The inability of world leaders to face up to the root causes or policy contradictions of a food crisis is nothing new, but the resultant crisis of faith in neoliberal economic orthodoxy is a sign that the world direction is changing course, writes Adam Parsons.
In the wake of a food crisis that gripped the media's attention during the summer of 2008, a new set of questions is beginning to surface. As analysts predict that the era of cheap resources is finally over, that the food emergency is no blip but a situation that could last indefinitely, the international community is being forced to re-examine the basic direction of world development. Could it be that the interlinked crises in food, energy and financial markets indicate the commencement of a terminal decline in the export-led, free market development model that has defined the past few decades of globalisation? Or will the emergency in food provision, as previously happened in 1974, reinforce the same policies in favour of large-scale industrial farming that have already devastated rural communities throughout the developing world?
The crisis of spiralling grain prices began well before the first media reports of food riots breaking out across nearly 40 countries earlier this year. By November 2007, the UN's biannual Food Outlook report warned that high food prices could trigger social unrest and make it increasingly difficult to meet the Millennium Development Goals (MDGs) on poverty and hunger reduction. The annual food expenditure of the most vulnerable countries had already more than doubled since 2000, they estimated.[1] Mainstream news outlets remained quiet on the issue until late December 2007 when Jacques Diouf, head of the UN Food and Agricultural Organization (FAO), declared an "unforeseen and unprecedented shift" in the world's food supply. World wheat stocks were at their lowest level since 1980, he revealed, while the agency's food price index rose by more than 40 percent that year, compared to 9 percent the year before - a rate that was already unacceptable.[2]
By January 2008, Afghanistan was the first country to plead for extra help from the UN's World Food Program (WFP) to feed an additional 2.5 million people, most of them the urban poor, in addition to the 5 million rural people the agency already feeds. The average Afghan household was now spending 45 percent of its income on food, up from 11 percent in 2006.[3] A few months later, the WFP was ironically making its own pleas for extra funds for the first time in its history. By now, the international media was widely quoting the catchphrase of Josette Sheeran, the agency's executive director, who had forewarned a "perfect storm of hunger" many months before in reference to the triple threats of climate change, population growth and rising food prices.[4] The WFP's limited budget was now being priced out of the market by the soaring cost of grains - just like the millions of impoverished people that it sought to keep alive.[5]
Chronology of a food price crisis
From that symbolic turning point in March until the emergency UN food summit held in early June, news agencies held nothing back in reporting the extent of the burgeoning crisis. Haiti was among the most terrible case studies; in a country once self-sufficient in rice production only a few decades ago, conditions on foreign loans - mostly from the International Monetary Fund (IMF) - forced it to liberalise its market. After cheap and subsidised rice flooded in from the U.S., local production was soon wiped out. In 2008, the price of rice suddenly increased by 50 percent within a year. For the poorest country in the Western hemisphere, impoverished Haitians were reported to be eating biscuits made of mud, or else risking their lives to cross the sea in search of illegal work in the United States.[6] Soon scores of people were on the rampage in the capital, blocking roads, looting shops and shooting at UN peacekeepers.
A similar story can be recounted in Mexico since implementing the North American Free Trade Agreement (NAFTA) in 1994. Before the liberalising of markets in basic agricultural produce, four out of every 10 tonnes of rice produced in Mexico were exported, but by 2006 seven of every 10 tons of rice consumed were imported. Production dropped by almost half, most of the small producers went bankrupt, and domestic prices fell by 55 percent between 1989 and 2006.[7] Smallholder producers of other basic grains and oilseeds suffered a comparable fate. With colossal food price inflation in the past two years, Mexicans can no longer produce the basic food their country needs, nor afford the products sold by U.S. agribusiness giants that now dominate the domestic market. Tens of thousands of Mexicans took to the streets in January 2007 to protest a 60 percent increase in the price of tortillas; exactly one year later, similar protests over food-price hikes descended into violent riots.[8]
In dozens of the world's poverty-stricken countries including Egypt, Cameroon, Burkina Faso, Bolivia and Bangladesh, food riots exploded across cities in which hunger was already an ever-present reality. As famine currently looms in Ethiopia, about 10 million people are in need of emergency aid, forcing the World Food Program to withhold rations for only the most extreme cases of malnourishment, and presaging a worse humanitarian crisis than swept the country in 1984.[9] The surge in food prices threatens to push the number of hungry people in the world from 860 million to almost one billion, says the WFP.[10] Such statistics have already made a mockery of Millennium Development Goal no. 1; without urgent action, the world could see hunger doubling instead of halving by 2015.[11]
Blaming India and China
Throughout this bleak reportage of widespread starvation, the media's analysis of causes driving the rise in food prices has been repeatedly quoted and revised. The popular reasoning at first centred on supply and demand factors, blaming the growing middle classes in countries like India and China alongside rising population levels and higher energy costs. For the U.S. administration, who maintain the argument that people in the emerging economies are becoming richer and therefore eating more, the underlying assumption is that a globalised food system led by large agribusinesses through free trade is a temporary victim of its own success. The influence of biofuels and financial speculation was subsequently focused upon in media reports as key short term drivers of the crisis, with a recent World Bank study concluding that biofuels forced global food prices up by 75% - and was a major cause in sparking a financial speculation in grains.[12]
With a record global grain harvest in 2007, and with at least 1.5 times the current global demand for food available,[13] it is no revelation to state that supply and demand side arguments for increases in food prices are misleading and overstated. Over the last 20 years, food production has in fact risen steadily at over 2 percent a year, compared to a rate of population growth that dropped to 1.14 percent a year.[14] Despite the OECD agricultural outlook report predicting that "developing countries are expected to dominate production and consumption of most commodities" by 2017,[15] the fundamental issue is not one of insufficient production or overpopulation, but rather the dysfunctional distribution, improper usage and wastage of the vast mountains of food that is already being produced.
As often noted, the world's cereal output has tripled since 1961, while population levels have doubled. Still less than half of the world's grain production is eaten directly by people, and is instead used for animal feed and, increasingly, biofuels.[16] And when an estimated US$30 billion a year could enable 862 million hungry people to enjoy their basic human right to food, excess consumption by the world's obese amounts to US$20 billion.[17] As forecasted by the FAO's Agriculture: Towards 2015/30 report, global demand for food can easily be met through 2030 despite a forecasted population growth to 8 billion. It is the contradictions within the international food system, however, that prevent this vital objective from being realised.
Policy blindness
The story of these contradictions has been once again recounted by several NGOs and innumerable commentators over recent months. The debt crisis in the early 1980s marked the shift towards large-scale, commercial farming that enabled giant agribusinesses to control the global food market and spell the beginning of the end for smallholder, self-sufficient crop growing. According to the rationale of most economists and the heralded position of the United States, the world will benefit most if every country specializes in growing, servicing or making what it can most efficiently produce, while trading for its other needs.
The resulting process is long documented in volumes of books and reports; during the transformation of the countryside into a system of intensive capital accumulation, hundreds of millions of rural dwellers have witnessed the rapid erosion of an ancient way of life and found themselves propelled into burgeoning megaslums and the informal sector of developing cities. Free trade policies, as relentlessly promoted in developing countries by the World Bank and International Monetary Fund, completed the shift away from national self-sufficiency in basic foodstuffs and led to a dependence on the imports supplied by a handful of agribusiness conglomerates.
These policies to rapidly increase trade were promised not only to generate economic growth, but also to eradicate poverty and hunger. As local farms were closed down to make way for large-scale farms that produce crops for export, however, invariably leading to widespread landlessness and migration, the promised utopia of increased wealth for all was far from realised. Regardless of the environmental degradation that accompanied the excessive commercialisation of the countryside, or the additional pollution caused by transporting every imaginable food around the world, the number of hungry people actually increased during the 1990s.[18] Across most of Africa, the most fiercely liberalised of all continents now transformed from a net food exporter to a net importer - the same as two-thirds of all developing countries - food emergencies and famine are a recurrent and ongoing phenomenon.
Out of the growing millions of hungry people 80 percent are small farmers, yet support of agriculture has been perversely neglected in those countries most in need of support.[19] Since the first pledge to halve world hunger made in 1996, resources to finance agricultural programs in developing countries have not only failed to rise as promised, but continued to decrease. Between 1984 and 2004, aid to agriculture reduced in real terms by 58 percent.[20] The only conclusion, according to any sweeping analysis, is that a crisis in food is nothing new but the consequence of a failed policy paradigm that works in favour of a handful of large corporations at the expense of a countries ability to feed its own people.
The inability of world leaders to face up to the root causes or policy contradictions of a food crisis is also nothing new. Throughout the 1980s and 90s, mass protests over a recurring food crisis in developing countries were popularly known as "IMF riots", although the solutions - as today - were handed to the very structures that caused those crises. The Ethiopian famine during the 1980s led not to initiatives that helped sustain poor rural dwellers, but rather the dedication of good land to export crops under the tutelage of the World Bank, thus further exacerbating food insecurity and storing up a repeat of the famine situation that is surfacing today. In Peru in August 1990, upon the orders of the IMF, fuel prices increased 30 times overnight, and bread prices increased 12 times within a day. In Caracas, 1989, after a 200 percent increase in the price of bread, anti-IMF riots led to the indiscriminate killing of men, women and children.[21]
More examples could be repeated ad infinitum. Compared to the last major food and fuel crisis of 1973/4, which culminated in similarly vain promises from the FAO's first World Food Conference to end hunger and prevent a repeat occurrence, the needed lessons after 34 years are far from being acknowledged.
Competing narratives
The main difference today is in the parting of extremes, or the deepening polarisation between alternative paradigms, narratives and solutions. On one side of the court stand all the impassioned NGOs and hardened campaigners who have long opposed large-scale agribusiness in place of food sovereignty, bottom-up development, and the empowerment of small farmers through local and regional markets. The food price crisis, they say, has exposed the disaster of global agricultural production and the conclusive failure of a market fundamentalist ideology left unchecked for far too long. On the other side of the court, supported by Gordon Brown, George W. Bush, Bill Gates' pockets and the most powerful financial institutions in the world, stand the Green Revolutionaries led by chemical technologies and multinational corporations from predominantly the E.U and U.S.A. One path, say almost all of the NGOs, will lead to social justice, the strengthening of local communities and food security for all, while the current path is inherently unsustainable, responsible for continued hunger in a world of plenty, and incapable of ending poverty.
By 2008 it should be a platitude to state that the escalating global food crisis, which some NGO's are pointedly distinguishing as the "food price crisis", is the inevitable long-term consequence of a disastrous free market restructuring of agricultural land. The only reason to keep repeating the long-standing story is due to the competing narrative that somehow continues to retain its credibility. In the World Bank's latest World Development Report 2008 on agriculture, the same model of development that has created a global crisis in food production in the first place - import liberalization, elimination of tariffs, a dependency on cash crops, GMO seeds and fertilizers, and all other measures that work in favour of agribusiness and against the millions of small-scale farmers struggling against poverty and hunger - is being promoted as the only solution.[22] The $1.2 billion of extra loans as part of the Bank's "Global Food Crisis Response Facility" will be handed out with the same underlying conditions of further trade liberalisation and market reforms.
Likewise, the IMF is using the crisis to augment their existing arrangements under the Poverty Reduction and Growth Facility (PRGF), attaching the same conditions requiring structural adjustment to the 10 countries, mostly in Africa, already forced to make new agreements.[23] The World Trade Organisation similarly tried to capitalise on the crisis by working to increase its mandate through the Doha Round of trade agreements, alongside a push to persuade developing countries to further liberalise their financial sectors under the General Agreement on Trade in Services (GATS).[24] Between the expert rhetoric and analysis by international financial institutions on the catastrophic extent of the crisis, with even the IMF now declaring that some countries are at "tipping point",[25] their proffered medicine is still mixed with the same deep-seated poisons.
A failed Food Summit
This basic contradiction of agreeing to increase agricultural production in developing countries to address the plight of small and poor farmers, while promoting policies that achieve the opposite ends, was set in stone after the UN's emergency food summit held in Rome. The final declaration made no attempt to address the structural problems and deeper causes of the crisis, as evidenced in key paragraph 7(e) that concluded: "We encourage... efforts in liberalizing international trade in agriculture by reducing trade barriers and market distorting policies."[26] A rare mentioning of small farmers was only made in reference to international markets, underlining the continued prioritising of market fundamentalism and trade over food security.[27] A renewed commitment was made to reduce by half the number of undernourished people by 2015, but after 45 years of similar promises one NGO called this "the big lie" that no-one at the Summit believes will happen.[28]
Despite both Ban Ki-moon and Jacques Diouf's impassioned speeches and articles over the period of the Summit, neither of them sought to address the entrenched structural origins of the food crisis. Most worrying was Ban's simplistic prescriptions for improved market efficiency and a 50 percent rise in food production by 2030 to meet rising demand,[29] thus playing into the hands of politicians who seek to divert political debate away from the role of agribusinesses in the current food crisis, as well as the corporations who wish to accelerate a "doubly Green Revolution" in agriculture as propounded by Bill Gates and the Rockefeller Foundation.
The inevitable result, without a critical re-examination of the unsustainable manner in which food is produced and distributed, will be more of the same; more privatization, more corporate monopolization of food systems, more GMO crop initiatives, more displacement of poor farmers, more migration into cities and slums, more hunger, more poverty, more overconsumption and obesity. And all this without even considering the environmental footprint of producing more food on less available land, or transporting more food through international markets which contradicts the urgent need of reducing CO2 emissions. The search for technical fixes to produce cheap and abundant food may have made sense in the 1940s, but 70 years of the "productionist" model has led to the vital challenge of defining a sustainable diet - one that recognises the central crisis of distribution and overcomes the co-existence of under-, over- and mal-consumption in a world defined by extremes of inequality.[30] Not even Ban Ki-moon, it seems, was able to acknowledge the most basic contradiction of all: that already we are producing more than enough food.
A crisis of faith in markets
There are signs, however, that the world direction is changing course. As a knee-jerk response to skyrocketing food price inflation, those developing governments fortunate enough to have export stocks began pulling out of the global market to safeguard their domestic prices. The failure of the Doha Round of trade negotiations, which sought to further liberalise agricultural markets, was widely interpreted as recalcitrance on the part of developing countries - and the issue of agriculture, in the light of the food crisis, was cited by most accounts to have provoked the collapse.
Confidence in the IMF's and World Bank's promises for a food utopia through liberalised markets is being shattered in the midst of a bidding war against speculators and traders. With the amount of speculative money in commodities futures increasing from US$5 billion in 2000 to US$175 billion in 2007, those who profit from the human disaster of food insecurity has become incontestably clear.[31] For the small clique of corporations that control the world's grain markets, profits soared by as much as 447 percent between 2007 and 2008.[32] Following the amoral logic of unrestrained market forces, hunger and famine is an assurance for hedge fund managers speculating in grain markets that food prices will keep on rising.
The only source of good to emerge from spiralling food price inflation is the resultant crisis of faith amongst poorer and developing countries in neoliberal economic orthodoxy. Unlike the crisis of 1970s stagflation that signalled the end for the Keynesian social-democratic model, 2008 could be marked down in history for setting in motion an opposite trend. A notable example of this gradual shift in economic thinking is set down in the UN's latest World Economic and Social Survey (WESS), released a week before the G8 Summit. A belief in the self-regulating market is no longer credible, was the Report's message, noting that "John Maynard Keynes, until recently persona non grata in policy circles, is once again the ‘defunct economist' to consult."[33]
What the world situation demands is a return to the "social contract" as once discussed by 17th century philosophers, says the Report, which requires appropriate government intervention to protect citizens against the severe economic swings and inequalities that have proven an unavoidable by-product of globalisation. Rolling back the welfare state in obeisance to the market mechanism hasn't worked, it says, and economic growth is a "necessary but not a sufficient condition for tackling poverty."[34] What we need, it concluded, is a renewal of the Bretton Woods system's originating purpose, a revisiting of the Marshall Plan principles, and a re-enactment of the New Deal on a global level.
Such an acknowledgement of the redistribution agenda is no longer confined to renegade economists exempt from mainstream discussion. The WESS Report may not go far enough in its call to merely "unleash, govern and civilise" markets,[35] but there is no shortage of alternative thinking on how to transform a runaway market-led economy. An immediate source of inspiration is found in the widespread proposals for food sovereignty: to remove basic foodstuffs from international markets, to focus on productive, sustainable agriculture under the control of small farmers and local markets. Although the food price crisis has failed to serve as a wake-up call to world leaders, a crucial international debate has started to emerge on the whole theology of food security. For now, the redundant model of export-led agriculture and import dependency has won through, but the calls for people-led social change are rapidly achieving a long-awaited consensus.
References:
[1] Food Outlook Report: Global Market Analysis (pdf) (Food and Agricultural Organisation, United Nations, November 2007)
[2] Elisabeth Rosenthal. World Food Stocks Dwindling Rapidly, UN Warns (The New York Times, 17 December 2007)
[3] Ban Ki-moon. The New Face of Hunger (Washington Post, 12 March 2008)
[4] Edmund Sanders and Tracy Wilkinson. A perfect storm of hunger (Common Dreams, 1 April 2008)
[5] Peter Popham. Threat to Millions as Food Aid Scheme Runs Out of Money (The Independent, 25 March 08)
[6] Tom Leonard. Haiti's rising food prices drive poor to eat mud (The Telegraph, 30th January 2008)
[7] For sources, see Ana de Ita. Fourteen Years of NAFTA and the Tortilla Crisis (Alai, 11 January 2008)
[8] Lorne Matalon. Mexico's Poor Seek Relief From Tortilla Shortage (Banderas News, 4 June 2008)
[9] Nicholas Benequista. As famine looms in Ethiopia, only the neediest get food aid (CS Monitor, 27 June 2008)
[10] Alison Fitzgerald and Mark Drajem. Free Trade in Food Is `On the Ropes' Amid Shortages, Price Rise (Bloomberg, 19 June 2008)
[11] See World Bank and IMF Emergency Loans: A Cure or a Curse for the Food Crisis? (Eurodad, 5 June 08)
[12] Aditya Chakrabortty. Secret report: biofuel caused food crisis (The Guardian, 4 July 2008)
[13] See FAO figures for 2007, quoted in Eric Holt-Giménez and Loren Peabody. From Food Rebellions to Food Sovereignty: Urgent call to fix a broken food system (Food First, 16 May 2008)
[14] See global census figures, and FAO food production figures, as quoted in Eric Holt-Giménez and Loren Peabody. From Food Rebellions to Food Sovereignty: Urgent call to fix a broken food system (Food First, 16 May 2008)
[15] The OECD-FAO Agricultural Outlook 2008-2017 (Paris, 2008)
[16] Making a Killing from Hunger (GRAIN, 21 April 2008)
[17] Jacques Diouf quoted in US$30 Billion a Year Would Eradicate World Hunger (Environmental News Service, 5 June 2008). Globally 1.6 billion adults are overweight, with 400 million obese; see The State of Food and Agriculture: 2007 (FAO, 2007) p. 125.
[18] See figures on hunger quoted in The State of Food Insecurity in the World 2006: Eradicating world hunger - taking stock ten years after the World Food Summit (Food and Agriculture Organization of the United Nations, 2006)
[19] Figure quoted in Making a Killing from Hunger (GRAIN, 21 April 2008)
[20] US$30 Billion a Year Would Eradicate World Hunger (Environmental News Service, 5 June 2008)
[21] Examples taken from Michel Chossudovsky. The Globalization of Poverty and the New World Order (Global Research, 2003)
[22] World Development Report 2008: Agriculture for Development (World Bank, 19 October 2008)
[23] World Bank and IMF Emergency Loans: A Cure or a Curse for the Food Crisis? (Eurodad, 5 June 08)
[24] Myriam Vander Stichele. Ignoring the crises? How further GATS liberalisation impacts the financial and food crises (South Centre Bulletin, 18 June 2008)
[25] IMF fears food prices may stir economic mayhem (Sydney Morning Herald, 2 July 2008)
[26] Declaration of the High-Level Conference on World Food Security: The challenges of climate change and bioenergy (Food and Agriculture Organization of the United Nations (FAO), 5 June 2008)
[27] Ibid, see paragraph 6(a).
[28] Ciao FAO: Another "Failure-as-Usual" Food Summit (Action group on erosion, technology and concentration - etc. Translator. Volume 5, No.1 June 2008)
[29] Ban Ki-moon. The New Face of Hunger (Washington Post, 12 March 2008)
[30] Interview with Tim Lang, Professor of Food Policy at City University in London (GRAIN, Seedling Magazine, July 2008)
[31] Paul Waldie. ‘Why grocery prices are set to soar' (Globe and Mail, Toronto, 24 April 2008)
[32] The example of Bunge, a fertilizer and oilseed producer. Second quarter profits in 2008 rose to US $751 million, from US$168 million for the same quarter in 2007 (447 percent increase). See Hal Weitzman. Fertilizer sales help Bunge reap benefits (Financial Times, 24 July 2008)
[33] World Economic and Social Survey 2008: Overcoming Economic Insecurity (United Nations Department of Economic and Social Affairs, 19 August 2008) p 6.
[34] Ibid, p xix.
[35] Ibid, p 149.