The era of cheap food is over — this means disaster for millions, and mega-profits for a few. How did we get into this mess?
Most objective observers of the current food crisis are understandably concerned. Around 45% of the world’s population live on two dollars per day or less. Skyrocketing food prices are now bringing stress to two billion people, and despair to millions — around one hundred million, actually. The situation is only expected to further deteriorate as: the price of oil continues to soar; climate change-related disasters increase in frequency and intensity, and as policy decisions such as mandated biofuel quotas in our fuel supply further strengthens the already strong price connection between fuel and food. It is a humanitarian disaster that’s well underway, and one which seriously threatens to destabilize international security. As I’m sure you can appreciate, a hungry man is an angry man.
Making a killing
And yet, this situation is playing into the arms of large corporations who are making windfall profits out of desperate demand for the most basic of needs, and who see even greater opportunities for a lot more of the same in the coming months and years.
Much of the news coverage of the world food crisis has focussed on riots in low-income countries, where workers and others cannot cope with skyrocketing costs of staple foods. But there is another side to the story: the big profits that are being made by huge food corporations and investors. Cargill, the world’s biggest grain trader, achieved an 86% increase in profits from commodity trading in the first quarter of this year. Bunge, another huge food trader, had a 77% increase in profits during the last quarter of last year. ADM, the second largest grain trader in the world, registered a 67% per cent increase in profits in 2007.
Nor are retail giants taking the strain: profits at Tesco, the UK supermarket giant, rose by a record 11.8% last year. Other major retailers, such as France’s Carrefour and Wal-Mart of the US, say that food sales are the main sector sustaining their profit increases. Investment funds, running away from sliding stock markets and the credit crunch, are having a heyday on the commodity markets, driving prices out of reach for food importers like Bangladesh and the Philippines.
These profits are no freak windfalls. Over the last 30 years, the IMF and the World Bank have pushed so-called developing countries to dismantle all forms of protection for their local farmers and to open up their markets to global agribusiness, speculators and subsidised food from rich countries. This has transformed most developing countries from being exporters of food into importers. Today about 70 per cent of developing countries are net importers of food. On top of this, finance liberalisation has made it easier for investors to take control of markets for their own private benefit. — ENN (also see this and this)
The ability of developing nations to feed themselves has been progressively undermined by trade policies and Structural Adjustment Programs (see also) forced upon them by the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the World Bank. This ‘unholy trinity’, as these partner institutions are often described, has brought our current food crisis upon us through their neoliberal ‘free’ trade agenda, tailoring markets in developing countries to suit Northern corporations. Recipients of IMF and World Bank loans must open their borders to the influx of highly subsidised agricultural produce from countries like the U.S. of A., who sell their food at below the cost of production (a practice called ‘dumping‘), undercutting local producers and putting them out of business — causing mass urbanisation as millions leave their fields to work or beg in cities, as well as swelling numbers of illegal immigrants into the North.
Whilst called ‘free trade’, the reality is that these Structural Adjustment Programs are inherently unfair. Wealthy states like the U.S. and the E.U. continue to subsidise their production, and refuse to consider any kind of program to ensure their farmers do not over-produce, whilst developing nations are forced to remove subsidies for their production. This imbalance makes it impossible for small scale farmers to compete with Big Agribusiness — so they simply stop growing food. As it happens, the same thing occurs within rich countries too — small scale American farmers are giving up at a rate of about 330 per week — but, while some of these farmers commit suicide (“Suicide is now the leading cause of death among US farmers, occurring at a rate three times higher than in the general population.” — CounterCurrents), most manage to find a way to continue getting food onto the table. It is not so in the developing world.
One of the main requirements imposed on developing countries is that they must plug into the global market by transforming themselves into export-oriented economies. Where a country before was producing a full and diverse range of agricultural produce on small landholdings, this transition sees traditional practices such as crop rotations and composting being supplanted by large scale monocrops intended for export to Northern supermarkets. Production of food for local consumption thus gives way to agricultural specialisation and mass transit of goods, and closed or virtually closed farming systems are converted into input- and water-intensive monocrop energy hogs, that only serve to deplete soils and create vulnerability to pests and disease.
Cash crops are exported for foreign currency, needed to repay debts to the World Bank and IMF. These commodity crops take up the best agricultural land, whilst producing food for local markets is disincentivised, reduced in scale and moved to less fertile fields. These countries thus become dependent on food imports themselves — and in each direction money continues to line the pockets of those orchestrating the production, transfers and transactions. Whilst there are some benefitting from this paradigm shift — from giant agribusiness entities like Cargill, Archer Daniels Midland (ADM), and Monsanto, to shipping and air-freight industries, western supermarket chains, and let’s not forget the oil industry, without whom none of this would be possible (hint hint) — the nation doing the exporting is not amongst them.
Some weeks ago I wrote about Haiti — where people have had to resort to eating mud to survive. As astonishing as this is, the following makes that mud even harder to swallow:
Recipe: Mud, a little vegetable oil,
and salt. Mix well, then bake in sun…
Thirty years ago, Haiti raised nearly all the rice it needed. What happened?
In 1986, after the expulsion of Haitian dictator Jean Claude “Baby Doc” Duvalier the International Monetary Fund (IMF) loaned Haiti $24.6 million in desperately needed funds (Baby Doc had raided the treasury on the way out). But, in order to get the IMF loan, Haiti was required to reduce tariff protections for their Haitian rice and other agricultural products and some industries to open up the country’s markets to competition from outside countries. The U.S. has by far the largest voice in decisions of the IMF.
Doctor Paul Farmer was in Haiti then and saw what happened. “Within less than two years, it became impossible for Haitian farmers to compete with what they called ‘Miami rice.’ The whole local rice market in Haiti fell apart as cheap, U.S. subsidized rice, some of it in the form of ‘food aid,’ flooded the market. There was violence, ‘rice wars,’ and lives were lost.”
“American rice invaded the country,” recalled Charles Suffrard, a leading rice grower in Haiti in an interview with the Washington Post in 2000. By 1987 and 1988, there was so much rice coming into the country that many stopped working the land.
… People from the countryside started losing their jobs and moving to the cities. After a few years of cheap imported rice, local production went way down.”
Still the international business community was not satisfied. In 1994, as a condition for U.S. assistance in returning to Haiti to resume his elected Presidency, Jean-Bertrand Aristide was forced by the U.S., the IMF, and the World Bank to open up the markets in Haiti even more. — Counterpunch
Haiti also used to be the world’s largest exporter of sugar — now it has to import even this.
The environmental impacts of the giant food-swap oriented globalised model are immense, but the socioeconomic impacts are equally so. This is effectively a tax-payer funded assault on poor countries, accompanied by the cha-ching sound of escalating profits for the world’s largest corporations.
Watch the clip below to see how twenty years of policy restructuring brought about the ‘famine’ in Niger in 2005:
The following 2005 article on the Niger food crisis shows how it’s not production that’s the problem, but ‘free market’ induced poverty.
In Tahoua market, there is no sign that times are hard. Instead, there are piles of red onions, bundles of glistening spinach, and pumpkins sliced into orange shards. There are plastic bags of rice, pasta and manioc flour, and the sound of butchers’ knives whistling as they are sharpened before hacking apart joints of goat and beef.
A few minutes’ drive from the market, along muddy streets filled with puddles of rainwater, there is the more familiar face of Niger. Under canvas tents, aid workers coax babies with spidery limbs to take sips of milk, or the smallest dabs of high-protein paste.
Wasted infants are wrapped in gold foil to keep them warm. There is the sound of children wailing, or coughing in machine-gun bursts.
… This is the strange reality of Niger’s hunger crisis. There is plenty of food, but children are dying because their parents cannot afford to buy it.
The starvation in Niger is not the inevitable consequence of poverty, or simply the fault of locusts or drought. It is also the result of a belief that the free market can solve the problems of one of the world’s poorest countries. — Guardian, August 2005
Just as in Niger in 2005, the current problem is not a lack of food, but of massive social inequality brought about by an unrestrained, extractive, capitalist system. People that could be providing for their own needs by the labour of their own hands must now, instead, fulfil those needs through purchase. No money, no food.
Where from here?
The World Bank, IMF and WTO are increasingly on the defensive as the double whammy of a recession and the food crisis hit hard. They have, after all, been effectively running the economies of the very nations we’re now watching become unglued. Over the last decade some countries have begun to wise up, seeking alternative sources of funding, so as to avoid the stranglehold conditions imposed in exchange for receiving loans from the IMF. In fact, business has been so bad for the IMF of late that it’s intending to liquidate some of its enormous gold reserves to plug its own funding shortfalls.
The Economist says that “the food crisis of 2008 may become a challenge to globalisation”. It is obvious that the world is ripe for change. Two weeks ago we covered (here and here) the recent huge IAASTD report on world agriculture, where 400 scientists and agricultural experts conducted a three year study which concluded that if we are to feed the world we need to relocalise markets and return to sustainable farming systems (a report that is being undermined, see section ‘The Obstacles’, by the countries whose industries reap the most benefits from globalised trade and who are pushing the use of genetically modified crops, which the scientists rejected…).
At the same time, there is also a very real risk that the ‘solutions’ applied to this global food crisis will be implemented by the same organisations that brought it upon us, bypassing lasting change to just bring more of the same.
The World Bank has announced emergency measures to tackle rising food prices around the world.
… The World Bank endorsed Mr Zoellick’s “new deal” action plan for a long-term boost to agricultural production.
Emergency help would include an additional $10m (£5m) to Haiti, where several people were killed in food riots last week, and a doubling of agricultural loans to African farmers. — BBC (emphasis added)
Again, the problem is not one of production, but the World Bank ‘solution’, ignoring root causes, is yet more loans and to ‘boost agricultural production’ — the latter, in their mind, means more destructive fossil fuel based monocrop agriculture, which means more profit for all the big players that have their fingers in the pie.
IMF/World Bank “economic medicine” is not the “solution” but in large part the “cause” of famine in developing countries. More IMF-World Bank lending “to boost agriculture” will serve to increase levels of indebtedness and exacerbate rather alleviate poverty.
World Bank “policy based loans” are granted on condition the countries abide by the neoliberal policy agenda which, since the early 1980s, has been conducive to the collapse of local level food agriculture. — Global Research
I must be on the same page as President Abdoulaye Wade of Senegal, as he has just come out with a scathing rebuke to the UN’s Food and Agriculture Organisation (or FAO — which has worked closely with the World Bank since 1964), saying that the UN food body should be completely scrapped and that it is largely to blame for the current food crisis.
Note: The following (short) clip strangely loops in the middle for a brief period, before continuing. It’s well worth watching right through.
Food crisis opens door to greater use of GMOs
As if the above wasn’t infuriating enough, the flip side to increased hunger is that it creates wonderful opportunities for Big Agribusiness to further the spread of genetically modified foods. People that need food aid, and seeds, are being pressured to accept it in a genetically modified form. Indeed, for many it’s now their only alternative.
Soaring food prices and global grain shortages are bringing new pressures on governments, food companies and consumers to relax their longstanding resistance to genetically engineered crops.
In Japan and South Korea, some manufacturers for the first time have begun buying genetically engineered corn for use in soft drinks, snacks and other foods. Until now, to avoid consumer backlash, the companies have paid extra to buy conventionally grown corn. But with prices having tripled in two years, it has become too expensive to be so finicky.
… Even in Europe, where opposition to what the Europeans call Frankenfoods has been fiercest, some prominent government officials and business executives are calling for faster approvals of imports of genetically modified crops. They are responding in part to complaints from livestock producers, who say they might suffer a critical shortage of feed if imports are not accelerated.
In Britain, the National Beef Association, which represents cattle farmers, issued a statement this month demanding that “all resistance” to such crops “be abandoned immediately in response to shifts in world demand for food, the growing danger of global food shortages and the prospect of declining domestic animal production.”
… Certainly any new receptivity to genetically modified crops would be a boon to American exporters. The United States accounted for half the world’s acreage of biotech crops last year.
… Opponents of biotechnology say they see not so much an opportunity as opportunism by its proponents to exploit the food crisis. “Where politicians and technocrats have always wanted to push G.M.O.’s, they are jumping on this bandwagon and using this as an excuse,” said Helen Holder, who coordinates the campaign against biotech foods for Friends of the Earth Europe. — NY Times (see also here, here and here)
The people of South Korea, who do not want GM foods in their country, are currently in a bind. Up until recently they imported corn from China, but, as the food crisis hit, China reduced its exports. This forces Korea to turn to the U.S., where 70 percent of the corn grown is now genetically modified.
I can almost see the Monsanto executives salivating. They’ve done a wonderful job of convincing naïve politicians worldwide that biotech is going to ‘feed the world’, despite report after report after report after report after report to the contrary.
Argentina, who have been farming with GM crops for some time, is a good ‘developing country’ example of how the introduction of GMOs has effected their farming communities:
Within the past decade in Argentina, 160,000 families of small farmers have left the land, unable to compete with large farmers. GM soya has served to exacerbate this trend towards large-scale, industrial agriculture, accelerating poverty.
… Argentina is currently the second biggest producer of GM Soya in the World. The countryside has been transformed from traditional mixed and rotation farming, which secured soil fertility and minimized the use of pesticides, to almost entirely GM soya.
Financial problems for farmers are set to worsen with Monsanto now starting to charge royalties for their seeds, where before, it was allowing farm-saved seeds. Twenty-four million acres of land belonging to bankrupted small farmers are about to be auctioned by the banks. — I-SIS
Time for a change
It’s time for a sea change. Many people regard these mighty financial institutions as beyond redemption, and after years of their obstinately pushing their agenda, despite uprisings and protests against them the world over, I can only agree. It seems that at their most fundamental level they are in conflict with real social and environmental development. Real, tangible rural development is simply not their purpose in life. All the evidence demonstrates that their role is to facilitate a South–North transfer of wealth. It is economic colonialism — or corporate rape of developing countries.
Just as in the North, the people in the South need to return to the land. They need policies in place that make it financially viable to become what people the world over should be — self-sufficient stewards of their local environment. People need tools and knowledge — not genetically modified food ‘aid’, which threatens their food sovereignty and pulls the rug out from under the few people still trying to grow food for local consumption. Whilst charity is essential to keep people alive at the moment, this situation should not be used to push dangerous biotechnology, and all aid should be seen as a temporary stopgap measure while we help these people rebuild their farming communities, and thus their economies, their environment and our climate.
Nearly a quarter-century ago, an outright famine led to Live Aid, an international fund-raising effort promoted by rock stars, which produced an outpouring of global generosity: millions of tons of food flooded into the country. Yet, ironically, that very generosity may have contributed to today’s crisis.
Over time, sustained food aid creates dependence on handouts and shifts focus away from improving agricultural practices to increase local food supplies. Ethiopia exemplifies the consequences of giving a starving man a fish instead of teaching him to catch his own. This year the U.S. will give more than $800 million to Ethiopia: $460 million for food, $350 million for HIV/AIDS treatment — and just $7 million for agricultural development. Western governments are loath to halt programs that create a market for their farm surpluses, but for countries receiving their charity, long-term food aid can become addictive. Why bother with development when shortfalls are met by aid? Ethiopian farmers can’t compete with free food, so they stop trying. Over time, there’s a loss of key skills, and a country that doesn’t have to feed itself soon becomes a country that can’t. – Time
Ron Paul calls for the phasing out of the World Bank and “its associated institutions”