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From The Socialist newspaper, 19 November 2008

World food crisis: A systemic failure of capitalism

The world could be facing a repeat of this year's food crisis, as the impact of recession unfolds. This month, despite what has been described as "harvest bumper crops", the UN Food and Agriculture Organisation (FAO) warned: "Uncertainty is emerging as a dominant feature of world agricultural markets" and "episodes of riots and instability could again capture the headlines".
ELAINE BRUNSKILL looks at the reasons behind this prognosis and condemns capitalism for being unable to provide basic nutrition for the well-being of humanity.

IT IS estimated that around 20,000 people, predominantly women and children, die of hunger every day. The United Nations estimates that 923 million people, approximately one in six of the global population, suffer from chronic hunger.

In the first three months of this year rice prices rose 141%. The price of one variety of wheat soared by 25% in just one day. And of course it was the world's poor in the neo-colonial countries, many of whom already spend around 80% of their income on food, who were hardest hit. In El Salvador, the poorest are now only eating half as much food as they were a year ago.

Although crop prices have fallen from the all-time highs of earlier this year, the FAO has warned against a "false sense of security".

On the impact of higher food prices, a spokesperson for the UN world food programme commented: "For the middle classes, it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster".

Even in the developed world, surging food prices have badly affected working class people and their families. In Britain the increased cost of food, alongside surging utility bills, has squeezed living standards. Food prices are 9.5% higher than a year ago, forcing many to drastically cut what they put in their shopping trolley.

In July, on a flight to a G8 summit in Japan which discussed the global food crisis, Gordon Brown strongly urged a reduction in "unnecessary demand" for food and called on British families to cut back on wasteful use of food. But his call for frugality didn't seem to apply to the world leaders attending the summit. Just hours later, he joined some them and their partners for a six course lunch followed by an eight-course dinner, both with plenty of luxury foods and wines. The staggering cost of the summit was estimated at 285 million.

The hypocrisy of Brown et al, feasting while discussing starvation in the developing world, was not lost on the world's working class and poor. A spokesperson from Save the Children commented: "It is deeply hypocritical that they should be lavishing course after course on world leaders when there is a food crisis and millions cannot afford a decent meal".

Social unrest

Governments across the planet continue to be fearful of the ensuing political and social unrest that is sparked by food hikes. As a spokesperson from the UN world food programme pointed out, unlike previous drought-induced famines, the recent food crisis was not about availability: "People can suddenly no longer afford the food they see on the store shelves because the prices are beyond their reach."

Strikes, protests and riots erupted in many countries. In Haiti protesters forced the prime minister to resign. In Egypt protesters chanting: "Aish! Aish!" - Bread! Bread! - pushed the president to order the army to bake bread for the hungry. Children in Yemen marched to highlight the hunger they were facing. In Mexico "tortilla riots" erupted as the cost of tortillas surged to as much as one-fifth of the wage of Mexico's working poor.

An article in The Times pointed out: "It is easier for urban slum dwellers to riot than for farmers: riots need streets not fields". Undoubtedly, food riots are worrying governments in both the developed and developing countries. However, the fear they have of riots pales when they begin to see how this resistance has the potential to develop into strikes or revolutionary movements when the organised working class moves into action.

In April, a general strike in Burkina Faso, where more than 46% of the population live below the poverty line, was triggered by soaring costs of food and fuel. Reuters reported that such is the discontent that workers from banks, shops, schools and government offices were joined by traders on informal stalls who scrape a living on street corners.

Causes of high prices

Numerous reports in the capitalist press point out that the causes of this year's world food crisis were "complex and interlocking". Speculation played a major role. Fears about investments in the US subprime housing market led to speculators taking billions of dollars out of financial institutions and ploughing them into basic food commodities.

The agricultural futures market was set up to lower the risk associated with price volatility for farmers and buyers. However, from the onset, speculators endeavoured to line their own pockets, regardless of the impact rocketing prices has on the world's poor. For spivs and speculators global shortages and hikes in food prices are good for business.

Other factors also played a role in food price rises, such as weather extremes, high oil prices, biofuel production and a growing global demand for meat. The surging cost of oil impacted on both the production and distribution of food. The manufacture of fertilisers requires petrol or natural gas (which also soared in price). In parts of East Africa farmers had to cut back on crops because they could not afford fertilisers.

High oil costs have led to the promotion of ethanol made from crops such as corn, oilseeds and sugar cane, as an alternative 'green' fuel. This year, 30% of US corn production is being used for the production of ethanol. The EU plans to get 10% of its auto-fuel from bio energy by 2020.

However, even if the entire US corn crop was used to produce ethanol, it could only replace 12% of current US gasoline usage. Therefore, as the price of oil continues to be unstable, the hunt for new sources of biofuels is underway.

In some of the poorest parts of the world, cassava, a potato-like tuber, is an important part of the diet. For example, in sub-Saharan Africa it provides one-third of the needs of the population, and it is the primary staple food for over 200 million of Africa's poorest people. However, its high starch content also makes it a good source of ethanol. Any surge in the production of cassava-based ethanol will have a direct impact on those who rely on it as part of their staple diet.

According to an article in Foreign Affairs: "Filling the 25 gallon tank of an SUV with pure ethanol requires over 450 pounds of corn - which contains enough calories to feed one person for a year".

Foreign Affairs also points out that in both the US and EU there has been a "panoply of subsidies, tariffs and mandates protecting the biofuel sector". However, alongside others it questions the assumption that biofuels are a green alternative.

For example, in the US, corn and soya beans used to often be planted in rotation. Soya beans add nitrogen to the soil, which is needed and used by the corn the following year. However, as corn is now increasingly being grown without the use of crop rotation, nitrogen has to be added to the soil. There are now major concerns in the US around this added nitrogen, as when it rains, the water leaks into waterways. In the Gulf of Mexico such leakage has resulted in a 'dead zone', an area of ocean the size of New Jersey that can barely support life.

Furthermore, scientific studies show the conversion of forest and grasslands to the production of biofuels incur a "carbon debt" from the release of biomass (which is material derived from living or recently living material). For example, in South-east Asia swathes of tropical forest are being burnt down to plant oil palms for the production of bio diesel. This craze for biofuels has been described as 'neither clean nor green'.

The impact of global warming, from record floods in China, to a prolonged drought in Australia, is having a catastrophic impact on harvests. Every year across the planet, drought, deforestation and climate instability ravage an area of fertile ground the size of Ukraine. Over almost a decade Australia has been gripped by a drought which has had a devastating effect on its wheat crop. Conversely, wheat and potato crops in the UK have been hit by flooding.

Drive for profit

Capitalism is utterly incapable of the planning which will be necessary to overcome such environmental catastrophes, because the 'hidden hand' of the free market economy is driven by the capitalists' quest for profit. The capitalist system cannot engage in planning to meet people's needs, because of this inbuilt, insatiable drive for profits.

The globalisation of agribusiness has heavily favoured rich countries and large corporations. Neo-liberal policies enforced by the World Bank and International Monetary Fund (IMF) have effectively used third world debts as a tool to access their markets.

In order to obtain loans or debt relief, governments from the developing world have been forced to restrict food subsidies, which makes it easier for multinational corporations to dump cheap exports, thereby undermining local food production. Yet at the same time huge subsidies are given to agribusiness in the developed word.

Between 1999 and 2002, $76 billion was handed out to US farmers. However, two-thirds of American farmers do not receive a dime. In 2003 the richest 10% of subsidised farmers took 66% of the payouts, the top 5% received 55%.

World Bank and IMF directives have also forced farmers in the neo-colonial world to mass produce cash crops for the world market, rather than produce a wide range of staple crops that can feed the local population. The terms of trade between rich and poor countries were progressively worsened to the detriment of the poor, ie less money was paid for their cash crops and more money was charged for goods they need to import.

The multinational agricultural conglomerates benefited hugely from this. The planet's poor may be starving, but big businesses are raking in super profits.

In April Monsanto reported its net income for the three months up until the end of February doubled in comparison to the same period in 2007; its profits leapt from $1.44 billion to $2.22 billion. Archer Daniels Midland, one of the world's largest agricultural processors of grain, saw its operating profit on its grains merchandising and handling operations soar 16-fold in the first three months of this year from $21 million to $341 million.

The food crisis worldwide highlights that capitalism is an inhumane, anarchic system which is incapable of feeding the world's masses. The Economist pointed out that in agriculture: "Yields cannot be switched on and off like a tap". However, the free market system is incapable of establishing a long term strategy.

For capitalism, food is just another commodity, from which profits can be extracted. When the market dictates that grain has a value as fuel, people in parts of the world go hungry. Likewise the price for seeds and fertilisers is based on the maximum profits that can be secured, regardless of the ability of neo-colonial farmers to buy at these prices.

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. In the developed world also working people are increasingly struggling to feed themselves and their families.

The strikes and protests that have rocked the neo-colonial world are a foretaste of future mass struggles that will develop across the planet. Such struggles can lead to the development of new mass parties of the working class that put forward an alternative to the brutality of the free market economy.

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.

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In The Socialist 19 November 2008:


No Job Cuts

'We're not taking these job cuts'

Programme of action to fight unemployment is needed

JCB: Pay cuts haven't saved our jobs!


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Stroud post office saved!

Coventry fights post office closure

Lewisham housing: Arguments against privatisation win

Fast news


Socialist Party workplace news

Drop the witch-hunt in Unison fight to Defend trade union democracy

Scotland: Unison local government: Close vote on pay

Dover port workers strike

Unite/Amicus general secretary election

In brief


International socialist news and analysis

World food crisis: A systemic failure of capitalism

Democratic republic of Congo: Civil war erupts once again

G20 conference: Summit for nothing

USA: Challenging the two parties of big business

First ever all-Germany school students' strike

Eyewitness report: Italian students occupy


Socialist Students

Student democracy under attack

Privatisation = FE college students suffer


Interviews

Social workers say: investment needed

Sacked for being pregnant!


 

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