April 2008 global food commodity prices skyrocketed around the world, the price of food led to riots around the world from Haiti to Egypt. What was most shocking was how quickly food prices soared, the World Bank reported that global food prices rose 83% over the last three years and the FAO cites a 45% increase in their world food price index during just the past nine months. The Economist’s comparable index stands at its highest point since it was originally formulated in 1845. As of March 2008, average world wheat prices were 130% above their level a year earlier, soy prices were 87% higher, rice had climbed 74%, and maize was up 31%.
Their are a number of specific factors that led to the price hike; however their still remain a number of underlying trends that have been taking shape for the last three decades and are fundamental to the current crisis and to the upcoming future crisis. The protests around the world at the height of the crisis in March and April 2008 were not crazed “riots” by hungry masses. Rather they were angry demonstrations against high food prices in countries that formerly had food surpluses, and where government and industry are unresponsive. In order to understand the crisis and the trends in agriculture and the world’s food system the evolution of the current system needs to be traced from its origins as well as the different players who have shaped it.
Understanding the Food Cycle
The food one has for dinner, forms part of a global supply chain which spans the world and has many components. If any multinational was to acquire a large portion of any section of the chain then a bottleneck would be created, where such a company could dictate terms. The global food system is currently worth $3.2 trillion and works as follows:
Farmland – All food in origin is grown on farms hence the ownership of land and which commodity will be given priority will affect the whole system. The current phenomena of using land for Biofuels means there is a large chunk of productive land now used for energy rather then growing food.
Water – Large amounts of water are needed to cultivate land, over the last three decades many third world nations have been forced to privatise water resources which have fallen into grip of multinations. Ownership of water wells is considered to be the future geopolitical area where conflict will take place.
Fertilizer – are chemical compounds given to plants to promote growth, The World Bank argued in the1970’s with the global population increasing it would be necessary to get more out the current global system, otherwise hunger would become widespread. Two US companies dominate the world’s fertilizer market, fertiliser also has huge side effects such as the emissions it sends into the atmosphere and soil degradation.
Transportation – The final part of the global food system is the supply line that stores and transports the world’s agriculture to the worlds markets. A vast global transportation network is required by the food industry in order to connect its numerous parts. These include suppliers, manufacturers, warehousing, retailers and the end consumers. There are also those companies that, during the food processing process, add vitamins, minerals, and other necessary requirements usually lost during preparation
Global Food system: past and present
After WW2 the nations that are considered today’s third world had yearly trade surpluses in food of $7 billion, subsistence farming where the cultivation of land was primarily for domestic consumption dominated the world and through mechanisms whereby government’s controlled food supplies, this ensured sufficient reserves were put aside for future harvests. However today the rise of food deficits in the third world mirrors the rise of food surpluses in the developed world. Far from the result of “overpopulation,” or the “invisible hand” of the market, hunger is the result of systematic destruction of the third worlds food systems through a series of northern economic development projects.
After the UN’s first “Decade of Development” the third worlds food surplus shrunk to $1 billion. Today, after four “Development Decades” and the expansion of global food system, the southern food deficit has ballooned to $11 billion a year. The UN predicts it will grow to $50 billion by 2030. Built over the past half-century – largely with public funds for grain subsidies, foreign aid, and international research and development – the industrial agri-foods complex is made up of multinational grain traders, giant seed, chemical and fertilizer corporations, processors and supermarket chains.
1960’s Green Revolution
The major development in the rise of the global food complex was the spread of the industrial model of food production through the “Green Revolution.” Starting in the 1960s, the Green Revolution marketed the technology of cross pollinated seeds, fertilizers and pesticides, to developing countries in Asia, Africa and Latin America. A project of Ford and Rockefeller Foundations (thereafter financed with public money), the Green Revolution raised production (yields per acre) by developing the cross breeding of rice, wheat and maize that could be densely planted and responded better to irrigation and the high applications of fertilizer.
World per-capita food production increased by 11%, but the number of hungry people also increased in the third world by 11%. This is because the Green Revolution’s technologies were more easily adopted by large-scale farmers who took over rich bottomlands, displacing peasants. Many smallholders, pushed out of agriculture, migrated to the city slums now common throughout the third world. Many national government ‘land reforms’ resulted in tropical forests and fragile hillsides being cleared. Development projects soon followed, offering cheap credit so smallholders so they could buy the Green Revolution technology packages. In fragile forest and hillside conditions, Green Revolution packages degraded soils rapidly, requiring higher and higher fertilizer applications. Yields fell, and the tremendous diversity of local varieties planted by traditional farmers was reduced by as much as 90%, destroying centuries-old agro-biodiversity. To compensate, more and more forest and hillside land was brought into production, causing massive environmental damage. The Green Revolution, ostensibly a project to save the world from hunger, undermined the ability of the poor to feed themselves by displacing them from their land and degrading the agro-ecosystems they depended on to produce food.
Bretten Woods Institutes aid disaster
The World Bank and IMF, discouraged farmers in the third world to cultivate crops for domestic consumption and encouraged farmers to produce in order to export so it would drive economic growth. This advice coupled with corporate sponsored deregulation resulted in farmers in the third world competing directly with the might of global corporations, putting many small farmers out of business and paved the way for corporate control of the farming process from seed to market. Research and development that was once the domain of universities has also fallen into corporate control.
The World Bank since the 1970’s sold the idea to the world that privatised agricultural sectors would mean more competition which would lead to global prices of agricultural goods to fall benefiting the consumer. The spin was that such policies are helpful to humanity because they will ultimately result in increased food production at a time of rising world demand. The World Bank argued the need to privatise would lead to global corporations buying up the world’s agricultural sector, but this was necessary as corporate profits would be invested in the development of new technologies that will help farmers improve productivity. Currently this new technology is Genetically Modified seeds; such new methods are being driven down the throats of farmers, who are told that the modified seeds can squeeze even more yield from each acre of planting.
The World Bank ensured national economies were brought into the global economy and that their economies were opened up for foreign multinationals to use their technology.
Western Monopolisation of the Agricultural-Food Industrial complex
The expansion of industrial food system crippled food production in the third world and emptied the countryside of valuable human resources. But as long as cheap, subsidised grain from the industrial north kept flowing, the agri-foods complex grew, consolidating control of the world’s food systems in the hands of fewer and fewer grain, seed, and chemical and petroleum companies.
Today DuPont and Monsanto are the leading producers of pesticide and seeds around the world. Monsanto produces 60% of the worlds seed. Both Archer Daniels Midland and Cargill process grain into animal feed and control the world’s grain. ADM also provides agricultural storage and transportation services, while Cargill operates a finance wing. Dole Food Company is the world’s largest fruit company, whilst Chiquita Brands International, another US based fruit company, is the leading distributor of bananas in the United States. Tyson Foods is the world’s largest processor and marketer of chicken and the largest beef exporter from the United States. Smithfield is the world’s largest pork processor and hog producer. Nestlé is the world’s largest food and beverage company. Unilever is an Anglo-Dutch company that owns many of the world’s consumer product brands in foods and beverages and Sysco Corporation, mainly catering to North America and Canada, is one of the world’s largest food distributors
The current global agriculture setup has eliminated national food systems and in their absence, national and international private companies have stepped in and have been dictating food policy in the interests of their profit margins. The West dominates world trade and has essentially got rid of national self sufficient food systems and established a global one, which they will always dominate. The third world can only make money from the commodities sold on the international markets; as a result they produce for the west rather then themselves.
In times of stress, the mechanisms whereby governments could protect their citizens from the impacts of fluctuating prices no longer exist. Hence the world’s poor are held to ransom by the international financial markets where the price of global commodities are set. Although speculation has been the driving factor behind the surge in food prices during the global credit crunch, all was not well prior to the crisis. Since 1960, global food production has been transformed from a primarily local activity, albeit with the import and export of luxury foods, to a primarily global business.
There are nearly 30 million different plants in the world, from which the world’s food comes from, however rice, wheat, maize and soya – provide 60% of the world’s food. Biotech companies are have over the last decade moved to corner all things related to the production, distribution and improvement of these.
Western solutions have only created global poverty
To understand why people go hungry in the world one must not think about food as something farmers grow for others to eat, but rather begin thinking about it as something companies produce for other people to buy.
Food is a commodity.…
Much of the best agricultural land in the world is used to grow commodities such as cotton, sisal, tea, tobacco, sugar cane, and cocoa, items which are non-food products or are marginally nutritious, but for which there is a large market.
Millions of acres of potentially productive farmland is used to pasture cattle, an extremely inefficient use of land, water and energy, but one for which there is a market in wealthy countries.
More than half the grain grown in the United States (requiring half the
water used in the US) is fed to livestock, grain that would feed far more
people than would the livestock to which it is fed.… The problem is, that people who don’t have enough money to buy food (there are 3 billon people in the world who earn less then $2 a day), simply don’t count in the food equation.
In other words, if you don’t have the money to buy food, no one is going to
grow it for you.
Put another way, you would not expect The Gap to manufacture clothes, Adidas
to manufacture trainers, or IBM to provide computers for those people earning $2 a day or less; likewise, you would not expect ADM (“Supermarket to the World”) to produce food for them.
What this means is that ending hunger and poverty, requires the third world to have money, the only way to ensure they have enough money or the means to acquire it, is through policies that promote economic growth, this is why anytime the IMF and the World Bank take over an economy they force wealth creation policies which most of the time means doing away with subsidies which for many in the third world is their only means of survival.
The official prescriptions from the US and the World Bank for solving the world food crisis call for more of the same policies that caused the crisis in the first place: e.g., more free trade and more Green Revolutions. Expecting the institutions that built the current food system to solve the food crisis is like asking a rapist to look after your daughter. More free trade and more Green Revolutions are good news for an industrial agri-foods complex seeking to prolong their windfall profits, but it will do nothing to re-structure the environmentally vulnerable and economically inequitable global food system.
The underlying problem in reality is the corporate monopolisation of the world’s food system, the entire chain of commodities and resources of the world are now being cornered by giant corporations from around the world. Farmland, water, fertilizer, seed, energy, and most of the basic necessities of life are falling under corporate control, providing increased wealth and power to the ruling elite while the rest of humanity struggles