By Ian Angus
[First of two articles. Click here for part two.]
“If the government cannot lower the cost of living it
simply has to leave. If the police and UN troops want to shoot at us,
that's OK, because in the end, if we are not killed by bullets, we’ll
die of hunger.” — A demonstrator in Port-au-Prince, Haiti
April 28, 2008 -- In Haiti, where most people get 22% fewer calories than the minimum
needed for good health, some are staving off their hunger pangs by
eating “mud biscuits” made by mixing clay and water with a bit of
vegetable oil and salt.
Meanwhile, in Canada, the federal government is currently paying
$225 for each pig killed in a mass cull of breeding swine, as part of a
plan to reduce hog production. Hog farmers, squeezed by low hog prices
and high feed costs, have responded so enthusiastically that the kill
will likely use up all the allocated funds before the program ends in
September. Some of the slaughtered hogs may be given to local Food Banks, but
most will be destroyed or made into pet food. None will go to Haiti.
This is the brutal world of capitalist agriculture — a world where
some people destroy food because prices are too low, and others
literally eat dirt because food prices are too high.
Record prices for staple foods
We are in the midst of an unprecedented worldwide food price
inflation that has driven prices to their highest levels in decades.
The increases affect most kinds of food, but in particular the most
important staples — wheat, corn, and rice.
The UN Food and Agriculture Organization says that between March
2007 and March 2008 prices of cereals increased 88%, oils and fats
106%, and dairy 48%. The FAO food price index as a whole rose 57% in
one year — and most of the increase occurred in the past few months.
Another source, the World Bank, says that that in the 36 months
ending February 2008, global wheat prices rose 181% and overall global
food prices increased by 83%. The bank expects most food prices to
remain well above 2004 levels until at least 2015.
The most popular grade of Thailand rice sold for $198 a tonne five
years ago and $323 a tonne a year ago. On April 24, the price hit
Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March.
These increases are catastrophic for the 2.6 billion people around
the world who live on less than US$2 a day and spend 60% to 80% of
their incomes on food. Hundreds of millions cannot afford to eat.
This month, the hungry fought back.
Taking to the streets
In Haiti, on April 3, demonstrators in the southern city of Les
Cayes built barricades, stopped trucks carrying rice and distributed
the food, and tried to burn a United Nations compound. The protests
quickly spread to the capital, Port-au-Prince, where thousands marched
on the presidential palace, chanting “We are hungry!” Many called for
the withdrawal of UN troops and the return of Jean-Bertrand Aristide,
the exiled president whose government was overthrown by foreign powers
President René Préval, who initially said nothing could be done, has
announced a 16% cut in the wholesale price of rice. This is at best a
stop-gap measure, since the reduction is for one month only, and
retailers are not obligated to cut their prices.
The actions in Haiti paralleled similar protests by hungry people in more than 20 other countries.
In Burkino Faso, a two-day general strike by unions and shopkeepers
demanded “significant and effective” reductions in the price of rice
and other staple foods.
In Bangladesh, more than 20,000 workers from textile factories in
Fatullah went on strike to demand lower prices and higher wages. They
hurled bricks and stones at police, who fired tear gas into the crowd.
The Egyptian government sent thousands of troops into the Mahalla
textile complex in the Nile Delta, to prevent a general strike
demanding higher wages, an independent union, and lower prices. Two
people were killed and more than 600 have been jailed.
In Abidjan, Côte d’Ivoire, police used tear gas against women who
had set up barricades, burned tires and closed major roads. Thousands
marched to the President’s home, chanting “We are hungry,” and “Life is
too expensive, you are killing us.”
In Pakistan and Thailand, armed soldiers have been deployed to prevent the poor from seizing food from fields and warehouses.
Similar protests have taken place in Cameroon, Ethiopia, Honduras,
Indonesia, Madagascar, Mauritania, Niger, Peru, Philippines, Senegal,
Thailand, Uzbekistan and Zambia. On April 2, the president of the
World Bank told a meeting in Washington that there are 33 countries
where price hikes could cause social unrest.
A senior editor of Time magazine warned:
“The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime
has seemed impossibly quaint since capitalism triumphed so decisively
in the Cold War…. And yet, the headlines of the past month suggest that
skyrocketing food prices are threatening the stability of a growing
number of governments around the world. …. when circumstances render it
impossible to feed their hungry children, normally passive citizens can
very quickly become militants with nothing to lose.”
What’s driving food inflation?
Since the 1970s, food production has become increasingly globalised
and concentrated. A handful of countries dominate the global trade in
staple foods. Eighy per cent of wheat exports come from six exporters, as does 85%
of rice. Three countries produce 70% of exported corn. This leaves the
world’s poorest countries, the ones that must import food to survive,
at the mercy of economic trends and policies in those few exporting
companies. When the global food trade system stops delivering, it’s the
poor who pay the price.
For several years, the global trade in staple foods has been heading
towards a crisis. Four related trends have slowed production growth and
pushed prices up.
The end of the `green revolution': In the 1960s and
1970s, in an effort to counter peasant discontent in south and
southeast Asia, the U.S. poured money and technical support into
agricultural development in India and other countries. The “green
revolution” — new seeds, fertilisers, pesticides, agricultural
techniques and infrastructure — led to spectacular increases in food
production, particularly rice. Yield per hectare continued expanding
until the 1990s.
Today, it’s not fashionable for governments to help poor people grow
food for other poor people, because “the market” is supposed to take
care of all problems. The Economist reports that “spending on
farming as a share of total public spending in developing countries
fell by half between 1980 and 2004.” Subsidies and R&D money
have dried up, and production growth has stalled.
As a result, in seven of the past eight years the world consumed
more grain than it produced, which means that rice was being removed
from the inventories that governments and dealers normally hold as
insurance against bad harvests. World grain stocks are now at their
lowest point ever, leaving very little cushion for bad times.
Climate change: Scientists say that climate change
could cut food production in parts of the world by 50% in the next 12
years. But that isn’t just a matter for the future:
Australia is normally the world’s second-largest exporter of grain,
but a savage multi-year drought has reduced the wheat crop by 60% and
rice production has been completely wiped out.
In Bangladesh in November, one of the strongest cyclones in decades
wiped out a million tonnes of rice and severely damaged the wheat crop,
making the huge country even more dependent on imported food.
Other examples abound. It’s clear that the global climate crisis is already here, and it is affecting food.
Agrofuels: It is now official policy in the US,
Canada and Europe to convert food into fuel. US vehicles burn enough
corn to cover the entire import needs of the poorest 82 countries.
Ethanol and biodiesel are very heavily subsidised, which means,
inevitably, that crops like corn (maize) are being diverted out of the
food chain and into gas tanks, and that new agricultural investment
worldwide is being directed towards palm, soy, canola and other
oil-producing plants. The demand for agrofuels increases the prices of
those crops directly, and indirectly boosts the price of other grains
by encouraging growers to switch to agrofuel.
As Canadian hog producers have found, it also drives up the cost of
producing meat, since corn is the main ingredient in North American
Oil prices: The price of food is linked to the
price of oil because food can be made into a substitute for oil. But
rising oil prices also affect the cost of producing food.
Fertiliser and pesticides are made from petroleum and natural gas. Gas
and diesel fuel are used in planting, harvesting and shipping.
It’s been estimated that 80% of the costs of growing corn are fossil
fuel costs — so it is no accident that food prices rise when oil prices
* * *
By the end of 2007, reduced investment in third world agriculture,
rising oil prices, and climate change meant that production growth was
slowing and prices were rising. Good harvests and strong export growth
might have staved off a crisis — but that isn’t what happened. The
trigger was rice, the staple food of three billion people.
Early this year, India announced that it was suspending most rice
exports in order to rebuild its reserves. A few weeks later, Vietnam,
whose rice crop was hit by a major insect infestation during the
harvest, announced a four-month suspension of exports to ensure that
enough would be available for its domestic market.
India and Vietnam together normally account for 30% of all rice
exports, so their announcements were enough to push the already tight
global rice market over the edge. Rice buyers immediately started
buying up available stocks, hoarding whatever rice they could get in
the expectation of future price increases, and bidding up the price for
future crops. Prices soared. By mid-April, news reports described
“panic buying” of rice futures on the Chicago Board of Trade, and there
were rice shortages even on supermarket shelves in Canada and the US.
Why the rebellion?
There have been food price spikes before. Indeed, if we take
inflation into account, global prices for staple foods were higher in
the 1970s than they are today. So why has this inflationary explosion provoked mass protests around the world?
The answer is that since the 1970s the richest countries in the
world, aided by the international agencies they control, have
systematically undermined the poorest countries’ ability to feed their
populations and protect themselves in a crisis like this.
Haiti is a powerful and appalling example.
Rice has been grown in Haiti for centuries, and until 20 years
ago Haitian farmers produced about 170,000 tonnes of rice a year,
enough to cover 95% of domestic consumption. Rice farmers received no
government subsidies, but, as in every other rice-producing country at
the time, their access to local markets was protected by import tariffs.
In 1995, as a condition of providing a desperately needed loan, the
International Monetary Fund required Haiti to cut its tariff on
imported rice from 35% to 3%, the lowest in the Caribbean. The result
was a massive influx of US rice that sold for half the price of
Haitian-grown rice. Thousands of rice farmers lost their lands and
livelihoods, and today three-quarters of the rice eaten in Haiti comes
from the US.
US rice didn’t take over the Haitian market because it tastes better, or because US rice growers are more efficient. It won out because rice exports are heavily subsidised by the US government.
In 2003, US rice growers received $1.7 billion in government
subsidies, an average of $232 per hectare of rice grown. That money,
most of which went to a handful of very large landowners and
agribusiness corporations, allowed U.S. exporters to sell rice at 30%
to 50% below their real production costs.
In short, Haiti was forced to abandon government protection of domestic agriculture — and the US then used its government protection schemes to take over the market.
There have been many variations on this theme, with rich countries
of the north imposing “liberalisation” policies on poor and debt-ridden
southern countries and then taking advantage of that liberalization to
capture the market. Government subsidies account for 30% of farm
revenue in the world’s 30 richest countries, a total of US$280 billion
a year, an unbeatable advantage in a “free” market where the rich
write the rules.
The global food trade game is rigged, and the poor have been left with reduced crops and no protections.
In addition, for several decades the World Bank and International
Monetary Fund have refused to advance loans to poor countries unless
they agree to “Structural Adjustment Programs” (SAP) that require the
loan recipients to devalue their currencies, cut taxes, privatize
utilities, and reduce or eliminate support programs for farmers.
All this was done with the promise that the market would produce
economic growth and prosperity — instead, poverty increased and support
for agriculture was eliminated.
“The investment in improved agricultural input packages
and extension support tapered and eventually disappeared in most rural
areas of Africa under SAP. Concern for boosting smallholders’
productivity was abandoned. Not only were governments rolled back,
foreign aid to agriculture dwindled. World Bank funding for agriculture
itself declined markedly from 32% of total lending in 1976-8 to 11.7%
During previous waves of food price inflation, the poor often had at
least some access to food they grew themselves, or to food that was
grown locally and available at locally set prices. Today, in many
countries in Africa, Asia and Latin America, that’s just not possible.
Global markets now determine local prices — and often the only food
available must be imported from far away.
* * *
Food is not just another commodity — it is absolutely essential for
human survival. The very least that humanity should expect from any
government or social system is that it try to prevent starvation — and
above all that it not promote policies that deny food to hungry people.
That’s why Venezuelan president Hugo Chavez was absolutely correct
on April 24, to describe the food crisis as “the greatest demonstration
of the historical failure of the capitalist model.”
* * *
 Kevin Pina. “Mud Cookie
Economics in Haiti.” Haiti Action Network, Feb. 10, 2008.
 Tony Karon. “How Hunger Could Topple Regimes.” Time, April 11, 2008. http://www.time.com/time/world/article/0,8599,1730107,00.html
 “The New Face of Hunger.” The Economist, April 19, 2008.
 Mark Lynas. “How the Rich Starved the World.” New Statesman, April 17, 2008. http://www.newstatesman.com/200804170025
 Dale Allen Pfeiffer. Eating Fossil Fuels. New Society Publishers, Gabriola Island BC, 2006. p. 1
 Oxfam International Briefing Paper, April 2005. “Kicking Down the Door.” http://www.oxfam.org/en/files/bp72_rice.pdf
 OECD Background Note: Agricultural Policy and Trade Reform. http://www.oecd.org/dataoecd/52/23/36896656.pdf
 Kjell Havnevik, Deborah
Bryceson, Lars-Erik Birgegård, Prosper Matondi & Atakilte Beyene.
“African Agriculture and the World Bank: Development or
Impoverishment?” Links International Journal of Socialist Renewal, http://www.links.org.au/node/328