Capitalism’s food crisis: starvation in the midst of plenty

More food is being grown than ever before—yet people are still starving. Ken Olende looks at how capitalism lets the rich profit from food while those who need it go without.

The biggest wheat crop in world history is expected this year yet half the globe’s population is at risk of going hungry. Globally, food prices have risen by 36 per cent in the past year, meaning millions of people are priced out of the basic foods.

Anger and desperation have led to protests and food riots in countries including Mozambique, Serbia, Pakistan, India, Algeria, Uganda, Tunisia and Egypt. Most of the 100 million people who were pushed into food poverty during the 2008 food crisis never emerged from it.

The number of undernourished people in the world grew to over a billion—the highest level since records began.
The “common sense” response to the food crisis is to say that there are too many people and not enough food to feed them. Some people add that the crisis is made worse by climate change and increases in extremes of temperature. But neither of these theories can explain why the last peak in food prices in 2008 coincided with a year of record production and record profits for multinational corporations.

Food production

Global food production has increased every year since the 1950s—much faster than population growth. The issue is not that there is too little food in the world, but that most people just can’t afford it. This means the issue of food prices is centrally important.

The single biggest problem is the growth of financial speculation on food, though the destructive influence of the biofuels industry should not be forgotten. Food speculation is concentrated on the international futures market, where investors speculate on what a product will be worth at some time in the future rather than its current value.

Neoliberal economists claimed hedge funds would stabilize food markets, replacing what state intervention and subsidies did in the past. But this ignores the fact that, as economist Robert Pollin put it, “The market is driven by people who benefit from bubbles.” And these people will always chase a short-term profit, as the 2008 crash showed us.

This profit-chasing in fact makes prices much more unstable, because when these investors see a potential crisis such as a flood, they buy, gambling that food prices will rise on the news of a shortage. For example, Glencore, a Swiss-based wheat trader, made speculative bets on rising corn and wheat prices as the Russian drought took hold in summer 2009.

The head of Glencore’s Russian grain unit made public statements encouraging the Russian government to ban exports of wheat. Russia imposed a ban two days later on August 5, sending prices soaring 15 per cent.

Capitalism

The underlying problem is a system of world agriculture based on profit rather than need. The current system of agriculture and trade developed with capitalism, through the colonial empires, when countries like Britain and France carved up the world to ensure the supply of raw materials, and controlled markets for their manufactured goods.

In the post-war period poorer countries, often newly independent, were told that the way to compete was to introduce Western farming methods—using large farms with mechanized farming and chemical fertilizers.

It is true that this “Green Revolution” meant that the amount of food available per person in the world increased by 11 per cent between 1970 and 1990 but by the end of this period hunger was increasing again. This was because farmers found they were in debt to the people who supplied the machines, seeds and fertilizers. If they stopped paying the companies, their yields would plummet.

At the same time, farmers had been encouraged to grow “cash crops” to sell on the world market, which made them much more susceptible to the ups and downs of world prices over which they had no control.

Markets only “work” to distribute food if people have the money to pay. As Jeffrey Sachs, adviser to the UN general secretary, writes: “Markets can’t step in and won’t step in when people have nothing. And if you take away help, you leave them to die.”

Yet there is an innate hypocrisy at work. Rich countries demand the poor be left to the “free market,” while they subsidize and support the vast agribusiness firms of the West. In April 2008, US agribusiness giant Cargill reported an 86 per cent leap in profits over the past year. Cargill can stockpile supplies to sell at inflated prices. In 2006, the price of corn—a staple ingredient in the tortillas eaten by the majority of the Mexican population—started to rise. Cargill bought 600,000 tonnes of white Mexican corn at 1,650 pesos per tonne then sold it six months later for 3,500 pesos per tonne.

In 1986 John Block, US Secretary of State for Agriculture, said the idea “that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products which are available, in most cases, at much lower cost.” But the reality is that flooding the market with cheap grain does not help local people who are thrown out of work and so have no money to buy it.

It is no use relying on the US and the free market for cheap food. The key question is over who controls the food industry—and in whose interests. Only when we take control of agriculture and produce food in a rational, planned way will we end the scandal of famine and hunger forever.