Kam Kumar and Simon Hardy report on the growing food disaster, as some of the world’s poorest people are priced into starvation as a result of the latest stage of the capitalist crisis
• The Economist commodity price index: food: 69 per cent increase in last year, oil, 84.4 per cent
• According to the Financial Times, on 17 April the cost of rice hit $1,000 a tonne in Hong Kong, $1,200 per tonne in Manila
• Within the EU, in the last year milk and cheese increased by 33 per cent, eggs by 17 per cent
• The World Food Programme: The Silent Tsunami: every 20 per cent increase in food increases the number of people on equivalent of one dollar per day by 100 million
What started as a credit crunch in 2007 has rapidly escalated into a major crisis, which not only affects the world’s banks, but is now emptying the rice bowls of poor people around the world. Capitalist globalisation, once heralded by George Bush, Tony Blair and Gordon Brown as the solution to Third World poverty, is now revealed as quite the opposite – its major cause.
Wolfgang Münchau, associate editor of the Financial Times wrote on 29 April: “It is no accident that our multiple crises – property, credit, banking, food and commodities – have been happening at the same time. The simple reason is that they are all part of the same overriding narrative.”
This narrative centres on what Marxists call the contradictions of capitalism.
For instance, China, which, thanks to its cheap labour, has been able to produce low priced commodities for export to the USA and Europe. Up until last year, this proved a deflationary factor in the Western economies. But China’s massive intake of raw materials, like steel and oil, and increasing demand for meat and wheat at home means its effect is now ever more inflationary.
The commodity most basic to life – food – is now at the centre of this crisis. The 2.6 billion of the world’s 6.6 billion people, who live on less than $2 a day, spend from 60 to 80 per cent of their incomes on food. Inflation in food prices is driving huge numbers of them to hunger, and even starvation. According to The United Nations Food and Agriculture Organisation (FAO), in the twelve months from March 2007 to March 2008, prices of cereals increased by 88 per cent, oils and fats by 106 per cent, and dairy products by 48 per cent. The FAO general food price index rose 57 per cent in one year.
In Thailand – one of the world’s main exporters – rice sold for $198 a tonne five years ago, and $323 a tonne a year ago. On 24 April, the price hit $1,000. In Haiti, the market price of a 50 kilo sack of rice doubled in one week at the end of March.
Nor is this crisis limited to the “developing” world. The US Food Research and Action Centre calculates that 35 million Americans – 10.9 per cent of all households – are already struggling to put enough food on the table. There are now 200 regional food banks distributing food to 30,000 soup kitchens in the US.
Food Riots
While George Bush offers the helpful advice that genetically modified seeds are the solution – a measure that would put third world counties even further into the clutches of biotech giant Monsanto, the world’s poor have been taking to the streets. Haiti, Egypt, Indonesia and Zimbabwe have seen some of the worst riots. People, whose standard of living has improved marginally, or even declined after a decade of globalisation, have now become more and more desperate as their most basic needs are threatened.
Protesters all over the world have met with violence from the state. In Haiti, demonstrations that the BBC described as a “hungry mob” tried to storm the presidential palace in the capital city, Port-au-Prince. Five protesters were shot dead and many others injured. In Cameroon in February this year, forty were killed. President René Préval, who first claimed there were no actions he could take, hastily announced a 16 per cent cut in the wholesale price of rice.
“Hunger riots” have taken place in Cambodia, Cameroon, Côte d’Ivoire, Ethiopia, Honduras, Indonesia, Madagascar, Mauritania, Mexico, Niger, Pakistan, Peru, Philippines, Senegal, Thailand, Uzbekistan, and Zambia.
These uprisings of the poor have struck fear into the meetings of the International Monetary Fund and World Bank, whose directors and their political masters fear more instability, in addition to the damage the credit crisis has already done to big business interests around the world.
So why has this food crisis happened? Droughts – such as the serious one in Australia, which has halved the yield of wheat crops in New South Wales for the past two years – help drive up prices. But these are not the prime cause. Capitalisms’ crises, even its agrarian ones are not caused, as was the case in previous modes of production, by crop failures.
Food shortage?
In fact, there is not a physical shortage of food worldwide – agriculture produces enough to provide every person in the world with at least 3,500 calories a day, significantly more than the average person needs. Of course this food is not evenly distributed. In Europe and North America food is still destroyed; farmers are subsidised to take land out of cultivation to keep prices high. In the rest of the world people are starving, not because there is no food, but because consumers cannot afford to buy it and small farmers cannot afford the investment needed to produce it.
Economists who have broken from neoliberal orthodoxy like Jeffery Sachs point out that third world countries, especially in Africa, have been banned by the World Bank and the IMF from subsidising inputs, such as fertilizer, improved seeds, infrastructure (storage facilities, access roads, transport networks, etc), for small farmers. Meanwhile in North America and Europe such investment remains heavily subsidised.
In Haiti, up until 1995, farmers produced 95 per cent of domestic rice consumption without subsidies, though their access to local markets was protected by import tariffs. In that year, as a condition for a desperately needed loan, the International Monetary Fund forced the country to cut its tariff on rice imports from 35 per cent to 3 per cent.
Rice imported from the US flooded in, at half the Haitian price. The country’s rice farmers were bankrupted, and the country now takes 75 per cent of its rice from the USA, whose own rice farmers are subsidised to the tune of one billion dollars a year, and are themselves protected by high tariffs on imports, that is, the very same state measure that the IMF demanded Haiti abolish.
The growth in India and China’s industrial production has not been matched by agriculture. In the late 1960s and the 1970s, worried by peasant discontent, the Indian government, with the help of foreign aid, undertook massive investment in agriculture in particular regions, like Punjab. New seeds, fertiliser, pesticides and agricultural machinery were deployed. The result was a great expansion of agricultural production – the so-called Green Revolution.
But since the triumph of neoliberalism, few such projects have been undertaken. The Economist reports that “spending on farming as a share of total public spending in developing countries fell by half between 1980 and 2004.”
Speculation
The present price rises have many causes, including the conversion of land from food crops to harvests for biofuels. Climate change has also lead to an increase in drought and flooding, both of which ruin land for food production.
But the dramatic increase in prices seen in the last year also relates directly to the credit crunch. As complicated derivative investments become increasingly unreliable, the vultures of Wall Street and the City of London have turned to what they see as the safer option – making their money from buying up “commodity futures”.
In effect, hedge funds have been buying up next year’s harvests. This drives up prices, encouraging more speculation and more price rises. Traders also hold on to food, so that they can sell it later at a higher price.
A growing number of countries are being forced to take measures to protect their dwindling food stocks. Vietnam and Egypt, normally major exporters, have restricted exports of basic foodstuffs; while necessary for their own populations, this further drives up prices on the world market, and is leading to near starvation in, for example, Afghanistan, which depends on Pakistan wheat imports. India is considering imposing a blanket ban on trading in food futures only five years after it introduced such trading as part of neoliberal policies to develop India as a world financial centre.
Revolution
Each day the global capitalist system is exposed more clearly for its incompatibility with the needs of humanity, as markets fail to ensure any kind of fair distribution of essential commodities. Food, oil and other essential commodities need to be taken out of the speculative markets, so that parasites in the financial sector cannot profit from others’ starvation.
Aid is not enough; the workers and peasants of the world need to regain control of the resources they produce. Third World countries have the right to protect their farmers’ produce from the imperialist countries dumping (selling surplus foodstuffs at below the cost of production) on their markets.
The workers and the urban and rural poor should demand the confiscation of the big farms, owned by the multinational agribusiness companies and local landed bourgeoisie, and ensure that they are turned over for production, according to a democratically agreed plan, to meet people’s needs first, not for cash crops.
But a return to the old 1960s and 70’s third world development model will not help either. These countries cannot just pull themselves up by their own bootstraps. If they remain capitalist they will fall into the clutches of a crippling foreign debt as they did then. They do indeed need the resources that have been robbed by two centuries of capitalism and imperialism. The question is how to do this in a way that does not mean soaring foreign debt and unequal trading relations all over again.
In the imperialist heartlands the workers movement must demand the complete cancellation of the foreign debt of these states. We must fight for massive reparations to be paid the countries that have been plundered for so long, with no IMF-style conditions. We must expose the super-exploitation of the food multinationals and the biotech giants like Monsanto. We must struggle for workers power so that the vast resources, gambled on the stock exchanges and futures markets, or wasted in wars and occupations, are deployed to abolish end the state of affairs whereby a few feast and billions go hungry
But the fightback will be fiercest where the effects of the crisis are felt most sharply.. Revolutions are born out of crises like this and can shake the rule of the capitalists to its very foundations. The workers and peasants of the countries facing hunger are not just victims of global capitalism but potentially its gravediggers. Once in power they can:
• Launch a development plan of to increase production on the farms and improve rural infrastructure
• Create a state monopoly of foreign trade, under workers and poor peasants control, to ensure food at home and its despatch to other countries that need it
• Develop cooperative production and a democratic plan to meet human needs and eliminate the madness of the market for good.