The uprisings in Egypt, Tunisia and other parts of the Arab world are universally recognised to be related to the escalating cost of staple foods in those countries.
Although food prices have risen everywhere, it is in third-world countries that the price hikes have been highest, and there is nothing, apart from war, like the onset of hunger to fuel social unrest.
The French revolution was triggered by a bread crisis. The genocide that racked and disgraced Rwanda in 1994 was related to destitution caused by a world collapse in the price of coffee, Rwanda’s principal export, on which its entire economy was dependent.
In 1999 ex US president Jimmy Carter drew attention to the problems of countries “whose economies depend on agriculture but lack the means to make their farmland productive”, concluding that “There can be no peace until people have enough to eat. Hungry people are not peaceful people.” (See Jimmy Carter, ‘First step to peace is eradicating hunger’, International Herald Tribune, 17 June 1999).
About a billion people suffer from chronic hunger in the world today, and a further 2 billion are estimated to be malnourished. About 30% of Africa’s population is undernourished. About 3.5 million children under 5 in developing countries die from undernutrition-related causes each year. In Haiti things are so bad that people have resorted to eating mud.
Yet between June and December 2010 prices have soared. For example, the price of wheat has increased by large amounts in Kyrgyzstan (54%), Bangla Desh (45%), Tajikstan (37%), Mongolia (33%), Azerbaijan (19%), Sudan (16%) and Pakistan (16%). World maize prices in January 2011 were some 73% higher than 6 months previously. Other staples have suffered similar astronomic rises.
What is surprising, however, is that there is in fact no absolute shortage of foodstuffs produced in the world. What is produced is capable of feeding the whole of humanity, with some to spare.
It would appear, for instance, that “… with the global grain production at a little over 300kg per person … there is more than enough to supply the 230 kg per person needed for an adequate calorific intake if the grain were equitably distributed.” (Fred Magdoff and Brian Tokar, ‘Agriculture and food in crisis: an overview’, in their book Agriculture and food in crisis, Monthly Review Press, New York, 2010, p. 12). Of course, good nutrition requires more than the calorific nutrition provided by grains but it is clear that there is plenty of leeway for conversion of grain into protein foods (by using it for raising animals) to satisfy everybody – and of course there is also plenty of food production that is not directly or indirectly grain dependent, such as the production of vegetables.
The fact is, however, that food is not equitably distributed. For a start it is estimated that half of it is simply thrown away or destroyed (according to the Stockholm International Water Institute, sufficient food to feed 3 billion people, half the world’s population, is wasted).
Secondly, far more grain than is necessary to produce a sufficiency is diverted into the production of high protein foods – i.e., is used to feed animals – for the benefit of those who can afford to buy them and, increasingly, it is being diverted to the production of biofuels. In addition there has in any event been a decline in per capita world cereal output, which was 335kg per capita in 1980-85 but was down to 310kg per capita in 2000-05 – a phenomenon we propose to examine in more detail in the next issue of Lalkar. According to the United Nations (‘World Economic Situation and Prospects 2009’, p.48), “production has fallen woefully short of growth in food demand” because “productivity growth for major food crops has stalled, and there has been no significant increase in the use of cultivated land”.
As a result of all these factors, the apparent sufficiency of grain production has transformed itself into severe shortages, which in turn have given rise to price rises that have priced increasing numbers of the poor out of the market, condemning them to hunger and malnutrition.
The food import bills of the Least Developed Countries (LDCs) jumped 30% from 2005 to 2006 and another 37% between 2007 and 2008. Their food import bill was $17.9m in 2007 and $24.6m in 2008. “The annual food import basket in LDCs cost more than three times that of 2000, not because of the increased volume of food imports, but as a result of rising food prices” (‘World economic situation and prospects’, pp. 7-8).
An FAO ‘Briefing Paper: Hunger on the rise’, published in 2008, noted that these price rises added 75 million people to the ranks of the hungry and drove an estimated 125 million people in developing countries into extreme poverty.
William Rees and Mathis Wackernagel (in ‘Ecological footprints and appropriated carrying capacity’ in AM Jansson and other (eds) Investing in natural capital: the ecological economics approach to sustainability, Island Press, Washington, 1994) calculated that it takes the earth one year and four months to regenerate what humanity consumes in 12 months – and this was before the biofuels explosion.
Considerable blame for this overshoot lies with the wasteful diets of the relatively well-off (which includes the junk-food diets of the poor in rich countries) because these contain quantities of animal products far in excess of what is desirable for a healthy diet, producing obesity and disease. Indeed, it has been estimated that “As many as three out of every five of the children presently coming through school in the well-off world are destined to die as a result of what they eat, from the host of chronic disorders that result from overnutrition” (Julian Cribb, The coming famine, University of California Press, Los Angeles, 2010).
As will be explained further below, food production and distribution has increasingly been falling into the grip of predatory imperialist multinationals whose sole purpose is profit – and profits are easier to extract from force feeding the relatively wealthy than from catering to the basic needs of the world’s poor.
Left to the tender mercies of capitalism, with its drive for profits, the system of food production and distribution not only condemns millions of people to starvation, but in addition causes massive ecological devastation that is likely to cause apocalyptic conditions for the next generation – an issue that will be examined in more detail in the next issue of Lalkar.
Monopolisation of food
The problems of equitable food distribution have grown worse over the last few decades as the food industry has been taken over throughout the world by a process of monopolisation.
According to Philip McMichael (‘The world food crisis in historical perspective’ in Magdoff and Tokar, op.cit.), “Food stocks are highly centralised – five corporations control 90 per cent of the international grain trade, three countries produce 70 percent of exported corn, and the thirty largest food retailers control one-third of world grocery sales” (p.62).
And John Wilkinson in the same volume explains in ‘The globalisation of agribusiness’, p. 157-8):
“The changing global dynamics of demand and the acceptance of the ‘free market’ liberal approach by developing countries [had] already occurred [by the 1980s] in most advanced capitalist countries. In the United States, concentration levels for the top four or five firms have been calculated for the major upstream inputs (materials, resources, energy, fertilisers, etc) and downstream outputs (farm products, processing, and sales markets). The main segments have ratios averaging well over the 40 percent level – considered the threshold for a market oligopoly – and often in the 70-80 percent range … The major agricultural commodities that make up world trade are also subject to high levels of concentration – grains and oils, coffee, cocoa, and bananas. In addition, a substantial proportion of trade is now organised and co-ordinated by lead firms. This is particularly the case for the so-called non-traditional exports (seafood, fruits, vegetables, flowers), very often under the control of large-scale retailers…
“In smaller market segments, there are even higher levels of concentration involving duopolies and even monopolies … the major firms grow both horizontally (in like sectors) and vertically (integrating both downstream suppliers and upstream markets for a given industry) – leading to concentration and economic power that extends to broad sections of the agrifood system…”
“The scale of the [monopolist] firms is staggering. In 2007, the food processor Nestlé posted a profit of $9.7 billion, greater than the 2007 GDP of the sixty-five poorest countries. Wal-Mart, the world’s largest grocer, posted profits of $13.3 billion for the fiscal year ending January 31, 2009. That is more than the 2007 GDP of almost half the countries of the world … in profits alone … With this market power comes the ability both to predict (and to some extent set) prices, the political clout to affect trade and investment policy in many of the more than one hundred countries in which the biggest firms operate, ad the power to keep would-be competitors at bay” (p.111).
One of the most dire consequences of this monopolisation of the food industry is the fact that the sheer economic power of the monopolies enables them to dictate policy to the governments of the countries in which they operate and, needless to say, their demands on government aim to maximise their profits, regardless of the interests – indeed normally at the expense – of the people those governments are supposed to represent.
It is the interests of agribusiness that have driven the governments of imperialist countries to impose Structural Adjustment Programmes (SAPs) on the oppressed countries, through the WTO, the IMF and the World Bank. These SAPs bear heavy responsibility for the rising prices of staples that beset oppressed countries today.
At the Uruguay Round of trade negotiations that took place in 1986, and which set up the World Trade Organisation, various governments signed an Agreement on Agriculture, the first multilateral agreement to create binding rules on agricultural trade.
According to Sophia Murphy (‘Free trade in agriculture: a bad idea whose time is done’ – in Magdoff and Tokar, op.cit. at p. 105):
“The argument that tied food security to unfettered trade went something like this: liberalise world agricultural markets by ending subsidies to inefficient producers, tear down tariff walls and end the practice of holding government-controlled food stocks. World market supplies will then move to where need is greatest. In turn world food prices for agricultural commodities will rise, which will be good for farmers who are profitable in the deregulated markets. At the same time, consumers will pay less, benefiting from the efficiencies created by sharper competition. Environmental efficiencies are gained by concentrating production of particular crops in countries that have the greatest ‘comparative advantage’, and private companies are able to manage the business of getting food from where it is grown to where it is needed, cutting significant costs out of government budgets in those countries where the state used to play all or some of this role …”
In practice, however, the imperialist countries continued to protect their own agriculture with a whole host of subsidies, while forcing liberalisation on oppressed countries. In the face of imperialist competition masses of farmers in oppressed countries were driven into bankruptcy.
Under the aegis of the World Trade Organisation (WTO), and the strong-arm discipline of the International Monetary Fund (IMF) and the World Bank (WB), oppressed countries were also forced to abandon their tradition of accumulating public food stocks that previously offered a defence against shortages. These stocks helped stabilise prices as government would buy up food stocks at times of excess supply, thereby maintaining a reasonable price for farmers, but release the food at times of insufficient supply, thus preventing excessive price rises. Of course, these government interventions stood in the way of the maximisation of profit by the imperialist agrifood multinationals and they had therefore to be outlawed. The result was that by 1998, according to the FAO, net food-importing oppressed countries experienced a 20% price increase.
The Keynesian Joan Robinson was quite right when she noted that:
“When Ricardo set out the case against protection he was supporting British economic interests. Free trade ruined Portuguese industry. Free trade for others is in the interests of the strongest competitor in world markets, and a sufficiently strong competitor has no need for protection at home” (‘What are the questions?’, in Collected Economic Papers vol 5, Bas Blackwell, Oxford, 1979, pp. 1-29).
An example of how ‘free trade’ impacts on oppressed countries is given by Fred Magdoff and Brian Tokar (op.cit. pp. 21-22):
“Corporations that pioneered factory-scale animal production in the United States, displacing many independent hog, cattle and poultry farmers, are now also producing abroad. They achieve low costs of production by: (a) having very large facilities, (b) controlling and providing all the feed and medicines; (c) mandating that the people raising the animals … essentially work as labourers under contracts favourable to the corporation …; (d) passing on responsibility for manure and other waste … Smithfield, a Virginia based Fortune 500 corporation, has used its power and connections to expand into Eastern Europe. In the space of a few years, about 90 percent of Romania’s and 56 percent of Poland’s hog farmers were put out of business because of competition from Smithfield – creating social as well as environmental havoc. In addition, frozen pork products are exported to West Africa – Liberia, Equatorial Guinea, and the Ivory Coast – where local producers are also put out of business. Smithfield receives export incentive funds from Poland and sells its pork at about half the price sought by local producers in the Ivory Coast”.
In this case the imperialist produced food is cheaper, but the economic activity of the target country has been shot to pieces by a multitude of imperialist interventions such as Smithfield’s, as a result of which increasing numbers of people are unable to pay even the reduced price of pork and other commodities.
Professor Jeffery Sachs of Columbia University, who was initially an enthusiastic supporter of free trade as the cure for all ills, has in the light of experience had the honesty and humility to revise his views somewhat and has concluded:
“The whole thing was based on the idea that if you take away the government from the poorest of the poor that somehow these 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” (quoted in Celia W Dugger, ‘World Bank Neglects African Agriculture, Study Says’, New York Times, 15 October 2007).
Not only do prices rise because the stabilization mechanisms practised by governments have been forcibly dismantled, but also because of the straightforward and time-honoured monopolist practice of price fixing.
Philip McMichael (op.cit.) gives the poignant example of how these processes affected Mexico (pp. 63-64):
“While corn prices fell continuously following NAFTA’s liberalization of corn imports from the United States, tortilla prices tripled during the 1990s. And during 2006, when world corn prices did rise rapidly, tortilla prices doubled again … With only two food processors controlling 97 per cent of the industrial corn flour market, and the state reducing food subsidies, tortilla riots have become part of the political landscape – spurred by a 10 percent reduction in wages resulting from rural migrants displaced by corn imports”.
In this context, Walden Bello and Mara Banera (in Magdoff and Tokar, pp. 39-40) remind us:
“… An intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was first domesticated, become ‘dependent’ on imports of US corn in the first place?
“The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn importing economy by free market policies promoted by the International Monetary Fund, the World Bank, and Washington … The key link between the food crisis, the drug wars, and the massive migration to the North has been structural adjustment”.
It was through Structural Adjustment programmes that support was withdrawn from peasant farmers alongside NAFTA-imposed trade liberalisation with the tragic results that are today all too obvious.
And while the masses all over the world are hit by starvation, the rates of profit for agribusiness are always more than healthy.
The monopolisation of food production and distribution goes hand in hand with the exponential expansion of unnecessary waste of food.
In 2005 BBC Radio 4 broadcast a programme, ‘Costing the earth’, which, using figures produced by DEFRA and the NFU, graphically exposed the egregious waste of food that is happening every day in the UK alone. 30-40% of all produce is binned. Every year in the UK, food worth £20 bn is discarded in its journey from the farmyard to the fridge. It just so happens that £20 bn is also the annual figure that, according to the UN, would be required to eliminate starvation in Africa.
But after the food reaches the fridge, even more is wasted, with an average of £420 per British adult per annum (£23 bn a year) being thrown away, largely because it has not been used by the ‘best before’ date. Altogether British household are estimated to throw away 6.7 million tonnes a year, half of which would have been perfectly edible when bought (see Sean Poulter, ‘Britain, the world’s most wasteful nation, Mail on Sunday, 17 March 2007).
All this waste is related to the activities of food distribution monopolies, i.e., the big supermarkets. For a start, they themselves destroy vast amounts of edible food. According to the Guardian of 15 April 2005:
“Tesco says it sent 131,000 tonnes of waste to landfill in 2004, of which ‘the majority was food’. Sainsbury’s, which distributes food to more than 400 charities, says it sent 91,000 tonnes to landfill, of which at least 70,000 tonnes is believed to be waste food”.
Meanwhile a woman called Sacha Hall faces conviction for theft for having helped herself in January this year to £215.16 worth of food, including 100 packs of ham, from Tesco dustbins in Great Baddow, Essex. Tesco sent police to find her. They raided her home and hauled her away in handcuffs. The case remains to be heard.
In all it is believed supermarkets may bin some 500,000 tonnes of food a year; while UK farmers, because the supermarkets to whom they supply require unblemished, specifically-sized, shaped and coloured food, find themselves obliged to trash some 30-40% by weight of their various crops. These do at least tend to get ploughed back into the land rather than adding to the rubbish mountains, but they still represent an appalling waste of the water, fertilizer, and land that has been used to grow them.
Even household waste arises because in the interests of profit supermarkets encourage customers to buy too much and stamp often unrealistic ‘best before’ dates on the food that they sell.
Wasting food has been costing the average British household some £35 a week. Perhaps a small benefit of the current economic crisis and the austerity to which capitalism is subjecting the British population is that this waste will be drastically curtailed … but then our supermarkets would be bankrupted!
Waste of food is not of course a purely British phenomenon, even if the Mail on Sunday does claim Britain leads the world on this front.
Globally the FAO estimates a full third of all fruits and vegetables grown never reach the customer at all, perishing in the fields, in storage, or en route, and being attacked by a ravenous horde of moulds, insects and rodents. Spoilage claims 30% of India’s fresh produce, while postharvest losses of fruit and vegetables in some African countries can reach 50%, says the World Vegetable Center.
We harvest around 4,600 calories per person per day, it says, but only 2000 of these actually reach our mouths (see Julian Cribb, op.cit., p.70) (see TABLE 1).
Daily calories per head of population
Edible crops harvested
LESS Post harvest losses
LESS Animal feed
ADD Meat and dairy produce
LESS Losses and waste in distribution and households
Available calories per head of population
Julian Cribb remarks on this: “A world in which a billion people go to bed hungry throws away food sufficient to feed three billion”. (op.cit. p.71).
If biofuels are added to the equation it can readily be seen what disaster awaits, since the table reproduced here takes no account of biofuels.
Yet the latter have become the great white hope of the imperialist countries facing the prospect of dwindling supplies of fossil fuels and asking themselves the question ‘What will happen when the oil runs out?’
President Bush embraced agrofuel development with total commitment. In 2007 the US Congress passed the Energy Independence and Security Act which aims to facilitate increasing US agrofuel production from 4.7 bn gallons in 2007 to over 36 bn in 2022.
Obama shows every sign of following in Bush’s footsteps and any possibility of going back on this policy has been dismissed out of hand, notwithstanding the alarm expressed by scientists around the world.
In 2008 around 30% of US corn was used for ethanol production, which cannot but have impacted on the world price of corn as the US is a major exporter. It is also suspected that much of the land that imperialist concerns are acquiring in huge tracts in such countries as Philippines, Cambodia and Madagascar are destined to be turned over to agrofuel production.
Half of Brazil’s sugarcane crop is also converted into fuel. European monopolies too are in on the action. According to Action Aid, European companies “have already secured or requested at least 5 million hectares of land for industrial biofuels in developing countries” (Tim Rice, ‘Meals per gallon’, Action Aid, London, 2010). This is an area equivalent in size to the whole of Denmark.
As a means of making good the loss of energy supplies that will necessarily occur as oil production reaches its peak (if indeed it has not already done so), those who see biofuels as the answer are on a hiding to nothing.
Oxfam Briefing Paper no. 114, ‘Another inconvenient truth: how biofuel policies are deepening poverty and accelerating climate change’ (London, 25 June 2008) has worked out that even if the world’s entire supply of carbohydrates (grains and sugar) were all used to produce biofuel, this would replace at most 40% of world petrol consumption.
Action Aid also estimates that on current trends the conversion of food into biofuels would raise food prices to such an extent that the number of people in the world suffering from hunger would rise by 50%, from 1 billion to 1.5 billion.
Lester Brown told the New Scientist (see Fred Pearce, ‘Fuels gold: big risks of the biofuel revolution’, New Scientist no. 2570, September 2006) that “the corn required to fill a SUV tank with bioethanol just once could feed one person for a year”.
However, since the demand for petrol on the part of the owners of motor vehicles and aggressive imperialist governments seeking to power their killing machines is effective demand, i.e., demand backed up by cash in hand, their requirements will always take precedence in a capitalist world to the demands of the poor for food!
[To be continued in the next issue of LALKAR]