Food crisis – capitalism to blame
Extraordinary
price hikes in the cost of food
There is a crisis in food production and
distribution which is causing high prices and rioting by hungry masses all over
the world.
Last year wheat prices rose 77% while rice prices
rose 16%. “The global food bill has risen 57% in the last year, the price
of rice is up by three quarters and wheat has more than doubled” (Jeremy
Laurance, ‘Is changing our diet the key to resolving the global food crisis?’ The
Independent, 16 April 2008).
Much of this price increase dates from the
beginning of this year: “Since January rice prices have soared 141%; the
price of one variety of wheat shot up 25% in one day” (‘The new face of
hunger’, The Economist, 17 April 2008).
Effect
of soaring prices on the poor
The effect of these rises on the masses of the
people is devastating:
“The middle classes in poor countries are giving
up health care and cutting out meat so they can eat three meals a day. The
middling poor, those on $2 a day, are pulling children from school and cutting
back on vegetables so they can still afford rice. Those on $1 a day [roughly
a billion people!] are cutting back on meat, vegetables and one or two
meals, so that they can afford one bowl. The desperate – those on 50c a day –
face disaster” (‘The silent tsunami’, The Economist, 19 April 2008).
“In Haiti where three quarters of the population
earns less than $2 a day and 1 in 5 children is chronically malnourished, the
one business booming in all the gloom is the selling of patties made of mud,
oil and sugar, typically consumed by only the most destitute. ‘It’s salty and
it has butter and you don’t know you’re eating dirt’, said Olwich Louis Jeune,
24, who has taken to eating them more often in recent months. ‘It makes your
stomach quieten down’.” (Marc Lacy, ‘Across globe, hunger brings rising
anger’, International Herald Tribune, 18 April 2008).
The full effect in different countries is not yet
known. Since the biggest price rises have taken place since January, official
statistics are not yet available for most of the countries affected, but it is
well known that even in countries such as Britain, prices of food have been
escalating, undermining demand for products that are not strictly necessary.
However, it is known, for instance that in El Salvador the poor are eating only
half the amount of food they were eating a year ago, whereas in Afghanistan,
people are spending half their income on food, when in 2006 they only had to
spend a sixth (see ‘The new face of hunger’, op cit).
The
poor rise up
At times like this the fact that it is the people
who make history becomes explicit. As food riots break out, governments are
forced to cede to mass pressure and/or they crumble. Although we have heard
little about this in the media, there have been food riots for quite some time
now in Burkina Faso and in Bangla Desh. In Senegal, “one of Africa’s oldest
and most stable democracies, police in riot gear beat and use tear gas against
people protesting high food prices and later raided a television station that
broadcast images of the event” (Marc Lacy, op.cit). In Cameroon, 24 people were killed in food rioting.
Haitian food riots have toppled prime minister
Jacques-Edouard Alexis, following insensitive remarks made by the Haitian
President, Preval, along the lines that since Haitians can afford cell phones
they can certainly afford to feed their families. The Malaysian government was
almost defeated at the polls as a result of discontent at rising prices and
prime minister Abdullah Badawi is thought likely to be eased out as a scapegoat
in the troubles.
As a result of mass movement, governments have had
to act and be seen to act. Egypt has had the army baking bread, while Indonesia has introduced food subsidies. Several governments have banned food exports and
measures have been taken to prevent hoarding. In the Philippines this has been made a criminal offence punishable by life imprisonment. 48 of
58 countries whose reactions have been tracked by the World Bank have imposed
price controls, consumer subsidies, export restrictions or lower tariffs to try
to keep food affordable, although in most cases these measures will probably
cause inflation and therefore provide only temporary relief.
The cause of the problem
Under capitalism price movement is caused on the
one hand by changes in underlying values (themselves determined by the amount
of socially necessary labour needed to produce the different types of
commodity) and on the other hand by the relative strength of supply and demand
which cause prices to fluctuate, often violently, above or below the value of
the commodities in question. As far as underlying values are concerned, modern
technology introduced all over the world has made food cheaper to produce,
which is perhaps the main reason why for the past 30 years the problem of world
hunger has been easing slightly – though it has certainly never been
eliminated! Infant deaths due to poverty have declined from 12 million a year
to 10 million, it was announced recently. This trend is now going into
reverse.
If prices are suddenly soaring, this is not because
food has become more laborious to produce. It is because of a disturbance in
the relative position of supply and demand. Supply is decreasing, in relative
terms, while demand is increasing. The last time food prices were so high in
relation to income was some 30 years ago, and the result was to attract capital
into food production via agribusiness and loans to both countries and farmers.
This brought about enormous increases in production of food, an excess of
supply over effective demand (people who could afford to buy) which caused
prices to fall. The new farming technology enables food to be produced more
cheaply because less labour is used, reducing the demand for wage workers and
thus lowering the price for labour power, i.e, wages, and therefore
impoverishing the working masses who cannot afford to buy as much as the new
technology is producing. The effect of this is that demand for the products of
capitalist production declines and prices have to decline too. This makes food
more affordable for the poor, but it is a disaster for farmers, especially
those who are least efficient in capitalist terms, i.e., those who are least
mechanised. It is well known that in India, for instance, farmer suicides have
reached almost epidemic proportions, as a result of failure of their farms. It
is well known that, all over the world, from the paddy fields of Kerala to the
wheat fields of Europe, land has been left uncultivated because it had ceased
to be profitable to work it, with European farmers being paid by the European
Union to let their land lie fallow.
And yet “There was a record global grain harvest
last year. It topped 2.1 bn tons, up 5% on the previous year” (Jeremy
Laurance, op. cit.). The fact remains that if poorer farmers had not
been driven out of business and farmers in rich countries had not been paid to
let their land lie fallow, the amount of food produced in the world would have
been considerably higher, and would have gone a long way towards meeting this
new demand which seems to have surfaced.
Causes of increased
demand
The increase in demand for the products of
agriculture appears to be due to a number of factors. The first that should be
mentioned is that with advancing industrialisation in China, in particular, but also India and Brazil, for instance, and the economic recovery of Russia, standards of living have increased in these countries, as well as in other countries that
are doing business with China. This means the people of these countries have
been in a position lately to pay for more and better food. “In China meat
consumption has risen from 20kg a head in 1980 to 50 kg a head today”, for
instance (Jeremy Laurance, op cit). However, “it takes 2kg of feed
to produce 1kg of [chicken] meat and 8 kg of grain to produce 1 kg of
beef”. One assumes, however, that demand will now drop sharply because
rising prices will knock millions of people back to subsistence level.
A second reason for increased demand is the spread
of biofuels. In the UK, for instance, from 15 April 2008 “all transport
fuel sold must be mixed with at least 2.5% biofuel made from crops”. But
according to the United Nations, it takes 232 kg of corn to fill a 50-litre car
tank with ethanol, “enough to feed a child for a year”, says Jeremy
Laurance (op.cit.). The implication is that the food is being snatched
out of the mouths of hungry children in order to provide petrol for the
indolent middle classes, but the truth of the matter is that without the higher
prices generated by increased demand for crops, many more farmers would be
shutting up shop and leaving their fields untilled. In fact, high crop prices
are themselves driving less capitalistically “efficient” farmers out of
business, as they cannot afford to feed their animals, for instance, despite
higher meat prices.
Another reason for high food prices is high
transportation costs caused by the record price of oil whose supply has been
disrupted by the Iraq war and sanctions against Iran, while at the same time
capitalist speculators rush into purchasing oil in the expectation that they
will be able to resell at a tidy profit as the price continues to rise.
Finally, the locust swarm of speculative capital
desperately searching for profit after gutting the western housing markets has
descended on every other kind of commodity, including food, and is undoubtedly
the cause of the extremely sharp and sudden rises in food prices that we are
witnessing today. It is buying up stocks of wheat, rice, maize, etc., in the
expectation of being able to sell later at a profit. The very fact that there
are so many wealthy purchasers demanding food not for eating but for investment
is driving up the prices and attracting even more speculators, thereby putting
the price of food beyond the reach of those who only want to eat it – just as
only yesterday they were driving up the price of houses beyond the reach of
ordinary people who merely needed somewhere to live.
Capitalism to blame
Thus it can be seen that there is no resource
reason why there should be a shortage of food. The world has produced a record
crop and is capable of producing far more. Indeed, European farmers are
expected to be able to increase the wheat crop next year by 15%, according to
the FAO. Were the purpose of production not profit but meeting people’s needs,
as is the case under socialism, sensible choices could be made as to whether it
was more important at a given moment to produce grain for eating, or meat, or biofuels.
Capitalism, however, leaves the decision to the owner of the capital who will
and must produce what is most profitable, and if that means producing biofuel
for the affluent rather than food for the destitute, well so be it!
The rioting shows that those who are hungry and
have nothing to lose are prepared to do anything to bring about a world without
the horrors of capitalism. The working class and its leadership must rise to
the challenge and topple the capitalist system, no matter what sacrifices this
entails. To delay is needlessly to prolong the agony, such as that of the
young mother in Haiti observed this month offering her children to total
strangers for adoption in the hope that at least they could be fed. This agony
is multiplied more than a billion times over in today’s world simply because
capitalism is decadent and overripe, putrid and dying.