Agriculture and Food in Crisis

Conflict, Resistance, and Renewal

Fred Magdoff, Brian Tokar

• Publisher: Monthly Review Press
• Year: 2010
• ISBN:
  9781583673904
• Topic: Ciencias sociales
• Subtopic: Sociología

The failures of “free-market” capitalism are perhaps nowhere more evident than in the production and distribution of food. Although modern human societies have attained unprecedented levels of wealth, a significant amount of the world's population continues to suffer from hunger or food insecurity on a daily basis. In Agriculture and Food in Crisis, Fred Magdoff and Brian Tokar have assembled an exceptional collection of scholars from around the world to explore this frightening long-term trend in food production. While approaching the issue from many angles, the contributors to this volume share a focus on investigating how agricultural production is shaped by a system that is oriented around the creation of profit above all else, with food as nothing but an afterthought.

As the authors make clear, it is technically possible to feed to world's people, but it is not possible to do so as long as capitalism exists. Toward that end, they examine what can be, and is being, done to create a human-centered and ecologically sound system of food production, from sustainable agriculture and organic farming on a large scale to movements for radical land reform and national food sovereignty. This book will serve as an indispensible guide to the years ahead, in which world politics will no doubt come to be increasingly understood as food politics.

PART ONE

Understanding the Agrifood Crisis

1. Food Wars

WALDEN BELLO and MARA BAVIERA

In the years 2006–08, food shortages became a global reality, with the prices of commodities spiraling beyond the reach of vast numbers of people. International agencies were caught flatfooted, with the World Food Program warning that its rapidly diminishing food stocks might not be able to deal with the emergency.

Owing to surging prices of rice, wheat, and vegetable oils, the food import bills of the Least Developed Countries (LDCs) climbed by 37 percent from 2007 to 2008, from $17.9 million to $24.6 million, after having risen by 30 percent in 2006. By the end of 2008, the United Nations reported, “the annual food import basket in LDCs cost more than three times that of 2000, not because of the increased volume of food imports, but as the result of rising food prices.”¹ These tumultuous developments added 75 million people to the ranks of the hungry and drove an estimated 125 million people in developing countries into extreme poverty.²

Alarmed by massive global demand, countries like China and Argentina resorted to imposing taxes or quotas on their rice and wheat exports to avert local shortages. Rice exports were simply banned in Cambodia, Egypt, India, Indonesia, and Vietnam. South-South solidarity, fragile in the best of times, crumbled, becoming part of the collateral damage of the crisis.

GLOBAL CRISIS, GLOBAL PROTESTS

For some countries, the food crisis was the proverbial straw that broke the camel’s back. Some thirty countries experienced violent popular actions against rising prices in 2007 and 2008—among them Bangladesh, Burkina Faso, Cameroon, Côte d’Ivoire, Egypt, Guinea, India, Indonesia, Mauretania, Mexico, Morocco, Mozambique, Senegal, Somalia, Uzbekistan, and Yemen. Across the continents, people came out in the thousands against uncontrolled rises in the price of staple goods that their countries had to import owing to insufficient production. Scores of people died in these demonstrations of popular anger.

The most dramatic developments transpired in Haiti. With 80 percent of the population subsisting on less than two dollars a day, the doubling of the price of rice in the first four months of 2008 led to “hunger so tortuous that it felt like [people’s] stomachs were being eaten away by bleach or battery acid,” according to one account.³ Widespread rioting broke out that only ended when the Senate fired the prime minister. In their intensity, the Haiti riots reminded observers of the anti-International Monetary Fund (IMF) riots in Venezuela—the so-called Caracazo—almost two decades ago, which reshaped the contours of that country’s politics.

THE PERFECT STORM?

The international press and academics proclaimed the end of the era of cheap food, and they traced the cause to a variety of causes: the failure of the poorer countries to develop their agricultural sectors, strains on the international food supply created by dietary changes in China and India’s expanding middle classes who were eating more meat, speculation in commodity futures, the conversion of farmland into urban real estate, climate change, and the diversion of corn and sugarcane from food production to the production of agrofuels to replace oil.

The United Nations’ World Economic Situation and Prospects spoke about the crisis being the product of a “perfect storm,” or an explosive conjunction of different developments. Speculative movements that brought about the global financial crisis that broke out in the summer of 2007 were implicated in the food crisis. According to the United Nations, the impact on food prices of speculation by financial investors in commodities and commodity futures markets “has been considerable.” It could be argued, said the report,

that increased global liquidity and financial innovation has also led to increased speculation in commodity markets. Conversely, the financial crisis contributed to the slide in commodity prices from mid-2008 as financial investors withdrew from commodity markets and, in addition, the United States dollar appreciated as part of the process of the de-leveraging of financial institutions in the major economies.⁴

Others, like Peter Wahl of the German advocacy organization WEED, were more emphatic, claiming that, in fact, speculation in agro-commodity futures was the key factor in the extraordinary rise in the prices of food commodities in 2007 and 2008. With the real estate bubble bursting in 2007 and trading in mortgage-based securities and other derivatives collapsing, hedge funds and other speculative agents, they asserted, moved into speculation in commodity futures, causing a sharp increase in trades and contracts unaccompanied by little or no increase in production of agricultural commodities. It was this move into commodity futures for quick profits followed by a move out after the commodities bubble burst that triggered the rise in the FAO food price index by 71 percent during only fifteen months between the end of 2006 and March 2008 and its falling back after July 2008 to the level of 2006.⁵

THE AGROFUEL FACTOR

Speculation was certainly among the factors that created a “perfect storm” in 2006–08. An even more prominent explanation was the diverting of cereal, especially corn, from serving as food to being used as agrofuel or biofuel feedstock.

On July 3, 2008, the Guardian came out with an exposé on a secret report made by a World Bank economist that claimed that U.S. and EU agrofuels policies were responsible for three-quarters of the 140 percent increase in food prices between 2002 and February 2008.⁶ This figure was significantly higher than the 3 percent previously reported by the U.S. Department of Agriculture (USDA), Oxfam’s estimate of around 30 percent, the IMF figure of around 20 to 30 percent, and the Organization for Economic Cooperation and Development’s (OECD) 60 percent. The report’s conclusion was straightforward:

[T]he most important factor [in the food price increases] was the large increase in biofuels production in the U.S. and the E.U. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due to other factors, such as droughts, would have been more moderate. Recent export bans and speculative activities would probably not have occurred because they were largely responses to rising prices.⁷

Completed as early as April 2008, the Mitchell report—named after the lead economist of the World Bank research team, Donald Mitchell—was allegedly suppressed by the World Bank out of fear of embarrassing former U.S. president George Bush and his aggressive agrofuel policy.⁸

The agrofuel factor affected mainly U.S. farming, where much of corn production was shifted from food to agrofuel feedstock. This is hardly surprising since over the last few years the Bush administration’s generous subsidies, made in the name of energy “independence” and combating climate change, has made conversion of corn into agrofuel feedstock instead of food very profitable.

Pushed by a corporate alliance that included some of the biggest names in the energy and agrifood industries, such as ExxonMobil, Archer Daniels Midland, and Cargill, Bush made agrofuel development one of the pillars of his administration’s energy policy, with the announced goal that renewable sources should comprise a minimum of 20 percent of the energy portfolio in the transport sector within ten years.

In 2007, with the administration’s active lobbying, the U.S. Congress passed the Energy Independence and Security Act that focused on promoting agrofuels and the automobile fuel industry. The act targeted the increase of agrofuels production by more than eightfold from 4.7 billion gallons in 2007 to at least 36 billion gallons in 2022—unusually high standards that would evoke significant changes in agricultural production. As of late 2007, there were 135 ethanol refineries in operation and 74 more being built or expanded.⁹ The American Midwest saw itself slowly being transformed into a giant agrofuels factory. In 2008, around 30 percent of corn was allocated for ethanol, with rapid increases occurring since 2006. Not surprisingly, the strong mandate and generous subsidies, as well as high tariffs against imported sugar-based Brazilian ethanol, ensured that such a large portion of U.S. corn was being allocated for agrofuel feedstock, with a not inconsiderable impact on grain prices.

While the actual impact of agrofuel production was bad enough, the future impact on developing countries is even more worrisome. Huge land lease deals are said to be taking place with land-rich countries like the Philippines, Cambodia, and Madagascar.¹⁰ There are widespread reports in international media of private firms and governments from countries that lack arable land striking lease agreements. Some of these deals are for food production, others for agrofuels, but with land being commodified, what is produced on the leased lands will ultimately depend on what is most profitable to bring to the global market at a given time.

The most controversial of these deals was the Korean firm Daewoo Logistics’ plan to buy a ninety-nine-year lease on more than 3 million acres of land in Madagascar for agrofuel production. Maize and palm oil were to be cultivated on almost half of the arable land in the country.¹¹ A new government that came to power in a coup in March 2009 reportedly cancelled the Daewoo contract owing to popular opposition. It was uncertain at the time, however, whether it would be renegotiated.

Similarly, Kuwait has leased land in Cambodia to grow rice and Bahrain has secured 10,000 hectares in the Philippines for agro-fisheries. (See chapter 7 for more detail about the global land grab.)¹² In effect, the food crisis and energy crisis are causing countries to secure food supplies and agrofuel feedstock in unconventional ways. It is no longer sufficient to import grains. The land that produces that grain must be secured through contracts. Land is now the desired commodity, to the detriment of local populations who depend on the land for their own food consumption. Political elites in land-rich countries appear to be all too happy to oblige at the expense of their own country’s food security. Multimillion-dollar leases, such as those being offered by the Chinese to the Philippine corporate groups, are a strong incentive.

STRUCTURAL ADJUSTMENT AND TRADE LIBERALIZATION

While speculation on commodity futures and the expansion of agrofuel production have been important factors contributing to the food price crisis, long-term processes of a structural kind were perhaps even more central. The role of these factors accounted for the fact that in the years leading up to the food price spike of 2006–08, demand for basic grains—rice, wheat, barley, maize, and soybeans—exceeded production, with stocks falling to 40 percent of their levels in 1998–99, and the stocks-to-use ratio reaching record lows for total grains and multi-year lows for maize and vegetable oils.¹³ A key reason behind the fact that “production has fallen woefully short of growth in food demand,” asserted the United Nations, was the degradation of the agricultural sectors of developing countries owing to the marked weakening [of] investment and agricultural support measures in developing countries, resulting in a condition in which “productivity growth for major food crops has stalled, and there has been no significant increase in the use of cultivated land.”¹⁴

As a result of supply constraints resulting from lack of investment, the FAO reported, “even before the recent surge in food prices, worrisome long-term trends towards increasing hunger were already apparent,” with 848 million people suffering from chronic hunger in 2003–05, an increase of 6 million from the 1990–92 figure of nearly 842 million.¹⁵

In short, there were a combination of structural and policy ingredients in the mix that led to the food price spike of 2006–08, and certainly, a key element was the massive economic reorientation known as “structural adjustment.” This program, which was imposed by the World Bank and International Monetary Fund on over ninety developing and transitional economies over a twenty-year period beginning in the early 1980s, was most likely the conditio sine qua non for the global food price crisis.

ERODING THE MEXICAN COUNTRYSIDE

When tens of thousands of people staged demonstrations in Mexico early in 2007 to protest a sharp increase of over 60 percent in the price of tortillas, the flat unleavened breads that are Mexico’s staple, many analysts pointed to agrofuels as the culprit since Mexico had become dependent on imports of corn from the United States, where subsidies were skewing corn cultivation toward agrofuel production.

However, an intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was first domesticated, become “dependent” on imports of U.S. corn in the first place?

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn importing economy by free market policies promoted by the International Monetary Fund (IMF), the World Bank, and Washington. The food price crisis in Mexico must be seen as one element in the concatenation of crises that have rocked that country over the last three decades and brought it to the verge of being a “failed state.” The key link between the food crisis, the drug wars, and the massive migration to the North has been structural adjustment.

In the countryside, structural adjustment meant the gutting of the various reformist government programs and institutions that had been built by the Partido Revolucionario Institucionalizado (PRI) (Party of the Institutional Revolution) from the 1940s to the 1970s to service the agrarian sector and cater to the peasantry that had served as the base of the Mexican Revolution. The sharp reduction or elimination of the services they provided, such as credit, extension, and infrastructure support, had a negative effect on agricultural production and productivity.

The erosion of the capacity of peasant agriculture was further eroded by the program of unilateral liberalization of agricultural trade in the 1980s and the North American Free Trade Agreement (NAFTA) in the mid-1990s, which converted the land that domesticated corn into an importer of the cereal and consolidated the country’s status as a net food importer.

The negative effects of structural adjustment and NAFTA-imposed trade liberalization were compounded by the halting of the five-decade-long agrarian reform process as the neoliberals at the helm of the Mexican state sought to reprivatize land, hoping to increase agricultural efficiency by expelling what they felt was an excess agrarian population of 15 million people.¹⁶

Over twenty-five years after the beginning of structural adjustment in the early eighties, Mexico is in a state of acute food insecurity, permanent economic crisis, political instability, and uncontrolled criminal activity. It may not yet be a “failed state,” to use a fashionable term, but it is close to becoming one.

CREATING A RICE CRISIS IN THE PHILIPPINES

Like Mexico in the case of corn, the Philippines hit the headlines early in 2008 for its massive deficit in rice.

From a net food exporter, the country had become a net food importer since the mid-1990s, and the essential reason was the same as in Mexico—that is, the subjugation of the country to a structural adjustment program that was one of the first in the developing world. The program involved a massive reduction of funding for rural programs that were set up during the Marcos dictatorship in the latter’s effort to convert the peasantry into a pillar of the regime.

The deleterious effects of structural adjustment, which sought to channel the country’s financial resources to the payment of the foreign debt, were compounded by the entry of the country into the World Trade Organization in the mid-1990s, which required that it end the quotas...