Tuesday, February 12, 2013

Orchestrating Famine – a Must-Read Backgrounder on the Food Crisis

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)

Orchestrating famine

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 theWorld 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. More