Trade and the food crisis
The food crisis is big news at the moment. With the price of basic foodstuffs like rice, wheat and maize going through the roof, shopping bills are also rising steadily. But the effect on people who are already struggling to feed themselves and their families is catastrophic.
Especially in cities, where people often cannot grow even a few vegetables or keep any livestock to support themselves, food prices have quickly spiralled out of reach for millions of people. The result has been food riots in countries from Malaysia to Haiti to Senegal.
But how did this happen and even more importantly, what can we do about it?
Causes of the crisis
Many factors have come together to produce a kind of 'perfect storm', where food prices have been pushed rapidly upwards just as the ability of poor people to deal with these kinds of shocks has been undermined.
Several short-term causes have received the most attention in discussions of the crisis. They include:
- Biofuels - The European Union and especially the United States have recently gone into biofuel production in a big way. Although this idea was originally put forward as a way of countering climate change, it has been implemented in a rushed and reckless manner. Huge amounts of land have been turned over to growing crops like corn for making ethanol (which is combined with petrol to lower carbon emissions from cars), but this has pushed prices up as well as decreasing the area available to plant food crops. In short, we are feeding cars instead of people
- Weather - Poor weather in Australia, Canada, Argentina and elsewhere has limited harvests, pushing the price higher
- Speculation - Stung by the mortgage crisis in the USA, financial speculators (hedge funds, index funds etc) have jumped into commodities like grain crops. They pour enormous sums of money into markets and remove them again in seconds, betting on the price changes and making them more and more unstable. These funds have already injected more than $70 billion into commodities markets, pushing prices sky high and - when the bubble bursts - wiping out small farmers around the world
- Fertilisers and the oil crisis - The cost of chemicals and fertilisers has also shot up as they are made from derivatives of oil. Transport costs are rising for the same reason, for example in getting the crops to markets, further pushing up food prices.
There are also-longer term reasons why the era of cheap food may be over. They include population growth, increasing demand for more meat in India and China (livestock requires a large amount of feed) and climate change and over-exploitation of soil and water resources, which has reduced yields.
How to turn a crisis into a catastrophe
But why has this hit poor people so hard? There have always been food shortages and droughts and local lifestyles and livelihoods have adapted to account for this. The answer can be found in the 'free trade' policies that have been forced onto developing countries since the 1980s.
In return for aid money, the World trade Organisation (WTO) and the International Monetary Fund (IMF) required poor countries to open up their economies, remove government supports and cut back on spending. The idea was that by producing cash crops like coffee and palm oil for export, poor countries could earn hard cash to pay off their debts and buy cheap goods from abroad.
Instead, their markets were flooded with goods from developed countries that continued unfairly to support their own companies. Unable to compete, thousands of small local businesses and farmers were forced out of business. Poor countries were told to sell off their food reserves. On top of this, they were forced to save money by shutting down government supports to farmers such as minimum price guarantees, central marketing boards, credit and technical assistance. Deprived of the tools to mange food stocks and production, two thirds of developing countries have been turned from producers of food into importers. Their food trade surplus of US$1.9 billion in the 1970?s was transformed into a US$17.6 billion deficit in 2000. It was a wrenching process, the pain of which was captured by a Filipino government negotiator during a WTO session in Geneva. "Our small producers," he said, "are being slaughtered by the gross unfairness of the international trading environment."
'Free trade' policies like these have made the impact of the food crisis much worse. They have already caused widespread misery and hardship, causing tragedies such as thousands of suicides among poor Indian farmers and exacerbating the 2005 famine in Malawi. Now the EU is seeking to lock in these same policies through a series of new 'free trade' deals. But it wants to go even further and introduce strict patent laws that would protect the rights of large agricultural and biotechnology companies at the expense of traditional and sustainable methods of farming.
| 'The time for food sovereignty has come!' - Via Campesina |
We believe that this approach must be turned around immediately. The dogma that exporting food will somehow be better for everyone than growing for local markets, has just helped big agribusiness companies and undermined small farmers, both in developed and developing countries.
In the short term, we need to provide money to buy food where it is urgently needed and to invest immediately in small-scale agriculture. What we don't need are more of the same 'free trade' policies that got us here in the first place, but which are being promoted even now by the World Bank and others, as a solution to the crisis.
But ultimately, we need to ensure that poor countries are able to support local food production and protect smallholder agriculture. We need new trade rules to stabilise prices and to limit the power of corporations in the global food system.
This is the demand coming from our partners and worldwide networks like Via Campesina. And it offers the best hope for stopping food crises in the future.
