Global food crisis reveals failure of capitalism

RESIDENTS OF Maputo, Mozambique's capital, took to the streets last week protesting at a 30% hike in the price of bread. The price rise is on top of a recent hefty increase in water and energy prices.

Simon Carter

Most households in Mozambique have to spend three-quarters of their budgets on food. The sharp rise in the price of bread was 'the straw that broke the camel's back' and pushed the impoverished people of Mozambique to protest.

As police fired on demonstrators the government announced that the price increase for bread was "irreversible". Ten people have been killed and 443 injured since the protests began.

The outpouring of anger over food prices in Mozambique could presage worldwide protests similar to what happened in 2008. Then, rice prices rose by 277% within six months. Corn became so expensive that millions of Mexicans were unable to afford tortillas. There were hunger riots in Egypt, Haiti, Bangladesh and over 30 other countries.

These protests followed three years of escalating prices pushing millions into food poverty - which has remained at a record high of 1.02 billion people (2009), up from 854 million in 2006. The subsequent global recession has trapped this sixth of humanity in an undernourished plight.

This year, prices of agricultural products have rocketed upwards with wheat prices surging almost 70% since January.

In June, a joint report of the United Nations Food and Agriculture Organisation (FAO) and the OECD predicted that food prices will soar by 40% in real terms over the next decade.

The report reckons that rising food prices will promote "a new surge in land grabbing by sovereign wealth funds and other powerful investors which risks marginalising further rural communities."

Although the output of agricultural products is also predicted to rise, the increased demand for crops to meet biofuel targets and to satisfy rising meat consumption in China, India and other 'emerging markets' is pressuring food supplies.

Extreme weather events, possibly linked to human induced climate change, have affected crop yields. 2010 is already shaping up to be possibly the hottest year on record.

Russia, the world's fourth largest wheat exporter, has experienced record high temperatures, drought and forest fires. The situation has prompted Russia's premier, Vladimir Putin, to impose a ban on grain exports for 12 months.

Unprecedented heavy rainfall, floods and mudslides have destroyed crops in Pakistan and China. The FAO has called an emergency meeting on 24 September to discuss the worldwide wheat shortage.

Speculators

Added to the mix is the harmful role of capitalist speculators, with hedge funds muscling into traditional grain markets over the last decade. Big players such as Goldman Sachs, Citigroup, Morgan Stanley et al, are making billions in profits trading in agricultural commodities' futures markets.

It's estimated that only 2% of commodities futures actually end up with a real exchange of goods. The FAO says: "These deals attract investors who are not interested in the commodity itself but merely in speculative profit."

The worldwide food crisis shows that capitalism is an inhumane, anarchic system which is incapable of feeding the world's masses because of its insatiable drive for profits.

During the 2008 food crisis The Socialist wrote: "We live on a planet where over a billion people barely exist on $1 a day and 1.5 billion live on $1-$2 a day. Capitalism has nothing to offer them - not even enough food in their bellies. The planet's poor may be starving, but big businesses are raking in super profits. In the developed world also working people are increasingly struggling to feed themselves and their families.

"Ultimately, only a socialist society can eradicate hunger on a global scale. This would entail taking the agribusiness multinationals out of the hands of the profiteers. In their place would be a democratically run and publicly owned food industry; only then can we start planning production for the needs of the world's people."

Two years on, the message remains the same.

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In The Socialist 9 September 2010:

We can stop the Con-Dem cuts