the world food crisis:
Of the more than 6 billion people living in the world today, the United Nations estimates that close to 1 billion suffer from chronic hunger. But this number, which is only a crude estimate, leaves out those suffering from vitamin and nutrient deficiencies and other forms of malnutrition. The total number of food insecure people who are malnourished or lacking critical nutrients is probably closer to 3 billion—about half of humanity. The severity of this situation is made clear by the United Nations estimate of over a year ago that approximately 18,000 children die daily as a direct or indirect consequence of malnutrition
(...) At this moment in history there are, in addition to the "routine" hunger discussed above, two separate global food crises occurring simultaneously. The severe and acute crisis, about two years old, is becoming worse day by day and it is this one that we'll discuss first.
(...) The prices of the sixty agricultural commodities traded on the world market increased 37 percent last year and 14 percent in 2006 (New York Times, January 19, 2008). Corn prices began their rise in the early fall of 2006 and within months had soared by some 70 percent. Wheat and soybean prices also skyrocketed during this time and are now at record levels. The prices for cooking oils (mainly made from soybeans and oil palm)—an essential foodstuff in many poor countries—have rocketed up as well. Rice prices have also risen over 100 percent in the last year ("High Rice Cost Creating Fears of Asia Unrest," New York Times, March 29, 2008).
(...) The reasons for these soaring food prices are fairly clear. First, there are a number of issues related directly or indirectly to the increase in petroleum prices. In the United States, Europe, and many other countries this has brought a new emphasis on growing crops that can be used for fuel—called biofuels (or agrofuels). Thus, producing corn to make ethanol or soybean and palm oil to make diesel fuel is in direct competition with the use of these crops for food. Last year over 20 percent of the entire corn crop in the United States was used to produce ethanol—a process that does not yield much additional energy over that which goes into producing it. (It is estimated that over the next decade about one-third of the U.S. corn crop will be devoted to ethanol production [Bloomberg, February 21, 2008].) Additionally, many of the inputs for large-scale commercial agricultural production are based on petroleum and natural gas—from building and running tractors and harvesting equipment to producing fertilizers and pesticides and drying crops for storage. The price of nitrogen fertilizer, the most commonly used fertilizer worldwide, is directly tied to the price of energy because it takes so much energy to produce.
(...) A second cause of the increase in prices of corn and soybeans and soy cooking oil is that the increasing demand for meat among the middle class in Latin America and Asia, especially China. The use of maize and soy to feed cattle, pigs, and poultry has risen sharply to satisfy this demand. The world's total meat supply was 71 million tons in 1961. In 2007, it was estimated to be 284 million tons. Per capita consumption has more than doubled over that period. In the developing world, it rose twice as fast, doubling in the last twenty years alone. (New York Times, January 27, 2008.) Feeding grain to more and more animals is putting growing pressure on grain stores. Feeding grain to produce meat is a very inefficient way of providing people with either calories or protein. It is especially wasteful for animals such as cows—with digestive systems that can derive energy from cellulose—because they can obtain all of their nutrition from pastures and will grow well without grain, although more slowly. Cows are not efficient converters of corn or soy to meat—to yield a pound of meat, cows require eight pounds of corn; pigs, five; and chickens, three (Baron's, March 4, 2008).
(...) A third reason for the big jump in world food prices is that a few key countries that were self-sufficient—that is, did not import foods, although plenty of people suffered from hunger—are now importing large quantities of food. As a farm analyst in New Delhi says "When countries like India start importing food, then the world prices zoom....If India and China are both turning into bigger importers, shifting from food self-sufficiency as recently we have seen in India, then the global prices are definitely going to rise still further, which will mean the era of cheaper food has now definitely gone away" (VOA News, February 21, 2008). Part of the reason for the pressure on rice prices is the loss of farmland to other uses such as various development projects—some 7 million acres in China and 700,000 acres in Vietnam. In addition, rice yields per acre in Asia have reached a plateau. There has been no per acre increase for ten years and yield increases are not expected in the near future (Rice Today, January-March 2008).
(...) Speculation in the futures market and hoarding at the local level are certainly playing a part in this crisis situation to make food more expensive. As the U.S. financial crisis deepened and spread in the winter of 2008, speculators started putting more money into food and metals to take advantage of what is being called the "commodities super cycle." (The dollar's decline relative to other currencies stimulates "investment" in tangible commodities.) While it would be a mistake to see these aspects, however despicable and inhumane, as the cause of the crisis, they certainly add to the misery by taking advantage of tight markets. It is certainly possible that the commodity bubble will burst, bringing down food prices a bit. However, speculation and local hoarding will continue to put an upward pressure on food prices.
(...) As critical as the short-term food crisis is—demanding immediate world notice as well as attention within every country—the long-term, structural crisis is even more important. The latter has existed for decades and contributes to, and is reinforced by, today's acute food crisis. Indeed, it is this underlying structural crisis of agriculture and food in third world societies which constitutes the real reason that the immediate food crisis is so severe and so difficult to surmount within the system.
(...) It seems logical that with higher food prices, farmers should be better off and produce more to satisfy the "demand" indicated by the market. To a certain extent that is true—especially for farmers that can take advantage of all the physical and monetary advantages of large-scale production. Yet, the input costs for just about everything used in agricultural production have also increased, thus profit gains for farmers are not as large as might be expected. This is a particularly difficult problem for farmers raising animals fed on increasingly expensive grains.
(...) Rising crop prices cause the price of farmland to increase—especially of large fields that can be worked by large-scale machinery. This is happening in the United States and in certain countries of the periphery. For example, Global Ag Investments, a company based in Texas, owns and operates 34,000 acres of Brazilian farmland. At one of its farms, a single field of soybeans covers 1,600 acres—that's two and a half square miles! A New Zealand company has purchased approximately 100,000 acres in Uruguay and has hired managers to operate dairy farms established on their land.
Private equity firms are purchasing farmland in the United States (Associated Press, May 7, 2007) as well as abroad. A U.S. company is cooperating with Brazilian and Japanese partners to purchase 385 square miles in Brazil, approximately a quarter of a million acres! This is also happening with South American capital taking the lead—a Brazilian investment fund, Investimento em Participacoe, is buying a minority stake in a an Argentine soybean producer that owns close to 400,000 acres in Uruguay and Argentina. Rising crop prices have also led to an acceleration of deforestation in the Amazon basin—1,250 square miles (about the size of Rhode Island) in the last five months of 2007—as capitalist farmers hunger for more land (BBC, January 24, 2008). In addition, huge areas of farmland have been taken for development—some of dubious use, such as building suburban style housing and golf courses for the wealthy.
(...) In China during 2000 to 2005, there was an average annual loss of 2.6 million acres as farmland is used for development. The country is fast approaching the self-defined minimum amount of arable farmland that it should have—approximately 290 million acres (120 million hectares)—and the amount of farmland will most likely continue to fall. As part of an effort to gain access to foreign agricultural production, a Chinese company has made an agreement to lease close to 2.5 million acres of land in the Philippines to grow rice, corn, and sugar—setting off a huge protest in the Philippines that has temporarily stalled the project (Bloomberg, February 21, 2008). As one farmer put it: "The [Philippine] government and the Chinese call it a partnership, but it only means the Chinese will be our landlords and we will be the slaves.''
(...) Although enhanced agricultural production is essential, much of the emphasis in the past has been on production of export crops. While this may help a country's balance of payments, export oriented agriculture does not ensure sufficient food for everyone nor does it promote a healthy rural environment. In addition to basic commodities such as soybeans, export-oriented agriculture also leads naturally to the production of high-value luxury crops demanded by export markets (luxuries from the standpoint of the basic food needs of a poor third world country), rather than the low-value subsistence crops needed to meet the needs of the domestic population. Production of sufficient amounts of the right kinds of food within each country's borders—by small farmers working in cooperatives or on their own and using sustainable techniques—is the best way to achieve the goal of "food security." In this way the population may be insulated, at least partially, from the price fluctuations on the world market. This, of course, also means not taking land out of food production to produce crops for the biofuel markets.