SocialismToday           Socialist Party magazine

Socialism Today 117 - April 2008

The growing food crisis

FOOD PRICES have been shooting up in recent months; 854 million of the poorest in the world go hungry, while many more cannot afford key parts of their diet. Working-class and poor people see the effects of the growing economic turmoil swirling around the globe when trying to feed their families. These price rises threaten governments unable to guarantee the most basic needs of life.

China experienced an 18.2% rise in the year to January with pork up 59% and cooking oil 37%. Tomato prices soared 138% after the recent blizzards, whose full effects have yet to pass from raw to processed foods. One third of wages are spent on food, so living standards are being hit.

USA commodity prices are rising 40%. Minneapolis wheat, the variety most suitable for commercial flour production, has risen 50% since the start of the year. Russian milk prices rose 30% and bread 22% in the past year. British food went up 7.4% last year – the biggest annual increase since the Office for National Statistics started tracking 15 years ago. A ‘basic basket’ of 24 staple items has gone up £2.59 (11%).

The main reasons prices are going up, according to Joachim von Braun, head of the International Food Policy Research Institute, are increased demand (accounting for half the price increases), biofuels (one third of the increases) and the weather, all causing shortages of staple foods. Meat consumption in China has doubled since 1990 and now accounts for one third of all meat eaten in the world. Indian meat consumption has increased 40% and Brazilian by a third over the past 15 years. Animals need feeding, either with crops or on land that could be used to grow crops.

Rapid economic growth has meant higher incomes for some. "Thirty years ago, one family could probably eat [500 grams] of meat a month. Now its once a week", said one old Chinese man. But higher prices are now eating into this newfound standard of living. An accountant, married to a factory manager, complained: "We don’t eat pork, lamb or beef so much any more. It’s just too expensive. Everything’s rising; the cost of vegetables has doubled". For the poorest, the rise in flour and cooking oil is hitting harder. (Guardian, 25 February)

Crude oil cost $20 a barrel ten years ago. It now costs around $100, pushing up the cost of farming, food processing and transport. Nitrate fertiliser produced from oil has trebled in price. Desperate to reduce their reliance on oil from politically unstable parts of the world, capitalists are rapidly expanding biofuel production. Land previously growing food is being turned over to industrial crops, where higher prices and profits are to be found. One third of the US maize crop will go to biofuel production this year, a major contribution to the 400% price rise of flat corn bread in Mexico. One estimate is that a tank of ethanol for a big car almost equals a year’s food for a poor family.

There is growing evidence of climate change affecting farming. In the past year West Africa has had devastating floods. Chinese blizzards destroyed many crops. There have been serious droughts in two of the most important wheat producing areas, Australia and Ukraine. Southern Australia’s Goyder line was mapped out 140 years ago. On one side was sufficient annual rainfall for crops while the other side was too dry. But the past two years’ winter rains have failed and the line has moved south. Some experts believe it could move 120km, affecting a huge area of farmland.

Years of over-intensive farming are also affecting yields. One of the main wheat producing areas of India – Punjab – has seen agricultural growth fall from 4.7% a year between 1992-97 to 1.5% from 2002-06. Over-use of artificial fertilisers has led to soil erosion, and falling water tables makes irrigation harder. Indian rice production was 93.3 million tonnes in 2002 but is expected to be 90 million tonnes this year. Over-fishing has led to the collapse of some species, such as North Sea cod.

All these factors have resulted in the lowest food stocks for years. World rice stocks – 136 million tonnes in 2001 – fell to 71 million tonnes last year. Globally, wheat is at a 30-year low, with a 60-year low in the US. India, the world’s second biggest wheat producer, had to import 5.5 million tonnes in 2006 and 1.8 million last year. It has banned the export of rice apart from luxury basmati.

While rising food prices are a daily nightmare for the poor, they have "been welcomed by opportunistic hedge fund managers looking for assets not correlated to the rocky equity markets". Stock market analysts described agricultural commodities as "the most recession-proof of all asset classes" this year. (Financial Times, 26 January)

One form of speculation, exchange-traded commodities, has increased from $200 million to $3.2 billion since autumn 2006. With stock-market predictions of coffee rising from $1.30 to $1.80 a pound, corn from $5 a bushel to $5.50-$6, and soya beans expected to rise by 7-15%, there are plenty of opportunities for money-making. Some of these speculators’ profits and bonuses may be spent in restaurants like Vivat Bacchus in London, charging £1,000 for a set menu (including wine).

Meanwhile, poor families watch their children starve and develop diseases of malnutrition. In the poorest countries, 50-80% of income goes on food. "There is food on shelves but people are priced out of the market. There is vulnerability in urban areas we have not seen before. There are food riots in countries we have not seen them in before", said the head of the United Nation’s World Food Programme.

Riots have broken out in Morocco, Yemen (where bread prices nearly doubled in four months), Mexico, Guinea, Mauritania, Senegal, Burkina Faso and Uzbekistan. Consumer boycotts have been held in protest at the price of tomatoes (in Argentina) and pasta (Italy). Thousands have demonstrated in Bangladesh, Pakistan and Indonesia. Pensioners have demonstrated in Russia.

During the cold war, when US imperialism and Stalinist USSR competed for influence, governments in the Middle East, Africa, South and East Asia were able to subsidise food and keep prices down. Since the USSR collapsed, US capitalists have pressured these governments to cut food subsidies, although they still exist quite widely as every attempt to cut them is resisted by workers and poor people.

These subsidies are now becoming more expensive for governments to maintain. But the Indonesian government has been forced to increase them after recent protests. The Pakistan government has reintroduced rationing for the first time in 20 years. Egypt is the biggest wheat importer in the world. The government, already under pressure from big strikes over pay, has had to maintain food subsidies despite falling income from oil. An extra 10.5 million people have been given food aid.

When an attempt was made to cut subsidies in 1977, there were massive riots and president Anwar Sadat had to flee Cairo until the army crushed opposition. Today, ageing president Hosni Mubarak is one of the US’s main supporters in the Middle East. If workers see food price rises as a result of US biofuel policy, it will weaken his position further. Other US supporters in the region, such as the Moroccan, Tunisian and Jordanian governments, are also caught between these pressures.

Rising food prices have been the spark that lit many revolutions in the past, including the 1789 French revolution and the revolution in Russia in February 1917. Contrasting their starving existence and rotten food with rulers who gorge themselves on the finest delicacies has led to mass movements demanding a complete change in society. The growing attention paid by national and international agencies to food prices is a sign some strategists of capitalism are beginning to sense the future. But they cannot change their unplanned and destructive system, which is utterly incapable of meeting the needs of the world’s population.

Jon Dale


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