The Multilateral Organizations and the Food Crisis

Wim Dierckxsens

03/07/2008

Opinión

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In the last few decades, the World Bank and the International Monetary Fund (IMF) together with the World Trade Organization (WTO) have forced the peripheral countries to decrease their investments in food production and their support of small scale farmers, who are the key players of food sovereignty. The rules of the game changed dramatically in 1995, when the WTO Agreement on Agriculture came into force. A study by the Food and Agriculture Organization of the United Nations in 14 countries showed that the levels of agricultural imports in 1995-98 already significantly exceeded those of 1990-94. Neoliberal politics undermined the national food production and forced farmers to produce commercial crops for multinational companies and to buy their own food from them on the international market. The Free Trade Agreements obliged countries to “liberalize” their agriculture markets: reduce taxes on importation and accept imports. Meanwhile, the multinationals kept on dumping the surpluses in their markets, using all kinds of direct and indirect subsidies for exportation.

The elimination of tariffs and other barriers caused not only the erosion of national food self-sufficiency and of food security, but also “de-peasantisation”, that is, the suppression of a mode of production so as to transform the countryside into a more appropriate place for the intensive accumulation of capital. (Walden Bello, “¿Como fabricar una crisis global?”, La Jornada, June 1, 2008). As a result, Egypt, the former wheat granary of the Roman Empire, turned into the first importer. Indonesia, one of the birthplaces of rice, nowadays imports transgenic rice, and Mexico, origin of the corn culture, today imports transgenic corn. The US, the European Union, Canada and Australia are the main exporters. This change is traumatic for hundreds of millions of people, because agricultural production is not only an economic activity: it is a thousand-year-old way of life, a culture, which is one of the reasons why thousands of displaced or marginalized farmers have committed suicide.

According to the FAO, between March 2007 and March 2008 the price of cereals, above all wheat, increased by 130%, soy by 87%, rice by 74%, and corn by 53% (Aurelio Suárez, “La vulnerabilidad alimentaria de Colombia”, Le Monde Diplomatique, May 2008:11). In the mainstream media, the rise of the food prices is attributed to a “perfect storm”, caused by the growing demands for food in India and China, the drop in food supply due to the recent droughts and other problems related to climatic change, the increasing costs of the fuel used to cultivate and transport food, and the greater demand for biofuels, which has replaced crops for food, like corn, with the production of ethanol. No one talks about the speculation with hunger. In the last nine months of 2007, the amount of capital invested in the agricultural markets quintupled in the European Union and multiplied sevenfold in the US (Domique Baillard, “Estalla el precio de los cereales”, in Le Monde Diplomatique, May 2008:6). The speculation created around staple foods turns into fuel and pushes the prices of cereals and sugar to new extremes, unaffordable to an immense part of the population, mainly in Asia, Africa and Latin America.

Speculating with hunger

The food crisis is occuring while there is enough food in the world to feed the global population. Hunger is not the result of food scarcity, far from it: in the past, the surpluses of food in the central countries were used to destabilize production in the developing countries. According to the FAO, the world could feed up to 12 billion people in the future. The global production of grain in 2007/08 amounts to an estimated 2108 million tons (an increase of 4,7% compared to 2006/07). This exceeds significantly the average growth of 2% in the last decade. Even though production remains on a high level, the speculators bet on the expected scarcity and artificially increase prices. According to the FAO, the price of essential grains grew by 88% since March 2007 (See Ian Angus, Food Crisis: "The greatest demonstration of the historical failure of the capitalist model", Global Research, April 2008).

In recent years, the multinationals and global economic powers have accelerated the production of agrofuels. Subsidies and investments on a large scale are being directed to this growing sector. As a result, farmland is switching massively from food production to the production of agrofuels in a very short time period. Multinationals and conventional analysts predict that soil will be used more and more for agrofuels (corn, but also palm oil, rapeseed, sugar cane…). A substantial share of the United States’ corn has suddenly “disappeared” because it has been bought for the production of ethanol. This uncontrolled explosion of the agrofuel sector has had a huge impact on the already unstable international grain markets. Speculation takes advantage of the relative food scarcity. Storekeepers retain their reserves from the market to stimulate rises in prices in the national market, making enormous profits. Multinationals aggressively purchase enormous areas of agricultural land around cities for speculation, expelling the farmers (See www.ecoportal.net, Henry Saragih International Coordinator of La Vía Campesina).

This set of recent speculative rises in food prices led to a wave of global hunger on an unprecedented scale. What triggers hunger is deregulation, lack of control over the major actors and the lack of necessary state intervention on an international and national level to stabilize the speculative markets. According to the FAO, in developing countries, food represents up to 60-80% of consumer expenses. According to data revealed by World Bank President Robert Zoellick in the FAO meeting in June 2008, hunger causes the death of 3.5 million children every year. Moreover, the rise in food prices pushed about 100 million people into poverty over the last two years. Such an abrupt rise in prices, which condemns a great majority to hunger, gives rise to rebellion of the people. World wide, riots are breaking out because of food prices. There were protests in Egypt, Cameroon, Indonesia, the Philippines, Burkina Faso, Ivory Coast, Mauritania and Senegal. Similar demonstrations, strikes and confrontations took place not only in large parts of Sub-Saharan Africa but also in Bolivia, Peru, Mexico and above all, in Haiti. (Bill Van Auken, Amid mounting food crisis, governments fear revolution of the hungry, Global Research, April 2008).

In the current context, the freezing of speculation on basic foodstuff in food markets, taken as an imperative political decision, would contribute immediately to lowering food prices. Nothing prevents this being done, but there are also no signs that such a thorough set of measures is currently under consideration. From what we can see, this is not what the World Bank and the International Monetary Fund propose ( See Michel Chossudovsky,, “Hambre global”, Rebelión, May 12, 2008).

The Multilateral Response to Famine: More Neoliberalism

While riots caused by hunger take place all over the globe, the reaction of the WTO, World Bank and the G8 governments has been disastrous. They simply promote the same policies that have caused the current crisis: more liberalization, more use of fertilizers and industrial seeds, more food aid and the rapid expansion of agrofuels. The General Secretary of the OECD, José Angel Gurria, recommended greater trade liberalization to respond to the escalating food prices. He suggested that a reduction by 50% of tariffs and of other subsidies that distort trade in agriculture as well as in industry would generate additional profits of 44 thousand millions of dollars per year. Mainly due to the behavior of the G8 countries, no advances have yet been made. At the High Level Conference organized by the FAO and the transnational companies, they received unanimous backing for their disastrous initiative for agrofuels.

At the Doha Round, they keep on promoting more access for their multinationals and the tying of additional financial aid to political criteria to increase the dependency of these countries. The global leaders keep on warning us about the dangers of protectionism. Protectionism has become a taboo when it is destined to aid the poor. What a contrast to the thousands of millions of dollars of aid that the big banks and financial companies receive to avoid their bankruptcy due to speculative games. No one talks about the need for a better regulation and greater stabilization of the market, even less about the need for food sovereignty.

Robert Zoellick, the President of the World Bank, announces that prices will remain high for several years, and that it takes a strengthening of “food aid” to administer the crisis. Zoellick, who took this position after being chief negotiator of the United States in the World Trade Organization, knows what he is talking about. Already in his previous job he did everything he could to weaken countries’ food sovereignty to favor the big transnationals and agribusiness. Even now he recommends the elimination of protectionist barriers and restrictions on exportations. He prescribes “food aid” for the 20 most affected countries and the distribution of seeds and fertilizers to small scale farmers in peripheral countries. It is once again undercover aid for the transnationals, who are traditionally those who sell the World Food Program the seeds that they “charitably” give to the hungry, under the condition that they will not produce the food they need themselves. The question is: Will the aid arrive for the small scale farmers that sustain agricultural production? No, when the price of wheat rises, food aid is restrained. The generosity of the northern countries manifests itself in times of surplus. During the period from 2005-2006, 8.3 million tons of grain were delivered for food aid, compared to barely 7.4 millions in 2006-2007 (2007 Baillard, ob. cit:6 ).

The transnationals are not satisfied yet, they want more. Now they are preparing the next round, monopolizing by means of patents the genetic characteristics they find useful to create plants which are resistant to drought, salinity and other factors of climatic stress. The governments at their service, like Mexico, think they can put out the fire with oil: instead of restoring food sovereignty and control of farmers over seeds and inputs, they suggest the use of transgenics with even more modifications and risks (Silvia Ribeira, ob. Cit.). Brasil, on the other hand, is preparing a major diplomatic offensive to convince the world of the virtues of ethanol made of sugar cane, which this year will reach its climax at a global Biofuels Summit. In a recent press conference, President Bush defended the use of food for producing ethanol. The transnationals and the main powers unscrupulously take advantage of the current situation, condemning an already huge and growing mass of people to suffer hunger. This is genocidal policy.

- Wim Dierckxsens, of Dutch origin, settled in Costa Rica. Coordinator of the World Forum for Alternatives for Latin America and Researcher for the Department of Ecumenical Investigations (DEI).

(Originally published in Spanish in América Latina en Movimiento, "Trasfondos de la crisis alimentaria", No. 433, ALAI, June 2008. http://alainet.org/publica/433.html. Translation: ALAI).

https://www.alainet.org/es/node/128521