economic growth and prosperity — instead, poverty increased and support for agriculture was eliminated.
“The investment in improved agricultural input packages and extension support tapered and eventually disappeared in most rural areas of Africa under SAP. Concern for boosting smallholders’ productivity was abandoned. Not only were governments rolled back, foreign aid to agriculture dwindled. World Bank funding for agriculture itself declined markedly from 32% of total lending in 1976-8 to 11.7% in 1997-9.”[9]
During previous waves of food price inflation, the poor often had at least some access to food they grew themselves, or to food that was grown locally and available at locally set prices. Today, in many countries in Africa, Asia and Latin America, that’s just not possible. Global markets now determine local prices — and often the only food available must be imported from far away.
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Food is not just another commodity — it is absolutely essential for human survival. The very least that humanity should expect from any government or social system is that it try to prevent starvation — and above all that it not promote policies that deny food to hungry people.
That’s why Venezuelan president Hugo Chavez was absolutely correct on April 24, to describe the food crisis as “the greatest demonstration of the historical failure of the capitalist model.”Footnotes
[1] Kevin Pina. “Mud Cookie Economics in Haiti.” Haiti Action Network, Feb. 10, 2008. http://www.haitiaction.net/News/HIP/2_10_8/2_10_8.html
[2] Tony Karon. “How Hunger Could Topple Regimes.” Time, April 11, 2008. http://www.time.com/time/world/article/0,8599,1730107,00.html
[3] “The New Face of Hunger.” The Economist, April 19, 2008.
[4] Mark Lynas. “How the Rich Starved the World.” New Statesman, April 17, 2008. http://www.newstatesman.com/200804170025
[5] Dale Allen Pfeiffer. Eating Fossil Fuels. New Society Publishers, Gabriola Island BC, 2006. p. 1
[6] Oxfam International Briefing Paper, April 2005. “Kicking Down the Door.” http://www.oxfam.org/en/files/bp72_rice.pdf
[7] Ibid.
[8] OECD Background Note: Agricultural Policy and Trade Reform. http://www.oecd.org/dataoecd/52/23/36896656.pdf
[9] Kjell Havnevik, Deborah Bryceson, Lars-Erik Birgegård, Prosper Matondi & Atakilte Beyene. “African Agriculture and the World Bank: Development or Impoverishment?” Links International Journal of Socialist Renewal, http://www.links.org.au/node/328
examines the causes of the global food crisis--and explains why the proposals offered by the world's wealthiest governments are motivated by self-interest.
June 11, 2008
WITH SOARING food prices sparking riots in dozens of countries and threatening to plunge 100 million more people into poverty, according to the New York Times, you might expect world leaders to take some kind of action.
Yet at the recent United Nations (UN) food summit in Rome, the priorities of world leaders were on display for all to see--and they didn't include alleviating the suffering of the billions around the globe, whose very existence is threatened by rising food prices.
UN Secretary General Ban Ki-moon stated that the world needs to "grow more food," and that governments placing restrictions on food exports and import tariffs in response to the protests of their starving populations must remove them.
But according to the UN's own figures, there is already enough food to feed everyone on the planet.
The Food and Agriculture Organization (FAO) of the UN reports that enough food was grown last year to give every single person on the planet 2,800 calories per day--enough to make them overweight. By 2030, with population growth continuing to decline as agricultural output rises, the UN predicts an estimated population of 8.3 billion people could receive 3,050 calories a day.
Even Pope Benedict XVI--hardly a radical--was moved to say, "Hunger and malnutrition are unacceptable in a world which, in reality, has sufficient production levels, the resources and the know-how to put an end to these tragedies and their consequences."
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ACCORDING TO Ban Ki-moon, however, the blame belongs, at least in part, with poor countries that have instituted measures designed to cushion their populations from the impact of rising prices. "Some countries have taken action by limiting exports or by imposing price controls," Ban said. "They only distort markets and force prices even higher."
This kind of "advice" is precisely what caused the food crisis in the first place.
Haiti, one of the countries hardest hit by the food crisis, used to grow its own rice, and Haitian farmers were protected by high tariff barriers. All that ended in 1986, when the International Monetary Fund (IMF), as a condition for more loans to pay off previous debt, forced Haiti to remove trade barriers.
Within two years, domestic rice growing was decimated by cheap U.S. imports, leaving Haiti open to the vagaries of the world market and unable to feed its own population when prices shot through the roof.
How can U.S. companies afford to sell rice so cheaply that they can undercut competition in a country where 80 percent of the population lives on less than $2 a day? U.S. agribusiness is subsidized to such an extent that it can sell rice at up to 20 percent below production cost--the very kind of support that Haitian farmers were barred from receiving.
The U.S. was at least criticized at the food summit for these extensive farming subsidies, which amount to massive corporate welfare handouts. Of the $165 billion in federal subsidies going to farmers from 1995-2005, more than 80 percent went to the largest 20 percent of growers. In the same period, members of Congress and their relatives raked in $9.2 million in farm subsidies, according to USA Today.
The U.S. also caught flak for its role in promoting biofuels for its corn-to-Hummer-fuel program. One-third of the U.S. corn crop this year will be turned into the alternative fuel ethanol, another factor that is driving up food prices. Much of the rest of corn will be used to feed animals--an unnatural and highly inefficient use in itself, but the animals grow faster and therefore are more profitable.
But the response of the Bush administration to the criticism was basically to tell the rest of the world to get lost. U.S. Agriculture Secretary Ed Schafer bristled at the criticism: "I don't think the United States gets enough credit at all for providing over one half of all the food aid."
The disagreements between different countries representing their own corporate interests meant that a comprehensive and meaningful solution to the food crisis--or even a coherent statement--was beyond the summit.
Proposals in Rome included implementing a "new Green Revolution" for
Africa (translation: Africans are starving because they don't know how
to grow things and need Western technology, irrigation techniques and
genetically modified seeds) and reducing "barriers to trade"
(translation: give us total access to all your markets and land).
Delegates from the 183 countries represented at the summit were
supposed to issue a resounding declaration on "eliminating hunger and
securing food for all." However, because of all the squabbling over
subsidies, export controls and the role of increased biofuel
production, the statement had to be watered down to almost complete
meaninglessness.
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THE ESCALATION in human misery as a result of rising food prices is fabulous news for some, however. The giant agribusinesses are quite literally profiting from the increase in starving people.
As Britain's Independent pointed out,
Some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543 million (£275 million) to $1.12 billion. Its profits increased from $1.44 billion to $2.22 billion.
Cargill's net earnings soared by 86 per cent from $553 million to $1.03 billion over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 percent in the first three months of this year from $363 million to $517 million. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21 million to $341 million.
Because of the rising prices, speculative trading in agricultural commodities has grown by more than 1,000 percent in the past four years, to more than $150 billion, and this, in turn, is pushing prices up.
The food crisis, therefore, doesn't really have anything to do with "things," but with relationships. Specifically, world hunger is about relationships among different sets of people--those who own and control the global economy in food and those who don't.
In the so-called "free market," it doesn't matter that people think food should be a human right, or that humans can't survive without it. Food is a commodity, the same as any other commodity--clothes, cars, pencils, books, etc. People aren't seen as having a right to purchase any particular commodity, and there is no distinction between necessities and luxuries.
Those who are rich can purchase anything they want, while those who are poor may not have enough to buy even the most basic foodstuffs.
Economists call this a lack of "effective demand." In other words, there is certainly intense demand among the poor for food, but because they don't have the money, that "demand" isn't "effective," in the sense that the market will provide for them.
As Jeffrey Sachs, director of the Earth Institute at Columbia University, told the New York Times last year, market liberalization and trade deregulation are "based on the idea that if you take away the government for the poorest of the poor, that somehow markets will solve the problems...But markets can't step in and won't step in when people have nothing. And if you take away help, you leave them to die."
If governments try to facilitate feeding the poor by instituting price controls or subsidizing the products, rather than the corporations that manufacture them, they are accused of creating "distortions" in the market and "disturbing" the free flow of goods.
This is why simply growing more food isn't the solution to the food crisis. It's not food that the world lacks. What the majority of the population of the world lacks--despite being the ones who actually grow all the food and manufacture all the goods--is the power to control how that food and those goods are distributed.
Ban Ki-moon's declaration that $20 billion a year is required to eradicate world hunger sounds like a lot of money--until you stack it up against the $35 billion allocated to crop subsidies in the recent U.S. farm bill or the $13 billion going to the oil and gas corporations, along with $25 billion to a resurgent nuclear industry, in the recent energy bill. That $20 billion to fight world hunger is less than the Christmas bonuses paid to Wall Street executives last year, and less than 2 percent of the U.S. defense budget.
And such are the priorities of the system that far less than $20 billion was pledged in aid at the food summit.
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THE FOOD crisis is also directly connected to other aspects of the operation of the system--particularly, the conflicts over resources that play out around the globe.
Africa has increasingly been plunged into a rerun of the 18th century "scramble for Africa" over its extensive (and, from a corporate perspective, underutilized) natural resources. Oil and other industrially important minerals (uranium and copper, for example) abound, and new competitors are throwing their hats into the ring--China and India, in particular.
Western governments talk about China's involvement in Darfur, but their motivations in this case are not that they care about the impoverished and brutalized people of Darfur, but that China is the single biggest investor in Sudan's developing oil fields--which, according to the West, are supposed to be reserved for exclusive exploitation by Western corporations.
Oil companies are scouring the planet in search of new supplies of oil and other raw materials. As these become harder and more expensive to find, business interests need increasing military and diplomatic arm-twisting, bullying and bribing to get access--especially because they are being out-competed in some areas they regard as their own by a very flush China and a newly reinvigorated, loaded and, hence, aggressive Russia.
In addition, it is estimated that for every calorie of food produced, it requires the consumption of 10 calories of oil. Hence, the strong correlation between rocketing oil prices and increases in the cost of food.
All of these factors--food prices, oil, imperialism--are fundamentally connected to the underlying insanity of the capitalist mode of production.
Africa does need technical know-how and advanced irrigation techniques. But if these are provided by the same corporate vultures and paid for with the same type of "loans" and "development aid" that the UN has in mind, all we have to look forward to is another UN conference in five years urging the "world community of nations" to once again "do better" and "really focus" on poverty reduction and food provision.
As the Independent commented:
A sane world would at this point reverse course and do some of the worthy things that UN summits are so good at talking about--helping some of the 96 percent of African farms dependent on rainfall to build irrigation systems, for example.
But the business-driven priority, as endorsed by the FAO summit, is to gouge open the world's economies even faster, via a speedy conclusion of the Doha round of trade liberalization. That is likely to make it even harder for the poor to feed themselves.
Fortunately, the thousands of protesters at the Rome summit (as well as the rioters in poor countries whose actions have spurred many governments to institute price and export controls) point in a different direction.
What is required now is the rebirth of a global justice movement that brings together all these various protests and asserts that food is a fundamental human right--a movement that recognizes capitalism has created the problem of world hunger and is incapable of being part of the solution.
We need a democratic movement that organizes to roll back the priorities of a system that denies people food in order to guarantee profits.
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The International Socialist Review has a special feature on the global food crisis, including Sharon Smith's "The revolt over rising food prices," an eyewitness report on "Haiti's food riots" by Mark Schuller and Hossam El-Hamalawy's "Revolt at Mahalla" on the eruption of class struggle in Egypt in connection with the food crisis.
For updated statistics on world hunger, visit the United Nations' Food and Agriculture Organization Web site. The FAO's report "State of Food Insecurity in the World" is available online. The Food First Web site also has useful articles and analyses.
World Hunger: Twelve Myths by Frances Moore Lappe, Joseph Collins, Peter Rosset and Luis Esparza is an authoritative examination of the policies and politics that cause hunger, as well as the misconceptions about "humanitarian" aid from advanced countries.
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This is a great article.
The two leading paragraphs give a very clear example of what is happening. Capitalist greed will likely kill thousands of people throgh hunger and starvation.
When the final tombstone of Homo Sapiens is built, it may well read: "Here Lies Homo Sapiens, killed by capitalist greed."