Global food crisis: ‘The greatest demonstration of the historical failure of the capitalist model’

This is a great article.

The two leading paragraphs give a very clear example of what is happening. Capitalist greed will likely kill thousands of people throgh hunger and starvation.

When the final tombstone of Homo Sapiens is built, it may well read: "Here Lies Homo Sapiens, killed by capitalist greed."

Manufacturing A Food Crisis
By Walden Bello
June 2, 2008 edition of The Nation
May 15, 2008
http://www.thenation.com/doc/20080602/bello

When tens of thousands of people staged demonstrations
in Mexico last year to protest a 60 percent increase in
the price of tortillas, many analysts pointed to biofuel
as the culprit. Because of US government subsidies,
American farmers were devoting more and more acreage to
corn for ethanol than for food, which sparked a steep
rise in corn prices. The diversion of corn from
tortillas to biofuel was certainly one cause of
skyrocketing prices, though speculation on biofuel
demand by transnational middlemen may have played a
bigger role. However, an intriguing question escaped
many observers: how on earth did Mexicans, who live in
the land where corn was domesticated, become dependent
on US imports 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 (IMF), the World Bank and Washington. The process
began with the early 1980s debt crisis. One of the two
largest developing-country debtors, Mexico was forced to
beg for money from the Bank and IMF to service its debt
to international commercial banks. The quid pro quo for
a multibillion-dollar bailout was what a member of the
World Bank executive board described as "unprecedented
thoroughgoing interventionism" designed to eliminate
high tariffs, state regulations and government support
institutions, which neoliberal doctrine identified as
barriers to economic efficiency.

Interest payments rose from 19 percent of total
government expenditures in 1982 to 57 percent in 1988,
while capital expenditures dropped from an already low
19.3 percent to 4.4 percent. The contraction of
government spending translated into the dismantling of
state credit, government-subsidized agricultural inputs,
price supports, state marketing boards and extension
services. Unilateral liberalization of agricultural
trade pushed by the IMF and World Bank also contributed
to the destabilization of peasant producers.

This blow to peasant agriculture was followed by an even
larger one in 1994, when the North American Free Trade
Agreement went into effect. Although NAFTA had a
fifteen-year phaseout of tariff protection for
agricultural products, including corn, highly subsidized
US corn quickly flooded in, reducing prices by half and
plunging the corn sector into chronic crisis. Largely as
a result of this agreement, Mexico's status as a net
food importer has now been firmly established.

With the shutting down of the state marketing agency for
corn, distribution of US corn imports and Mexican grain
has come to be monopolized by a few transnational
traders, like US-owned Cargill and partly US-owned
Maseca, operating on both sides of the border. This has
given them tremendous power to speculate on trade
trends, so that movements in biofuel demand can be
manipulated and magnified many times over. At the same
time, monopoly control of domestic trade has ensured
that a rise in international corn prices does not
translate into significantly higher prices paid to small
producers.

It has become increasingly difficult for Mexican corn
farmers to avoid the fate of many of their fellow corn
cultivators and other smallholders in sectors such as
rice, beef, poultry and pork, who have gone under
because of the advantages conferred by NAFTA on
subsidized US producers. According to a 2003 Carnegie
Endowment report, imports of US agricultural products
threw at least 1.3 million farmers out of work--many of
whom have since found their way to the United States.

Prospects are not good, since the Mexican government
continues to be controlled by neoliberals who are
systematically dismantling the peasant support system, a
key legacy of the Mexican Revolution. As Food First
executive director Eric Holt-Giménez sees it, "It will
take time and effort to recover smallholder capacity,
and there does not appear to be any political will for
this--to say nothing of the fact that NAFTA would have
to be renegotiated."

Creating a Rice Crisis in the Philippines

That the global food crisis stems mainly from free-
market restructuring of agriculture is clearer in the
case of rice. Unlike corn, less than 10 percent of world
rice production is traded. Moreover, there has been no
diversion of rice from food consumption to biofuels. Yet
this year alone, prices nearly tripled, from $380 a ton
in January to more than $1,000 in April. Undoubtedly the
inflation stems partly from speculation by wholesaler
cartels at a time of tightening supplies. However, as
with Mexico and corn, the big puzzle is why a number of
formerly self-sufficient rice-consuming countries have
become severely dependent on imports.

The Philippines provides a grim example of how
neoliberal economic restructuring transforms a country
from a net food exporter to a net food importer. The
Philippines is the world's largest importer of rice.
Manila's desperate effort to secure supplies at any
price has become front-page news, and pictures of
soldiers providing security for rice distribution in
poor communities have become emblematic of the global
crisis.

The broad contours of the Philippines story are similar
to those of Mexico. Dictator Ferdinand Marcos was guilty
of many crimes and misdeeds, including failure to follow
through on land reform, but one thing he cannot be
accused of is starving the agricultural sector. To head
off peasant discontent, the regime provided farmers with
subsidized fertilizer and seeds, launched credit plans
and built rural infrastructure. When Marcos fled the
country in 1986, there were 900,000 metric tons of rice
in government warehouses.

Paradoxically, the next few years under the new
democratic dispensation saw the gutting of government
investment capacity. As in Mexico the World Bank and
IMF, working on behalf of international creditors,
pressured the Corazon Aquino administration to make
repayment of the $26 billion foreign debt a priority.
Aquino acquiesced, though she was warned by the
country's top economists that the "search for a recovery
program that is consistent with a debt repayment
schedule determined by our creditors is a futile one."
Between 1986 and 1993 8 percent to 10 percent of GDP
left the Philippines yearly in debt-service payments--
roughly the same proportion as in Mexico. Interest
payments as a percentage of expenditures rose from 7
percent in 1980 to 28 percent in 1994; capital
expenditures plunged from 26 percent to 16 percent. In
short, debt servicing became the national budgetary
priority.

Spending on agriculture fell by more than half. The
World Bank and its local acolytes were not worried,
however, since one purpose of the belt-tightening was to
get the private sector to energize the countryside. But
agricultural capacity quickly eroded. Irrigation
stagnated, and by the end of the 1990s only 17 percent
of the Philippines' road network was paved, compared
with 82 percent in Thailand and 75 percent in Malaysia.
Crop yields were generally anemic, with the average rice
yield way below those in China, Vietnam and Thailand,
where governments actively promoted rural production.
The post-Marcos agrarian reform program shriveled,
deprived of funding for support services, which had been
the key to successful reforms in Taiwan and South Korea.
As in Mexico Filipino peasants were confronted with
full-scale retreat of the state as provider of
comprehensive support--a role they had come to depend
on.

And the cutback in agricultural programs was followed by
trade liberalization, with the Philippines' 1995 entry
into the World Trade Organization having the same effect
as Mexico's joining NAFTA. WTO membership required the
Philippines to eliminate quotas on all agricultural
imports except rice and allow a certain amount of each
commodity to enter at low tariff rates. While the
country was allowed to maintain a quota on rice imports,
it nevertheless had to admit the equivalent of 1 to 4
percent of domestic consumption over the next ten years.
In fact, because of gravely weakened production
resulting from lack of state support, the government
imported much more than that to make up for shortfalls.
The massive imports depressed the price of rice,
discouraging farmers and keeping growth in production at
a rate far below that of the country's two top
suppliers, Thailand and Vietnam.

The consequences of the Philippines' joining the WTO
barreled through the rest of its agriculture like a
super-typhoon. Swamped by cheap corn imports--much of it
subsidized US grain--farmers reduced land devoted to
corn from 3.1 million hectares in 1993 to 2.5 million in
2000. Massive importation of chicken parts nearly killed
that industry, while surges in imports destabilized the
poultry, hog and vegetable industries.

During the 1994 campaign to ratify WTO membership,
government economists, coached by their World Bank
handlers, promised that losses in corn and other
traditional crops would be more than compensated for by
the new export industry of "high-value-added" crops like
cut flowers, asparagus and broccoli. Little of this
materialized. Nor did many of the 500,000 agricultural
jobs that were supposed to be created yearly by the
magic of the market; instead, agricultural employment
dropped from 11.2 million in 1994 to 10.8 million in
2001.

The one-two punch of IMF-imposed adjustment and WTO-
imposed trade liberalization swiftly transformed a
largely self-sufficient agricultural economy into an
import-dependent one as it steadily marginalized
farmers. It was a wrenching process, the pain of which
was captured by a Filipino government negotiator during
a WTO session in Geneva. "Our small producers," he said,
"are being slaughtered by the gross unfairness of the
international trading environment."

The Great Transformation

The experience of Mexico and the Philippines was
paralleled in one country after another subjected to the
ministrations of the IMF and the WTO. A study of
fourteen countries by the UN's Food and Agricultural
Organization found that the levels of food imports in
1995-98 exceeded those in 1990-94. This was not
surprising, since one of the main goals of the WTO's
Agreement on Agriculture was to open up markets in
developing countries so they could absorb surplus
production in the North. As then-US Agriculture
Secretary John Block put it in 1986, "The idea that
developing countries should feed themselves is an
anachronism from a bygone era. They could better ensure
their food security by relying on US agricultural
products, which are available in most cases at lower
cost."

What Block did not say was that the lower cost of US
products stemmed from subsidies, which became more
massive with each passing year despite the fact that the
WTO was supposed to phase them out. From $367 billion in
1995, the total amount of agricultural subsidies
provided by developed-country governments rose to $388
billion in 2004. Since the late 1990s subsidies have
accounted for 40 percent of the value of agricultural
production in the European Union and 25 percent in the
United States.

The apostles of the free market and the defenders of
dumping may seem to be at different ends of the
spectrum, but the policies they advocate are bringing
about the same result: a globalized capitalist
industrial agriculture. Developing countries are being
integrated into a system where export-oriented
production of meat and grain is dominated by large
industrial farms like those run by the Thai
multinational CP and where technology is continually
upgraded by advances in genetic engineering from firms
like Monsanto. And the elimination of tariff and
nontariff barriers is facilitating a global agricultural
supermarket of elite and middle-class consumers serviced
by grain-trading corporations like Cargill and Archer
Daniels Midland and transnational food retailers like
the British-owned Tesco and the French-owned Carrefour.

There is little room for the hundreds of millions of
rural and urban poor in this integrated global market.
They are confined to giant suburban favelas, where they
contend with food prices that are often much higher than
the supermarket prices, or to rural reservations, where
they are trapped in marginal agricultural activities and
increasingly vulnerable to hunger. Indeed, within the
same country, famine in the marginalized sector
sometimes coexists with prosperity in the globalized
sector.

This is not simply the erosion of national food self-
sufficiency or food security but what Africanist Deborah
Bryceson of Oxford calls "de-peasantization"--the
phasing out of a mode of production to make the
countryside a more congenial site for intensive capital
accumulation. This transformation is a traumatic one for
hundreds of millions of people, since peasant production
is not simply an economic activity. It is an ancient way
of life, a culture, which is one reason displaced or
marginalized peasants in India have taken to committing
suicide. In the state of Andhra Pradesh, farmer suicides
rose from 233 in 1998 to 2,600 in 2002; in Maharashtra,
suicides more than tripled, from 1,083 in 1995 to 3,926
in 2005. One estimate is that some 150,000 Indian
farmers have taken their lives. Collapse of prices from
trade liberalization and loss of control over seeds to
biotech firms is part of a comprehensive problem, says
global justice activist Vandana Shiva: "Under
globalization, the farmer is losing her/his social,
cultural, economic identity as a producer. A farmer is
now a 'consumer' of costly seeds and costly chemicals
sold by powerful global corporations through powerful
landlords and money lenders locally."

African Agriculture: From Compliance to Defiance

De-peasantization is at an advanced state in Latin
America and Asia. And if the World Bank has its way,
Africa will travel in the same direction. As Bryceson
and her colleagues correctly point out in a recent
article, the World Development Report for 2008, which
touches extensively on agriculture in Africa, is
practically a blueprint for the transformation of the
continent's peasant-based agriculture into large-scale
commercial farming. However, as in many other places
today, the Bank's wards are moving from sullen
resentment to outright defiance.

At the time of decolonization, in the 1960s, Africa was
actually a net food exporter. Today the continent
imports 25 percent of its food; almost every country is
a net importer. Hunger and famine have become recurrent
phenomena, with the past three years alone seeing food
emergencies break out in the Horn of Africa, the Sahel,
and Southern and Central Africa.

Agriculture in Africa is in deep crisis, and the causes
range from wars to bad governance, lack of agricultural
technology and the spread of HIV/AIDS. However, as in
Mexico and the Philippines, an important part of the
explanation is the phasing out of government controls
and support mechanisms under the IMF and World Bank
structural adjustment programs imposed as the price for
assistance in servicing external debt.

Structural adjustment brought about declining
investment, increased unemployment, reduced social
spending, reduced consumption and low output. Lifting
price controls on fertilizers while simultaneously
cutting back on agricultural credit systems simply led
to reduced fertilizer use, lower yields and lower
investment. Moreover, reality refused to conform to the
doctrinal expectation that withdrawal of the state would
pave the way for the market to dynamize agriculture.
Instead, the private sector, which correctly saw reduced
state expenditures as creating more risk, failed to step
into the breach. In country after country, the departure
of the state "crowded out" rather than "crowded in"
private investment. Where private traders did replace
the state, noted an Oxfam report, "they have sometimes
done so on highly unfavorable terms for poor farmers,"
leaving "farmers more food insecure, and governments
reliant on unpredictable international aid flows." The
usually pro-private sector Economist agreed, admitting
that "many of the private firms brought in to replace
state researchers turned out to be rent-seeking
monopolists."

The support that African governments were allowed to
muster was channeled by the World Bank toward export
agriculture to generate foreign exchange, which states
needed to service debt. But, as in Ethiopia during the
1980s famine, this led to the dedication of good land to
export crops, with food crops forced into less suitable
soil, thus exacerbating food insecurity. Moreover, the
World Bank's encouragement of several economies to focus
on the same export crops often led to overproduction,
triggering price collapses in international markets. For
instance, the very success of Ghana's expansion of cocoa
production triggered a 48 percent drop in the
international price between 1986 and 1989. In 2002-03 a
collapse in coffee prices contributed to another food
emergency in Ethiopia.

As in Mexico and the Philippines, structural adjustment
in Africa was not simply about underinvestment but state
divestment. But there was one major difference. In
Africa the World Bank and IMF micromanaged, making
decisions on how fast subsidies should be phased out,
how many civil servants had to be fired and even, as in
the case of Malawi, how much of the country's grain
reserve should be sold and to whom.

Compounding the negative impact of adjustment were
unfair EU and US trade practices. Liberalization allowed
subsidized EU beef to drive many West African and South
African cattle raisers to ruin. With their subsidies
legitimized by the WTO, US growers offloaded cotton on
world markets at 20 percent to 55 percent of production
cost, thereby bankrupting West and Central African
farmers.

According to Oxfam, the number of sub-Saharan Africans
living on less than a dollar a day almost doubled, to
313 million, between 1981 and 2001--46 percent of the
whole continent. The role of structural adjustment in
creating poverty was hard to deny. As the World Bank's
chief economist for Africa admitted, "We did not think
that the human costs of these programs could be so
great, and the economic gains would be so slow in
coming."

In 1999 the government of Malawi initiated a program to
give each smallholder family a starter pack of free
fertilizers and seeds. The result was a national surplus
of corn. What came after is a story that should be
enshrined as a classic case study of one of the greatest
blunders of neoliberal economics. The World Bank and
other aid donors forced the scaling down and eventual
scrapping of the program, arguing that the subsidy
distorted trade. Without the free packs, output
plummeted. In the meantime, the IMF insisted that the
government sell off a large portion of its grain
reserves to enable the food reserve agency to settle its
commercial debts. The government complied. When the food
crisis turned into a famine in 2001-02, there were
hardly any reserves left. About 1,500 people perished.
The IMF was unrepentant; in fact, it suspended its
disbursements on an adjustment program on the grounds
that "the parastatal sector will continue to pose risks
to the successful implementation of the 2002/03 budget.
Government interventions in the food and other
agricultural markets... [are] crowding out more
productive spending."

By the time an even worse food crisis developed in 2005,
the government had had enough of World Bank/IMF
stupidity. A new president reintroduced the fertilizer
subsidy, enabling 2 million households to buy it at a
third of the retail price and seeds at a discount. The
result: bumper harvests for two years, a million-ton
maize surplus and the country transformed into a
supplier of corn to Southern Africa.

Malawi's defiance of the World Bank would probably have
been an act of heroic but futile resistance a decade
ago. The environment is different today, since
structural adjustment has been discredited throughout
Africa. Even some donor governments and NGOs that used
to subscribe to it have distanced themselves from the
Bank. Perhaps the motivation is to prevent their
influence in the continent from being further eroded by
association with a failed approach and unpopular
institutions when Chinese aid is emerging as an
alternative to World Bank, IMF and Western government
aid programs.

Food Sovereignty: An Alternative Paradigm?

It is not only defiance from governments like Malawi and
dissent from their erstwhile allies that are undermining
the IMF and the World Bank. Peasant organizations around
the world have become increasingly militant in their
resistance to the globalization of industrial
agriculture. Indeed, it is because of pressure from
farmers' groups that the governments of the South have
refused to grant wider access to their agricultural
markets and demanded a massive slashing of US and EU
agricultural subsidies, which brought the WTO's Doha
Round of negotiations to a standstill.

Farmers' groups have networked internationally; one of
the most dynamic to emerge is Via Campesina (Peasant's
Path). Via not only seeks to get "WTO out of
agriculture" and opposes the paradigm of a globalized
capitalist industrial agriculture; it also proposes an
alternative--food sovereignty. Food sovereignty means,
first of all, the right of a country to determine its
production and consumption of food and the exemption of
agriculture from global trade regimes like that of the
WTO. It also means consolidation of a smallholder-
centered agriculture via protection of the domestic
market from low-priced imports; remunerative prices for
farmers and fisherfolk; abolition of all direct and
indirect export subsidies; and the phasing out of
domestic subsidies that promote unsustainable
agriculture. Via's platform also calls for an end to the
Trade Related Intellectual Property Rights regime, or
TRIPs, which allows corporations to patent plant seeds;
opposes agro-technology based on genetic engineering;
and demands land reform. In contrast to an integrated
global monoculture, Via offers the vision of an
international agricultural economy composed of diverse
national agricultural economies trading with one another
but focused primarily on domestic production.

Once regarded as relics of the pre-industrial era,
peasants are now leading the opposition to a capitalist
industrial agriculture that would consign them to the
dustbin of history. They have become what Karl Marx
described as a politically conscious "class for itself,"
contradicting his predictions about their demise. With
the global food crisis, they are moving to center
stage--and they have allies and supporters. For as
peasants refuse to go gently into that good night and
fight de-peasantization, developments in the twenty-
first century are revealing the panacea of globalized
capitalist industrial agriculture to be a nightmare.
With environmental crises multiplying, the social
dysfunctions of urban-industrial life piling up and
industrialized agriculture creating greater food
insecurity, the farmers' movement increasingly has
relevance not only to peasants but to everyone
threatened by the catastrophic consequences of global
capital's vision for organizing production, community
and life itself.

Walden Bello

Walden Bello is senior analyst at and former executive
director of Focus on the Global South, a research and
advocacy institute based at Chulalongkorn University in
Bangkok. He is the author or co-author of many books on
politics and economic issues in the Philippines and
Asia, including, most recently, Deglobalization (Zed),
and recipient of the 2003 Right Livelihood Award, also
known as the "Alternative Nobel Prize." In March he was
named Outstanding Public Scholar for 2008 by the
International Studies Association.

The Global Food Crisis
How the Market Has Driven up Prices and Hunger

Karen Harper, Oakland LMV

Anger at rapidly rising food prices has now been surpassed in the US by
anger at the high cost of gas and getting to work. For the 2 billion
ordinary people around the globe that live on less than $2 a day, the
current global food crisis is having a huge impact. It is likely that
more people will starve to death in the coming months than die as a
result of all the current wars on the planet combined. How did this
situation arise?

There has been a worldwide increase in prices in certain food
commodities especially cereals, which are the staple foods for a huge
proportion of the world's population. Primarily affected are wheat,
corn, rice and soybeans. These price increases in turn are affecting the
prices of other foods like dairy products and eggs. Slightly less
affected at this point are the prices of meats and vegetables.

For example, globally, food prices have increased by 83% in the past 36
months, 1 with the greatest price increase happening since the summer of
2007. Rice prices in Asia have increased two to threefold in the recent
period and specifically doubled this year. Thai rice at the end of 2007
was $320 per metric ton, in May 2008 it was $1100 per metric ton.2 In
May of 2008, corn in the US was priced at $5.50 a bushel, which is
double the 2007 price, 3 and at the Minneapolis Grain Exchange in
February wheat prices had quadrupled in one year to over $15 a bushel.4
Even food commodities that have primarily local markets have increased
in price: lentils in India have increased from $300 to $800 per ton
during this same period.5 In Burundi a product called farine noir, a
combination of black flour and moldy cassava, which is sold as a
subsistence food to the very poor, saw its price triple in eight weeks.6

In China food inflation was estimated at about 18% for last year.7 In
the Middle-east, which is net food importer, the food import bill has
increased 170% since 2000. In Egypt and Yemen alone food prices have
increased almost 60% in one year.8 In Pakistan food and beverage prices
increased by over 20% in March of this year alone.9

*Worldwide Starvation, Increased Revolts *
The biggest impact from price increases are on the world's poorest
people. There are many references to the "world's bottom billion," which
is generally the population who live on less than $1 per day, and is
currently about 880 million people. This is an arbitrary dividing line,
and in fact, 2.1 billion people live on less than $2-a day.10 The UN
estimates that with the current rise in food prices 100-130 million more
people are at risk from hunger than they were 8 months ago.11 In the
world's under developed countries the poorest people spend about 40-70%
of their incomes on food, compared to 10-15% in the industrialized
nations.12 So it is clear how this food crisis is greater for those
living in poverty.

In response to these dramatic price increases, there has been increased
unrest in dozens of countries in the form of strikes and riots. Haiti,
Egypt, Yemen, and the Philippines have had some forms of rioting. In
Haiti the Prime Minister was forced to resign in response to the unrest
over food prices. In Lebanon, a general strike was organized in response
to price increases, and calls for strikes in Egypt have been
aggressively suppressed by the US-backed regime there.

Some countries, desperate to prevent food-related unrest, have
introduced increased price controls for food. India and Vietnam, the #2
and #3 rice exporters in the world, have begun export restrictions.13
Also countries such as Argentina, China, Cambodia, and Indonesia have
introduced similar measures.
India, under pressure from its population's rising anger, shut down its
food futures markets to try to dampen price fluctuations. Indonesia,
Thailand, and Cambodia are providing subsidized rice to their
populations, and the government of the Philippines has been buying up
massive amounts of rice, which it then plans to provide to its
population at a lower cost.
However when the Philippines government tried to buy up 500,000 tons of
rice on the global market, only 300,000 tons were available for
purchase.14

*Energy and Food Crisis Converge*
There are multiple reasons why food prices are increasing, primary among
these is the increase in fuel costs. Currently oil is selling at about
$135 a barrel, which has more than doubled since last year's high price.
This is a huge additional expense for food production, especially for
factory farming practices. These are very fuel-intense and highly
mechanized, with the use of tractors and other heavy machinery. Also,
with globalized food production, there is increased shipping of food
around the globe, which is consuming more fuel. This is entirely a
market-driven process. Food production is geared toward producing large
volumes of food cheaply, which is then shipped to where they are most
likely to be sold for the most profit.

This process increases the dependence on cash crops for many farmers in
the developing world who hope to produce enough to make a meager living
for themselves. However, this makes many poor rural dwellers more
vulnerable to the market. Inherent in capitalism's inequality, they will
never be paid the full value of the food products they are producing, so
they can never afford to buy back what they are producing. In areas
where farm productivity is relatively low it is impossible for them to
make enough income from what they produce to buy back enough basic food
for themselves and their families. This just puts them at a further
disadvantage compared to their counterparts in more developed countries
whose farming techniques are more productive per acre: simply irrigating
land doubles its productivity compared to non-irrigated land. In the US,
farmers can often yield 150 bushels of corn per acre, compared to farms
in the under developed world which average about 30 bushels per acre.15

On top of increased fuel prices, there is increased demand for food
worldwide. With rising economic growth in China and India swelling the
ranks of the middle class in those countries, there is increased demand
for meat. Every kilogram of beef produced requires 10 kilograms of
grain, and each kilogram of pork requires about 4.16 This grain is
being diverted to animal feed, or the land is being diverted away from
human food production to animal food production.

*Food for Cars*
Other food crops, especially corn, and soy to a lesser extent, are also
being diverted to bio-fuel production. Last year a record 13.1 billion
bushels of corn was grown in the US on 85 million acres; 22% of that was
diverted to ethanol production.17 US farmers get a 51 cent tax credit
per gallon of ethanol produced. The current farm bill in Congress will
likely decrease this to 45 cents, but this is unlikely to have a major
effect on the colossal production of ethanol from corn. This push for
bio-fuels is a huge subsidy to big corn growers and not necessarily a
greener source of fuel.

Increased demand for corn for bio-fuels will lead to diversion of land
from growing other crops which will in turn increase the cost for animal
feeds and other food production. The UN estimates that the diversion of
corn to bio-fuels has already contributed 10% to the current rise in
food prices, while the IMF estimates it at 20-30%.18 Patrick Schnable,
an agronomy professor at Iowa State University made this point, "Crops
will go to the highest bidder, and we in the western world are willing
to pay more for fuel than poor people are able to pay for food."19

Global warming is also likely contributing a small amount to the price
increase through the effects of climate change on changing crop
patterns. An ongoing drought in Australia for the last few years has
significantly decreased their wheat production.

Finally, financial speculation on food prices has also contributed to
the increase. It is discounted as a significant factor in the capitalist
press. They are very quick to rule it out as a possible contributor to
escalating prices. However, in an interview with the Financial Times
Kemal Dervis, head of the UN Development Program argued, "We are seeing
excessively expansionary economic policies, just as we did when the
dotcom bubble burst" and, "We face a new phenomenon of commodity prices
going through the roof at a time of recession, or at least slowdown, in
the advanced economies.. I cannot help feeling that liquidity in the
system is looking for an outlet." 20
Speculation Fuels Runaway Prices

An important element of capitalism is that it always seeks to maximize
its profits. The current housing and credit crisis means that real
estate is not as attractive as a source of profits, and consequently
food futures have become more appealing. Food futures, which are the
basis of this speculation, are when food is bought before it is
harvested and delivered. Those who buy the futures at one price can turn
around and sell at whatever the market price is later. There is a huge
speculative element in this, as those buying the food futures are hoping
that food prices will rise. Tim Hannagan, a senior grain analyst from a
major Chicago trading company said, "I've never seen a rice (futures)
market until this year in my three decades of trading grains." 21

Middlemen stand to make huge amounts of money, just as we have seen in
recent years in the housing market. Grains are being stockpiled, not
just by traders, but by governments, which fuels panic buying and
further increases the mammoth potential for profiteering. Around
Christmas of 2007, fuelled by the low dollar, investors staged a run on
the US wheat harvest. The price skyrocketed.

Jeff Voge, the Chairman of the Kansas City Board of Trade, said, "We
have never seen anything like this before. Prices are going up more in
one day than they have in entire years in the past. But no matter what
the price there always seems to be a buyer. this isn't just any
commodity. It is food, and people need to eat." 22

Meanwhile, according to the European Commission, two-thirds of the
recent rise in food prices can be attributed to increased costs of
ingredients. Bread increased 10% between February 2007 and 2008, but
doubling the price of wheat should only have led to a price increase of
3%. From their report, "energy, transport, and labor costs have risen.
But it is possible that somewhere along the food chain someone may be
doing well out of this." 23

*Short Term Perspectives*
There is no perspective for a short-term decrease in food prices. None
of the fundamental causes are likely to change soon. Financial Times
analyst, Martin Wolf, argues, "prices are likely to remain relatively
elevated, by historical standards, unless (or until) energy prices
tumble."24 It is hard to imagine any perspective of energy prices
tumbling. Energy is likely to continue to become more expensive. This
will, in turn, increase world wide suffering, poverty, starvation, and
social unrest, particularly in the under developed world, but capitalism
will continue to push to maximize profits as long as it can get away
with it.

Increased prices of their commodities will still fail to help poor cash
crop farmers, and the general price increases will only make it harder
for them. In fact, Kemal Dervis, the UN development notes that "we have
been saying Africans cannot grow food or cotton because of low world
prices, in a sense, there is an opportunity here. But on the negative
side you have to remember that higher energy prices affect the prices of
fertilizer and other inputs. Farmers cannot produce more because the
inputs are so expensive." 25

Once again we are facing the undeniable fact of capitalism that there
will always be an underclass, and those on the bottom need to stay on
the bottom for capitalism to maximize its profits.

*Capitalism's Alternative*
Capitalism's solutions to the global food crisis would be aimed at the
preservation of the market and maintaining maximum profits. Their
answers would include an increased use and reliance on genetically
modified foods. In Japan, where the population has a deep aversion to
genetically modified foods, manufacturers have started importing GM
foods for use in processed foods for the first time.26 The capitalists
will push also to eliminate subsidies and tariffs to decrease
regulations and allow the market to "work things out". This will be at
the expense of poor countries and to the benefit of richer ones.
Big Business will also push to increase production per acre, which is
more energy and water intensive, more chemically reliant, more
destructive to the environment, and ultimately unsustainable.

The market is driven by profits and ignores the needs of humanity. It
depends on and perpetuates massive imbalances and inequality worldwide.
To solve the global food crisis the market system itself must be
destroyed.

In the midst of rising global food prices there is also extreme global
caloric imbalances with massive levels of starvation in the under
developed world and unprecedented levels of obesity in the developed
world. Calories are put into the global market place and then they
follow the Dollar or Euros. In the developed world it is common to throw
food calories away. Bulimics flush them down the toilet, while others
exercise hard to get rid of them. Capitalism pushes them our way and we
are desperate to get rid of them. Meanwhile there is brutal starvation
and malnutrition across the entire globe. As long as the market exists
the imbalance will continue.

We also need to focus on decreasing consumption in developed nations,
not just of unnecessary calories, but also of consumer goods. A change
in lifestyles will decrease the general strain on global resources,
making more resources available for food production.
*
Socialism, Democracy and Ending the Market*
By replacing capitalism with democratic Socialism we can begin to plan
food production according to the needs of people worldwide and with a
better understanding of resources worldwide to try to decrease the
global shipping of food. This may mean any of the following: do we eat
foods only when they are locally in season? Do we only eat foods grown
in our geographic area? Do we discourage development in places such as
deserts where there is inadequate soil and water to produce enough food
to support large populations? Do we try to increase food production
within urban areas. These questions need to be discussed, and will only
be seriously taken up once the market itself is eliminated.

Cuba, after the fall of the Soviet Union, lost access to cheap Soviet
oil, and essentially became close to a post-petroleum economy. As
combine harvesters were left to rust, wheat production collapsed and the
caloric intake of Cubans also collapsed. In response the Stalinist
regime led the development of infill urban organic gardens all over the
island. These were able to produce a massive increase in food for the
population. Local organic gardens in Havana supply 90% of all the fruit
and vegetables consumed by the city's two million residents.27
Similarly, where lawns were abandoned for agriculture during World War
Two, Victory Gardens provided the US with 40% of all its vegetables. 28

We can see that under democratic socialist planning there is a
perspective to better provide for the world's food needs in a way that
capitalism has failed to do. Big business will never be able to feed the
world because the profit motive can never be separated from capitalism.

Sources
Business Week 5-12-08 Solutions for a Hunger Crisis (1,19)
Business Week 5-1-08 What Spurred the Run on Rice? (2,13,14, 21)
Business Week 5-1-08 Is Ethanol Getting a Bum Rap (3,15,17)
Mgex.com (4)
Financial Times 4-26-08 UN says Oil Rise Hits Food Prices Harder (5,18)
Business Week 5-12-08 Food Emergency: On the Front Line with the U.N.'s
Josette Sheeran (6,11)
Voanews.com (7)
Financial Times 5-7-08 Mideast Reels as Hunger Outgrows Oil Revenues (8)
Financial Times 5-12-08 UAE Investors Buy Pakistan Farm Land (9)
World Bank 2008 World Development Report (10)
Financial Times 4-30-08 The Food Crisis is a Chance to Reform Global
Agriculture (12, 24 )
Earthsave.ca (16 )
Financial Times 5-7-08 Warning over Dangers of Inflation for World's
Poor (20,25)
Washington Post 4-27-08 The New Economics of Hunger (22,26)
Financial Times 4-30-08 Food Prices Have Risen Faster Than Justified,
Argues Brussels (23)
The Independent 8-8-06 The Good Life in Cuba: Havana's Green Revolution
(27)