More of the same won't solve the food crisis

An intensifying global climate and farming emergency is threatening the security and affordability of food while leading international agencies view the crisis as an investment opportunity.

In the UK, the wettest autumn on record, followed by the coldest spring in 50 years has devastated spring wheat. Normally at this time of year UK farmers would export 2.5m tonnes - this year food processing companies will import a similar amount.

In central Europe, the state of emergency continues in the aftermath of unprecedented flooding wreaking havoc across Germany, Austria, Switzerland, Hungary, Slovakia, Poland and the Czech Republic. At least 18 people were killed, and tens of thousands evacuated.

The European Union is struggling to count the cost in lost production, but the areas affected by the floods and heavy rains are amongst some of Europe's key farming areas, including in Italy.

In the United States, wildfires are raging in drought affected south west states of Colorado, New Mexico, California and Oregon.

Every US state west of a line from Minnesota in the north to Mississippi in the south (with the exception of the far north states on the border with Canada) is now entering a second year of drought.  Some 80% of US agriculture land was affected in 2012 and there is no sign of any let up.

The US agriculture department is warning consumers of 15% price increases for meat, dairy and cereal products.

Meanwhile the eastern half of the US been swept by yet another Atlantic storm. The strength and frequency of these is being driven by climate change. A US government study warns that "for each 1°C increase in tropical sea surface temperatures, hurricane surface wind speeds will increase by 1 to 8% and core rainfall rates by 6 to 18%".

As Peter Kendall, president of the UK's National Farmers Union has said: “Climate change scientists have long predicted that agriculture will face major challenges from global warming. However 2012 has starkly demonstrated the cost that extreme weather events can wreak on farmers and the food supply chain.”

The OECD-FAO Agricultural Outlook 2013-2022 says agricultural production will grow by just 1.5% a year on average over the coming decade, compared with annual growth of 2.1% between 2003 and 2012. That's not even enough to feed the growth in population over the same period.

They go on to warn that a repeat of the drought of 2012 could raise world food prices by between 15-40%.

But they can only offer more of the same market-driven solutions, and in fact present the crisis as an investment opportunity for cash-strapped governments:

"Agriculture is an increasingly market-driven sector, as opposed to policy-driven as it was in the past, thus offering developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets."

They do not explain how this approach will feed the world's people, since all the land grabbing and intensive application of chemicals of recent years have totally failed to deliver more food.

There is no room here to set out an alternative agriculture policy, but suffice it to say that growing close to the point of consumption, using organic methods and shifting away from high meat and high processed diets can succeed where industrial farming has failed.

And doesn't that describe pretty accurately the kind of agriculture pursued by those who are currently being driven off their land to make way for the agri-businesses? No profit in there for Monsanto or Walmart though.

The food “plateau” is just another example of how capitalism is incapable of moving forward a single step to meet society's needs, and is actually in reverse. It is time we opted for a very different diet.

Penny Cole

Environment editor

Climate change adding to health inequality

It's the Easter holidays, when households might have traditionally planned a Sunday feast of roast lamb, peas, roast potatoes, mint sauce, apple pie and custard. But it's a custom many families can only dream about.

With thousands of lambs dead in the fields and a drought in New Zealand so bad the browned earth can be seen from space, roast lamb is too pricy for many.

Peas, potatoes and apples will also be expensive. Waitrose managing director Mark Price has warned that last year's disastrous weather is working its way through the market causing big price increases. And that’s even before the impact of the current freezing weather is taken into account.

“In some commodities, the increases will be massive,” he says. “It’s bread, vegetables, all produce. The apple crop was down 20%-30%, so apple prices have to go up. You have only seen the tip of the iceberg.”

The price of 1 kg of Braeburn apples has risen by an average of 20% in the big supermarkets, from £1.62 at the beginning of 2012 to £1.95.

Meat prices are also soaring, because of high feed costs. And now farmers are having to bring early calves back indoors and buy in feed for animals that ought to be grazing spring grass.

Wheat yields in England are down by an average of 15% and in some places as high as 35%, according to the National Farmers Union. The world market price for wheat has risen by 29% compared to last year, after heat waves and drought hit the 2012 harvests in Russia and the US.

The UK government's chief scientist Professor Sir John Beddington, in his last week in the job, made clear that the extreme weather responsible for this growing food crisis is going to be a feature for many years to come.

"The variation we are seeing in temperature or rainfall is double the rate of the average. That suggests that we are going to have more droughts, we are going to have more floods, we are going to have more sea surges and we are going to have more storms. These are the sort of changes that are going to affect us in quite a short timescale," he warned.

He explained that climate changes lag behind the CO2 emissions that cause them. In other words, it is the CO2 already in the atmosphere that is causing the current weather extremes.

But capitalist economies are emitting more CO2 than ever, and in the UK, the government has taken measures to boost fossil fuel burning. The situation is not going to get better any time soon.

And of course the impact of higher food prices is worst for poorest people. The price of healthy produce such as fruit and vegetables has risen by 34% in the last five years and that is nothing to what is coming later this year.

Climate change is now a key contributor to the growing health inequality in the UK and the government's response shows its flagrant hypocrisy. They continue to spend millions on TV adverts urging people to eat their "5-a-day" when their own statistics show that  the 10% of families on lowest incomes are actually reducing their spending on fruit and veg to save money.

We need to bring the energy and food corporates into a new and sustainable economic framework. With profit driven out of the system, we can start acting to reduce greenhouse gas emissions and halt climate change.

And we will need to start adapting to the changes that have already taken place; that means supporting farmers to sell their produce at a fair price to not-for-profit co-operatives. Then every family can have a healthy diet - and the occasional celebration!

Penny Cole

Environment editor

Pension funds in global farmland grab

Public sector pensions from across the globe are helping to drive up food prices by buying up farmland in poor countries as investments. And at least one local government pension fund in Britain is reportedly considering a similar move.

As hundreds of thousands of teachers, lecturers and civil servants strike today in defence of their pensions, the issue of what happens to their contributions is worth considering. A new report from GRAIN, the organisation that works to support small farmers and social movements, is extremely critical of some funds. GRAIN says:

Large scale agricultural land acquisitions are generating conflicts and controversies around the world. A growing body of reports show that these projects are bad for local communities and that they promote the wrong kind of agriculture for a world in the grips of serious food and environmental crises. Yet funds continue to flow to overseas farmland like iron to a magnet. Why? Because of the financial returns. And some of the biggest players looking to profit from farmland are pension funds, with billions of dollars invested.

The big picture shows that:

• the largest institutional investors are planning to double their portfolio holdings in agricultural commodities, including farmland;
• they are reportedly going to do it very soon;
• the new surge in money will push up global food prices;
• high food prices will hit poor, rural and working-class communities hard.

GRAIN estimates that pension funds have $23 trillion in assets, of which some US$100 billion are believed to be invested in commodities. Of this money in commodities, some $5–15 billion are reportedly going into farmland acquisitions. By 2015, these commodity and farmland investments are expected to double.

Pension fund managers see farmland as “a big attraction” for them with what they call . good "fundamentals". In this case, rising demand is driven by an increasing world population needing to be fed, and the resources to feed these people being finite.

“They see long-term pay-offs from the rising value of farmland and the cash flow that will in the meantime come from crop sales, dairy herds or meat production,” says GRAIN.

Pension funds in Britain are increasingly looking at getting involved in the farmland grab. According to reports, this includes the Merseyside Pension Fund which covers local government workers in the region. And it’s not as if the fund’s current investments are fine and dandy. The last published accounts reveal substantial investments in such corporations as tax-dodging Vodafone, notorious oil giants Shell and BP and a couple of major pharmaceuticals.

GRAIN wants trade unions to get involved campaigns for disinvestment in farmland and other agricultural commodities, saying: “Pension funds are supposed to be working for workers, helping to keep their retirement savings safe until a later date. For this reason alone, there should be a level of public or other accountability involved when it comes to investment strategies and decisions.”

But there are other questions and issues too. It is a paradox that workers’ contributions to pension funds are used to prop up capitalist corporations through share ownership. At the end of 2008, the latest figures available, show that pension funds owned nearly 13% of shares on the London stock market with funds of £150 billion (insurance companies used customers’ premiums to buy up another 13% by the way). A survey earlier this year showed that UK pension assets now amount to 76% of national income.

Using these funds and assets for social purposes, with new arrangements to ensure that the value of pensions is protected, instead of for profit or speculation in farmland, is surely an aspiration worth fighting for.

Paul Feldman

Communications editor

One corporation's power over life and death

Until now the largest and wealthiest commodities trader in the world, notorious for tax avoidance, has managed its murky business in the shadows. But it needs capital to fuel its growth, hence its launch on the London stock market today.

Most people on the planet will not have heard of Glencore, but virtually all are only too well aware of the inflationary effects of its control of a wide range of commodities. Glencore controls 60% of the world’s trade in zinc and 50% in copper.

According to the World Bank’s Food Price Watch, since June 2010, an additional 44 million people fell below the $1.25 poverty line as a result of higher food prices. In March 2011, the food index remained 36% above its level a year earlier.

Even the notoriously right-wing Daily Mail is disturbed by Glencore’s power over life and death. A special investigation says:

“Its empire stretches from the jungles of Colombia to the plains of Australia. It makes its money from metals, minerals, oil, sugar, grain — commodities that form the very building blocks of world trade. And, armed with the best possible knowledge of global events, its traders buy these at the lowest possible price and sell at the highest possible mark-up.”

With its share issue – the biggest-ever in London – Glencore is now drawing together many more threads in the global web of capital consolidation that is driving food and fuel inflation and forcing tens of millions over the edge into starvation.

Everyone who is anyone in the exploitation of the planet and its people wants to get in on the game of building profit from starvation. Aabar, a unit of Abu Dhabi’s International Petroleum Investment Company is set to be its largest external investor, taking $1 billion. GIC, Singapore’s sovereign wealth fund, will take $400m. Fund managers BlackRock and Fidelity, are set to take $360m and $215m, respectively. Swiss banks Credit Suisse, UBS and Pictet will also take part. Zijin Mining, the Chinese group, will buy as well as several other institutional investors, including hedge funds Och Ziff, Eton Park and York Capital. The launch brings huge fees to the banks which underwrite it. The group is led by global co-ordinators Citigroup, Credit Suisse and Morgan Stanley.

Commodity speculation took off in a big way in the wake of the 2007/8 global financial meltdown. In a co-ordinated panic action, governments and central banks threw billions of every currency onto the world’s credit markets trying to stave off the inevitable recession. But with banks refusing to lend, a great deal of the money found its way into the commodity markets, driving price inflation way beyond the effects of demand and supply pressures.

In 2003, the commodities futures market amounted to just $13 billion. But when the global financial crisis hit, commodities – including food – seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. "You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture said. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was rolling the markets. From 2003 to 2008, the volume of index fund speculation increased by 1,900%.

But speculation is not the only cause of inflation in food and fuel. Severe weather vents induced by climate change, increased competition for food and land especially from China, increasing costs of production as oil reaches its peak. And the switch to bio-fuel also contributes to the underlying pressures that Glencore and the other speculators feed upon.

A small, and now declining. number of global corporations driven by profit for the benefit of shareholders, have brought the planet to the limits of its ability to support life, and its people to the limits of their ability and willingness to endure its effects.

Gerry Gold
Economics editor

Supermarkets cash in as food prices soar

Food price inflation is running at a faster rate in Britain than in the rest of Europe – and supermarkets, which control around three quarters of grocery sales, are accused of driving prices up faster than is justified by rising costs, to protect their profits.

According to the Organisation for Economic Co-operation and Development, food prices rose 6.3% in the year to the end of January, compared with an average of 2.8% for the EU and 2.6% across the 34 countries that make up the OECD.

Strangely enough, investment bank UBS says said UK consumers are suffering most from the pressures of food inflation. "Prices are rising in excess of justifiable cost increases," said Paul Donovan and Larry Hatheway, co-authors of a recent report. "The UK stands out as having the broadest range of food price increases."

World prices are also soaring. The UN Food and Agriculture Organisation's (FAO's) food price index averaged 236 points in February, a record, up 2.2% from January and rising for the eighth month in a row. The index highlights how food prices have taken off in alarming fashion in the last three years. In 2000 the index stood at 90 and did not break through 100 until 2004.

As one analyst put it: “What is extraordinary about this trend is that for more than two decades before 2008, there were no spikes of this magnitude. To be entering a second such spike within three years suggests that something has fundamentally changed in the global food situation.”

It was a more than doubling in the price of bread that put food beyond reach for many that helped trigger the wave of revolts in the Middle East and North Africa. Fearful that they will spread, governments around the world are assessing the likely political impact of food prices.

Campaigning organisations like the World Development Movement have joined the simplistic “blame the bankers” chorus, accusing them and hedge funds of speculating in food. But this is just one of the many interacting factors involved in the global crisis which can be summarised as peak soil and peak oil:

- thirty years of credit-financed rapid growth of global corporations have transformed much of agriculture into a destructive industrial process. Land, seed, machinery, oil-based fertilisers and pesticides are now subject to transnational corporate ownership and control

- exhaustion of the soil intensifies the demand for fossil-fuel based inputs and has accelerated the depletion of resources

- rapid depletion of the world’s supply of oil combined with concerns for the climate change it has produced has increased demand for alternatives. Profits from the production of biofuels now outcompetes the production of food

- Crop losses associated with weather extremes are increasing because of climate change

- the constant demand for consumption to absorb the products of economic growth has increased the standard of living in places like India and China

- capital’s need for unlimited quantities of cheap labour has driven population levels to rise to an estimated 9 billion in 2050-60.

The FAO is organising a series of seminars in an attempt to keep the lid on the rising anger. “FAO feels it is essential that countries consider their policy options and steer away from decisions that might exacerbate the situation," said deputy director-general Changchui He. "During the last food crisis, the situation was aggravated when some countries imposed export restrictions or engaged in panic buying."

But their solution is for more of the same. "Governments should focus on mitigating the impact of high food prices on the poor and at the same time need to take steps that favour investment in agriculture," he added. But the present framework is clearly unsustainable. A global network of farmers, processors, and distributors, planning the sustainable production of food according to the needs of the population and not profit has to be the way forward.

Gerry Gold

Economics editor

King's speech wins Oscar for half-truths

As everyone who buys their own food and fuel knows, price rises are accelerating. Even in the unlikely event that the revolutionary uprisings in the Middle East and North Africa don’t push oil prices even higher, inflation in the UK is shooting past 4% and heading towards double that by the middle of the year.

The supermarkets which control 75% of groceries, have already doubled the inflation coming through the commodity markets. They’ve pushed the price of processed food up by as much as 6.5% as they try to protect their profits from falling demand.

As the world has seen, when rising prices push food beyond reach even the most autocratic governments feel the anger of the people.

Inflation is just one side of the global crisis. It is the direct and inevitable result of desperate attempts by governments and central banks to reverse the implosion of the global financial system in 2007-8. They poured in trillions of dollars, pounds, yen, and yuan, hoping to restart lending through commercial banks that they had rescued with money borrowed in advance – without asking - from billions of ordinary people, their children and grandchildren.

It was clear from the outset – at least to some – that the growth needed to repay the debt will never materialise. But they had to try. So another solution to the worsening debt crisis is now in play – higher taxes and cuts in government spending which have already provoked social upheaval throughout Europe.

Now the reality is hitting home. Mervyn King, governor of the Bank of England, told MPs yesterday: "The research makes it clear that the impact of these crises lasts for many years. It is not like an ordinary recession, where you lose output and get it back quickly. We may not get the lost output back for very many years, if ever."

And, he added something that should strike fear into the parliamentarians: "The price of this financial crisis is being borne by people who absolutely did not cause it. Now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has."

Maybe King is thinking of joining the national demonstration called by the TUC for March 26, which looks like turning into the Britain’s very own Day of Rage. King told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector. And so he’s now proposing that rather than rescuing ailing banks, ways should be found to allow them to fail, albeit gracefully.

But the bankers’ banker is only telling half the story, or at best one side of it, to shield the real villain in all this – the capitalist system of production for profit. This is the elephant in the room that few people want to speak of. Certainly not the TUC nor Ed Milband and his let's-build-a “prosperous capitalism”-party which we wrote about yesterday.

For decades, global growth of the capitalist economy was only made possible by an expansion of credit many times greater than the new value generated. It couldn’t last. When the limit was reached, meltdown took over. Then everything that was done to try and solve the crisis by treating its symptoms only made it worse.

Growth has been replaced by recession, and everything and anything that is done to try and deal with it just inflames the people affected most. King wonders why people are not angrier and out on the streets like the workers of North Africa. Don’t worry Mervyn. The rage is building and when it blows it needs to be directed not just against a few bankers but at the crazy capitalist system as a whole. At that point, you will be out of a job!

Gerry Gold

Economics editor

How Cairo connects to Wisconsin and Britain

As people battle tanks and security forces in Bahrain, Libya, Iran and Yemen, and hundreds of thousands gather once more in Tahrir Square in Cairo to “protect the revolution”, you might wonder how this connects with struggles in Britain, the United States and other major capitalist countries.

While it seems that the upsurge in North Africa and the Middle East is mostly about the demand for political freedom and democratic rights – things we are said to “enjoy” already in this and other countries – this is too limited a view. The connections are more direct and just as explosive in their potential.

As we pointed out yesterday, the prolonged world recession which now includes rampant food inflation, falling living standards and mass unemployment in countries like Egypt and Yemen, is a key determining factor in the street revolts. Since Mubarak was overthrown a week ago, a wave of strikes over pay and conditions has gripped Egypt. The economic and the political are now joined together.

The global crisis has undoubtedly weakened the political standing of United States and its ability to influence events. This is sensed by protesters everywhere. Washington lagged well behind events in Egypt and although its Fifth Fleet sails out of Bahrain, the masses there clearly don’t give a damn either.

Now the proverbial chickens are coming home to roost. Anti-cuts campaigns proliferate in Britain and some unions are preparing strikes against the Coalition over jobs and pensions. The middle classes are on the move over library closures and the threatened government sell-off of forests.

With a million young people on the dole and record numbers working part-time, the number of working households close or to or below the breadline is increasing daily. Channel 4 News found dozens of US-style charities are handing out food parcels in Britain’s cities.

The latest estimate is that 53% of working age households in poverty have at least one working adult. “What the foodbank experience suggests is that these individuals are finding they plummet into crisis situations suddenly and more frequently,” the report said.

One woman who has been forced to use the foodbanks in Salisbury said: "Because I've always worked, I never expected to be in that position where I would be so grateful for somebody else giving us some food."

In the United States, where there are 10 million out of work, there is a growing revolt against attempts to make workers pay the entire price for the crisis, nowhere more so than in Wisconsin

This week, 30,000 public employees overwhelmed the state capital in an action against plans to strip them of benefits and collective bargaining rights. The Republican Governor failed to get a quorum for his bill when Democratic senators made themselves scarce. Similar attacks on the public sector are taking place across the country as budget deficits mount up.

In Washington, meanwhile, the Obama administration is preparing to end the Federal government’s involvement in social housing. The plan is to hand over the mortgage banks founded by Roosevelt in the 1930s to the very same banks responsible for the crash of 2008.

What we experience in Britain and the US more sharply than ever before is a form of dictatorship just as oppressive as the one overthrown in Egypt and under attack elsewhere. It is the dictatorship of the banks and the corporations, whose political front is provided by the likes of Obama, Cameron, Clegg and Miliband.

As Mahatma Gandhi said, when asked what he thought about Western “civilisation”: “I think it would be a good idea.” The real lesson from Egypt, Tunisia and other revolts is that we should get ready for our own Tahrir Square if we are to achieve a democracy of ownership and control that strips big business of its hold over us.

Paul Feldman
Communications editor

Climate change will 'overwhelm governments'

Anger over soaring food prices was a major factor in the Egyptian uprising and the United Nations’ top climate official warned this week that without action on climate change, more governments will fall and the danger of military conflict will grow.

Christiana Figueres told a top-level meeting of defence chiefs and strategists in Spain that climate change-driven drought, falling crop yields and competition for water were fuelling conflict and without aggressive action to reduce emissions causing global warming they would increase.

“It is alarming to admit that if the community of nations is unable to fully stabilise climate change, it will threaten where we can live, where and how we grow food and where we can find water,” said Ms Figueres. “In other words, it will threaten the basic foundation – the very stability on which humanity has built its existence.”

She added: “All these factors taken together mean that climate change, especially if left unabated, threatens to increase poverty and overwhelm the capacity of governments to meet the basic needs of their people, which could well contribute to the emergence, spread and longevity of conflict.”

The world’s food supply is already increasingly fragile, as a result of extreme weather events affecting crop yields. In January world prices rose for the seventh successive month, up 3.4% from December, to the highest level since the UN Food and Agriculture Organisation (FAO) began measurements in 1990.

And more increases are on the way. The FAO issued a special alert this week that provinces of northern China, the country’s main wheat producing area, are suffering a drought that could destroy up to one third of the summer wheat crop. The absence of snow cover and ferociously low temperatures, means dormant wheat will be killed by frost. Not only crops but 2.57 million people and 3 million livestock animals are affected by a shortage of drinking water.

The weather is the same in the US Great Plains and Midwest. Kansas and Oklahoma have had has less than half of normal rainfall in January and there is intense cold. China is the world’s biggest wheat producer but also its biggest consumer. If China starts buying wheat in the world market prices will be pushed even higher.

FAO economist and grains expert Abdolreza Abbassian warned: "High food prices are of major concern especially for low-income food deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food."

But for capitalist agri-business, including companies whose activities are financed by Chinese and Saudi sovereign wealth funds and by investment funds launched by the likes of Goldman Sachs, high food prices are good news.

Delegates attending the World Social Forum at Dakar in Senegal, cheered wildly at news of the fall of Mubarak. The global land grab was their main focus with representatives of peasant and worker movements from across the world reporting on their struggle to hold on to land and livelihoods.

Veteran food campaigner Susan George highlighted the situation in Europe, where unemployment is rising along with food price inflation. Europeans, she said, are beginning to learn what it is to live with an IMF structural adjustment programme.

Of course whilst UN may find toppling governments a terrifying prospect, the majority of the world’s people would be delighted to get rid of rulers whose ruthless support for the financial system overwhelms any concern for their populations.

People know the priority is neither climate change nor hunger, but kick-starting growth and restoring profitability. The market in food offers one of the best opportunities to do that, since the onset of the global economic crisis. The price of restarting the global capitalist economy by expanding the globalisation of land and farming will be hunger affecting more and more of the world’s population. So help work out alternatives at our “Beyond Resistance” teach-in Kicking capitalism's growth habit - building a sustainable economy on February 26.

Penny Cole
Environment editor

Uprisings deepen capitalism's crisis

Attempts to solve the global debt crisis have sent food prices soaring, driving impoverished masses onto the streets throughout the Middle East. Now a wave of political revolutions dashes remaining but false hopes of economic “recovery”.

Oil prices are rising sharply as the upheaval that began in Tunisia and now grips Egypt threatens to spread to major producers Algeria, Libya and even Saudi Arabia. Stock markets are jittery as they take in the consequences, including any threat to oil tankers which use the Suez Canal.

In Egypt, workers, the unemployed, young and old, artists and athletes, Christians and Muslims have united in their determination to bring the 30-year old autocratic regime of Hosni Mubarak to an end. His determination to hang on until September pleases neither the Egyptian people nor the White House, which fears the consequences of an unstoppable revolutionary process the longer Mubarak’s regime clings to power.

This fact is recognised by the International Monetary Fund too, which helped impose harsh market “reforms” on Egypt in the 1990s, which have only deepened inequality. IMF chief Dominique Strauss-Kahn warned governments to tackle economic strains or risk instability and even war.

“This protest won’t end in North Africa; it will spread in many countries because of high unemployment and increasing food prices,” Hamza Alkholi, chairman and chief executive of Saudi Alkholi Group, a holding company investing in industrials and real estate, said in an interview in Davos, Switzerland.

As Nouriel Roubini, the leading economics analyst who forecast the global financial crash, notes: "What has happened in Tunisia, is happening right now in Egypt, but also riots in Morocco, Algeria and Pakistan, are related not only to high unemployment rates and to income and wealth inequality, but also to this very sharp rise in food and commodity prices."

In Egypt, 40% of the 80 million people live on less than $2 a day. Prices of basic foodstuffs have soared by over 17%, putting basic necessities beyond the reach of many. The average Egyptian now spends 40% of his or her income on food while economists put the unofficial jobless rate at about 25%.

The worldwide surge in commodity prices is being driven by stock markets and investment banks desperate to find new areas for profit-taking. With the 2008 financial meltdown still unravelling, speculators have turned to basic commodities. They have used funds pumped into the system by the US Treasury and the Bank of England, also known as QE or “quantitative easing”.

QE was designed to boost economic growth. Instead, it has helped to create a 32% increase in the average cost of food in the second half of 2010, according to the UN Food and Agriculture Organisation (FAO). Wheat prices alone jumped 70% between June and December.

Despite Mubarak’s televised claim that the protests had been manipulated by political forces this is a completely Egyptian, largely secular, wholly grass roots movement. With its roots in a strike by textile workers in April, 2008, a popular revolution is under way. The country is at a standstill as events unfold. The economy is paralysed. People’s committees have taken charge of the security of their streets and neighbourhood.

Even when Mubarak shut down the internet and mobile phone networks last week the 70,000 strong April 6th Facebook group of mostly young people continued to organise the protest, calling for the “million man march” that brought more than two million Egyptians onto the streets of Cairo, Alexandria, Suez, Sinai and Upper Egypt demanding that the president should leave.

People on the street demand change to “every element of the system” but lack a developed leadership that can transform the Egyptian capitalist state. As soaring prices and unemployment make clear, revolutionary social and economic change is required along with the end of the Mubarak dictatorship.

Gerry Gold
Economics editor

Capitalism feeding off hunger

A capitalist perfect storm has ended all progress in reducing world hunger, and one billion people are now undernourished – 925 million more than before the economic crisis began. In every country, prices are soaring, including in the UK where food prices have risen by 22% in the last three years.

The crisis has been caused by the cumulative effects of:
• An expansion of commodity speculation in food products and land, including the poisonous hedgers and futures traders
• A year of extreme weather, from drought to floods
• Loss of agricultural land to bio-fuels, and urbanisation
• The collapse in purchasing power of the poorest people due to the economic slump.

Commodity speculators have moved strongly into food, betting on shortages and pushing up prices in a world where the food supply is increasingly globalised.

True, the wheat crop will be 30m tonnes lower than last year – a 5.5% decrease, due to drought in China, the heat wave in Russia and the floods in Pakistan. But stocks are not so low that prices could not be kept at a reasonable level. However that would assume a rational economic and trade system – and we are a million miles away from that. The market price of wheat and maize soared by 30% in just a few weeks.

In Russia, the price of buckwheat – a popular staple – has tripled. World meat prices – dependent on grain prices – are at a 20-year high. Egyptians can no longer afford their own basic diet of bread, cheese, tomatoes. Sugar and rice prices are at an all-time high.

According to the UN food price indicator (a figure based on a statistical analysis of 6 key commodities) prices have not reached the 2008 high of 199 – when there were food riots across the world – but they are heading in that direction at 188. The figure increased 14 points in 2010.

Governments across the world are preparing for social uprisings – already 12 people died last month in riots in Mozambique. But those same governments have facilitated the system that has led to the food crisis.

UN special rapporteur on the right to food, Olivier de Schutter, says a combination of environmental degradation, urbanisation and large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.

According to the World Bank, more than one-third of large-scale land acquisitions are intended to produce agro fuels. It is this loss of local agriculture that causes shortages – and not population increases.

Meeting in Rome, the UN’s Food and Agricultural Organisation’s committee on world food security (CFS) established a panel of experts to look at the “causes and consequences of food price volatility, including market distorting practices and links to financial markets, and appropriate and coherent policies, actions, tools and institutions to manage the risks linked to excessive price volatility in agriculture."

This panel will have as much success in changing the system as the International Panel on Climate Change has had in persuading governments to reduce greenhouse gas emissions; or experts working with the Convention on Bio-diversity have had in stopping the corporations destroying the planet’s eco-system.

The unsustainability of capitalism itself is the real problem, and the food crisis is a systemic, not a sporadic crisis. If we allow a system driven by profit and speculation to keep control of the world’s land use and agriculture, we will face famine on a scale not seen before.

Rioting and looting could well result as food prices rise out of reach. But these are not solutions. The real need is for a transformation in the ownership of land, the way food markets operate, the development of local food and the sharing of expertise and knowledge in a not-for-profit framework. That means grasping the opportunities offered by capitalist crisis to go beyond protest to democratising ownership, production and the political system itself.

Penny Cole
Environment editor

Profit and food are a deadly mix

Capitalism’s inability to feed the world, in spite of increased production and a slowdown in population growth, is underlined by a report which predicts that food prices will rise by 40% over the next decade.

Prices have remained high since the price spike of 2008, which led to food riots in many areas of Africa and Asia. High prices combined with the economic crisis have left about 1 billion people undernourished, says the annual report from the UN Food and Agriculture Organisation (FAO).

The price of grain is set to rise by between 15% and 40% in real terms, once adjusted for inflation, over the next decade. Vegetable oils will be 40% dearer will the cost of dairy food could rise between 16-45%.

Although the review suggests production can increase to meet demand, it warns that many people will not be able to afford the prices. It assumes that high energy prices will continue, and increase the cost of production and chemical inputs. This will have an impact on supplies and prices, and will increase the demand for bio-fuels. More areas will move out of food production and into oil crops.

The report explains that the extent to which world prices are reflected in domestic prices varies markedly by country. “The transmission of international prices to domestic markets can be impeded by border measures, domestic price supports and infrastructure weaknesses,” the FAC acknowledges.

Let’s unpack this bland statement. In a world of globalised unfairness the rich capitalist economies keep agricultural subsidies and hidden price subsidies in place, whilst the least developed countries are bullied into allowing market forces free rein in their home markets. Industrial agriculture enterprises continue to export food, while people living on their doorstep starve.

The FAO itself is entirely wedded to the free-market capitalist model, claiming that “there is a need for greater assurance of unimpeded access to global supplies” in order to “improve confidence in market functioning”. It unreservedly praises the trend towards the establishment of organised Commodity Exchanges in developing countries as a “welcome institutional development and a sign of market deepening”.

Yet Commodity Exchanges are at the centre of a great deal of reckless speculation, contributing to the economic crisis, and invariably at the expense of the smallest producers and poorest consumers. For the FAO, Commodity Exchanges are “useful and time-tested price discovery and hedging institutions, if they are regulated properly and attract sufficient volume to avoid monopolistic practices”.

Now that’s a very big “if”. More realistically, if there are increased profits to be made from food – which for capitalism is simply another commodity – then there will be increased speculation and market distortion. The outcome will be more hunger, the elimination of small farmers and further global land-grabbing by global investors and sovereign wealth funds.

This new form of rentiér capitalism will lead to further impoverishment of the soil as intensive farming methods are extended. New areas of marginal land cleared of scrub trees for bio-fuel production will add to global warming. The drive to clear virgin forest for palm oil plantations will increase – and at the climate summit in Cancun in December this activity will be given status as a carbon offset scheme. That’s the actual “time-tested” functioning of commodity markets in action.

The point is that capitalism is capable of extending the market in commodities into any area, but not of getting them to the people that need them in a fair, affordable way. In the case of training shoes or flat-screen TVs, that’s not the end of the world. When it comes to food, it is a life or death question for millions of hungry people. More than in any other area, food production is crying out for a new approach – ecologically sustainable, just and based on common ownership of land and global co-operation. Profit and food is a poisonous combination.

Penny Cole

Environment editor

Cashing in on global food crisis

The intensification of the global food crisis is bringing misery to millions but profits for investors and entrepreneurs as a massive land grab takes place at the expense of local people.

Just to underline the point, it was revealed this week that China’s Jin Hui Mining Corporation has changed its name to Natural Dairy (NZ) Holdings after buying a bankrupt family-owned New Zealand business using a mixture of cash and convertible bonds. The Crafar family’s empire has land, 30,000 animals, a milk powder production plant, 200 staff and around $200 million of debt.

It was also reported that 1,000 Cambodian villagers rose up against a local business tycoon and politician trying to force them to sell their land to him at a rock-bottom price. It is only the latest in a series of protests as politicians and landowners profit from the Phnom Penh government’s policy of giving concessions to foreign companies. These are mainly from China, Vietnam and South Korea, and are running mines, power plants and farms.

Under capitalism’s business-as-usual vision, rubber-stamped at Copenhagen, demand for food will rise by 50% by 2050 whilst water shortages, rising seawater and desertification, caused by uncontrolled global warming, reduce the amount of arable land.

This nightmare vision makes land look like one of the few safe bets for investors. It, as they say, a no brainer – increased demand + shrinking supply + rising prices = big profits. New investment funds spring up almost daily, bringing private investors into an area previously dominated by farming corporations and sovereign wealth funds of China, Saudi Arabia and the other Gulf States.

They are buying up thousands of acres of land and turning them over to industrial forms of agriculture. The long-term result will be the same as elsewhere – soil structure destroyed, yields falling, loss of species diversity and increased greenhouse gas emissions as virgin land and forest are broken up, releasing stored CO2.

But investors pay about one tenth of the price per hectare for land in Africa as they would in Argentina or the United States. When the soil fails? Buy elsewhere and move on.

You might think that as the world faces unprecedented famine, governments would be rushing to take control. But the G8 summit in L’Aquila in 2008 failed to get even a commitment on the issue. Now the World Bank is drafting a “code of practice” – which will undoubtedly be ignored.

The terrible contradiction is that while profits from food and land are increasing, agriculture itself – the actual foundation of human society – is going backwards. In six of the last eight years, world grain production has fallen short of consumption. In 2008 grain prices climbed to the highest level ever and though they have fallen a little, they remain extremely high.

Historically, the enclosure and privatisation of land was the foundation for capitalist development – it is time to reverse the process, with new forms of common ownership. Preventing famine means overcoming the alienation of human beings from the soil that, in the final analysis, is the source of all our lives. Holding land in common, with farmers’ rights protected, we can use our knowledge to solve organically the problems that herbicides and nitrates have intensified.

Instead of boosting the capitalist market in land, we can revitalise the soil by composting waste on a huge scale and ending the global drive towards grain-fed meat based diets, with a return to more natural, balanced diets. We should advocate a policy of no more land sales to investment banks and sovereign funds and fight to socialise the agri-businesses that dominate the food chain for profit.

Penny Cole
Environment editor

Let them eat cake

Few gatherings of world leaders can have shown greater political impotence alongside callous indifference than those currently gathered in Hokkaido, Japan, for the annual G8 summit. Protected from protestors as usual by a massive display of force, they are truly the leaders of the new world disorder.

Yesterday they discussed famine in Africa and rising food prices. But organisations like Oxfam had already sounded the alarm bells about whether commitments made at Gleneagles as long ago as 2005 will actually be adhered to. As to even earlier promises, Oxfam declared: “The Millennium Development Goals that were set out in 2000 were chosen because they were ambitious, but also because they were realistic and achievable. The current delays in meeting these commitments are a disgrace.”

But are the G8 leaders really bothered about the world’s poor and hungry? Judging by the lavish feast for Bush, Brown and company laid on by the Japanese hosts, the answer is a resounding ‘No’. While the prime minister was urging Britons to tighten their belts and stop wasting food, he and the other G8 leaders sat down to replenish themselves with an eight-course, 19-dish dinner prepared by 25 chefs. Perhaps the fact that there had only been four courses and wine for lunch had merely whetted their appetite.

Billed as a "world food shortages summit" – which is costing £238 million to stage - there was no sign of that at the banquet at the luxury Windsor hotel. The starter alone included caviar, sea urchin, smoked salmon, hot onion tart and winter lily bulb. Hairy crab Kegani bisque-style soup was another feature in a meal prepared by the Michelin chef Katsuhiro Nakamura. Other dishes included milk-fed lamb, roasted lamb and black truffle.

Marie Antoinette reputedly told starving French peasants to go and eat cake if they couldn’t afford bread. And we know what happened to her as a result. But that’s rushing ahead. What about the G8’s capacity for getting to grips with the world economic crisis and accelerating climate change by showing some political leadership? Not much doing on that front either, I’m afraid.

A statement released today could only say: “We remain positive about the long-term resilience of our economies and future global economic growth.” As to rising oil and food prices, the G8 leaders were only concerned that they posed a “serious challenge to stable growth worldwide”. Then it was back to insisting there was no alternative to the market economy and that “globalisation is a key driver for global economic growth and strong, prosperous economies”.

This is simply unreal. The corporate-driven globalised economy is facing its biggest crisis since 1929. A seemingly insoluble credit crunch is linked to falling output, rising prices, sharply increasing unemployment (especially in housebuilding where sales have slumped) and a loss of confidence. By all accounts, the Chinese economy is also coming off the rails at a rapid rate.

The G8 communiqué simply poured oil on troubled water and was followed this morning by a further crash in shares in London, with troubled lender Bradford & Bingley heading for total meltdown. The British Chambers of Commerce's (BCC) quarterly report didn’t help. A survey of almost 5,000 small, medium and large businesses suggested that the UK is facing a serious risk of recession within months.

As for cutting carbon emissions, the G8’s fine words cut no ice with environmental campaigners. “This is a complete failure of responsibility. They haven't moved forward at all. They've ducked the responsibility of adopting clear midterm targets and even the 2050 target is not a single thing more than what we got in Heiligendamm," said Daniel Mittler, political adviser for Greenpeace International, referring to the German town where last year's G8 was held.

So back to Marie Antoinette. Just like her, the G8 leaders are promoting a failing economic and political system at the expense of the masses. A movement in the spirit of the French Revolution of 1789 would be the best response.


Paul Feldman
Communications editor

How to fight price rises

As 600,000 low-paid council workers prepare to strike on July 16 and 17 in support of a 6% rise in their meagre wages, the cause of their anger – soaring prices – shows no sign of abating. On the contrary, gas and electricity prices are set to climb 40% this winter while the cost of food and fuel continues to rocket.

A 48-hour strike called by ever-so-reluctant Unison leaders – who have sat back for years watching their members’ wages fall further and further behind - will make no impact on the New Labour government. Brown and Darling are determined to make ordinary people pay for the economic crisis. The council workers have been offered a below-inflation pay offer of 2.45%, which therefore amounts to a pay cut.

The question is: How can we halt price rises that are eating away at people’s incomes? Millions of families are seeing their cost of living rise by 6.7% this year – more than double the headline inflation rate of 3.3. Official figures show that an average basket of foodstuffs has risen in price by almost 8% over the past year, or £8 for every £100 spent. Even if Unison won its claim, its members would still be worse off by the end of the year.

This is because the major food and energy corporations simply pass on costs where they can as they are in the business of making profits not feeding people or providing affordable fuel. And the corporations sing the same song as the government – prices are soaring because of global “market conditions”. These are quite obviously beyond human control so consumers will just have to grin and bear it.

What rubbish! The pressures are indeed global in nature but their impact is local and within our power to deal with. We don’t have to worship at the altar of the capitalist market if we don’t want to. If Unison leaders were really serious about improving their members’ pay, they could launch a campaign along the following lines:

1. Create price committees of producers and consumers. These should analyse the real cost of food and fuel, exposing the profiteering and price-fixing that goes and propose sustainable, not-for-profit alternatives.
2. Demand that supermarket chains cut prices. Tesco, Sainsbury, Asda and Morrisons racked up £4.5 billion in profits last year alone by exploiting producers, staff and consumers. Instead of distributing profits to shareholders, the money should be used the money to mitigate the effects of global “market pressures”.
3. Redirect government priorities. Just by ending wars in Iraq and Afghanistan and cancelling the Trident nuclear missile replacement programme, state subsidies could be made available to make food and fuel affordable.
4. Campaign for social ownership and control. If, as is likely, the supermarket chains refuse to play ball, then the union should win popular support for them to be taken over and run by staff, consumers and local communities with the support of expert, financial, technical and scientific advice.
5. Affordable food and energy. Prices should be determined by the costs of production, taking into account sustainable methods of agriculture and processing, the livelihoods of those involved in production, distribution and retailing and the purchasing power of consumers. The same approach could just as easily be applied to energy supplies.
6. New political solutions. Obviously, implementing such a programme would require the support of government, backed up by an independent social movement. No one expects New Labour to take such a stand and it’s ridiculous (and a waste of effort) to suggest they do. Just like the Tories, Brown and company are tied to big business interests. So Unison and other union leaders should acknowledge that the old politics is finished and that creative, new solutions must be found.
   

Paul Feldman
Communications editor

Hunger haunts the Big Apple

Problems of hunger and malnutrition in many parts of the developing world are common knowledge. But less well known is that in the United States itself, the world’s richest country, growing numbers are finding it difficult to put food on their table as prices rise at their sharpest for nearly 20 years.

Things are so serious that campaigner Jesse Jackson Jr has called on US Congress to legislate a temporary 20% increase in food stamps as people relying on them are falling short of the minimum needed. Significantly, many people in work rely on government food stamps to eke out their supplies. And things are set to get far worse, as floods in the corn growing states of Iowa and Illinois will send the price of corn even higher. It has tripled over the past two years, partly driven by the switch to biofuel production instead of food.

The Food Bank for New York City, which collects and distributes food to provide food for the hungry, has announced that around 3.1 million New Yorkers – over a third of the city’s population – had problems over the last year. That figure is up by 55% from 2003 levels.

More people than ever are relying on soup kitchens and “food pantries” where free food is distributed, to eke out their dwindling diets. A year-long survey revealed that in the middle age group (ages 36-64), nearly half of city residents had difficulty affording food in 2007. And worst hit in terms of a worsening of their circumstances are middle-income residents.

The number of residents relying on soup kitchens and food pantries rose by 24%, from one million to 1.3 million over the last three years. The New York Food Bank report found that one out of five households were unable to save to cushion any loss of household income and would not be able to afford food as a consequence of illness, unemployment or rising prices.

People like June Jacobs-Cuffee of Brooklyn, interviewed by the New York Times, who has to share her $120 a month in food stamps with her 19-year-old epileptic son, can only make do by “very careful budgeting”. New Yorkers are specially affected because food costs there are higher than most other parts of the US. Across the US, the cost of what the government considers a minimum nutritional diet has risen 7.2% in the last year alone. Some staples, such as eggs have gone up 20%.

With rapid and continuing rises on a global level of staples like rice, corn, wheat, eggs and many other foodstuffs, there is no end in sight to the problems of middle and low income people in the United States, as indeed elsewhere, including Britain. While the production and distribution of food remains in the hands of a small number of global corporations, profit margins and not the needs of ordinary people, will remain the priority.

Far from being insoluble, the world food crisis could actually be ended, certainly in the view of the United Nations, whose food agency met in Rome earlier this month. The figure it came up with for ending global hunger was just $30 billion. This compares with the $340 billion approved by US Congress for the wars in Iraq and Afghanistan in 2009 alone. Feeding hungry New Yorkers was the last thing on their minds as they voted through another year of war and destruction.


Corinna Lotz
AWTW secretary

Profiting from the food crisis

The world’s major governments are sitting on their hands while the world’s poor face starvation from soaring food prices. This is the stark conclusion to be drawn from the fact that the United Nation’s World Food Programme (WFP) has so far received only £9 million towards closing a £380m funding gap, despite all the fine words from London, Washington and other capitals.

What is also increasingly clear is that the focus is on imposing top-down, market-driven “solutions”, which will deliver no benefits to the poor but will boost investment in research into agri-chemicals, GM crops, and second generation bio-fuels. The British government, for example, is giving just £30m extra to the WFP but has pledged £400m in extra investment in “agricultural research” over next five years. Much of it will be spent in the UK.

UN secretary-general Ban Ki-moon is doing his best to keep the issue upfront but he faces a slow reaction by governments more concerned about the impact of the global financial crisis on shares and property values then they are about starvation. The WFP believes 100 million people are currently going short of food. The prices of staple foods including rice, grain, oil and sugar are all at least 50% higher than a year ago. Fertiliser prices have soared too, leading to a decline in production by poorer farmers.

As for the leading agencies of global capitalism, they see the food crisis as an opportunity to boost corporate-driven globalisation. Dominique Strauss-Kahn, managing director of the International Monetary Fund, says curbs on food exports, “have a damaging global impact”. He called for the completion of the Doha round of trade talks as it “would reduce trade barriers and distortions and encourage agricultural trade”. The World Bank is developing a “Strategic Framework for Climate Change and Development” which will “provide direction on how adaptation - in agriculture as well as other impacted areas, such as flood-prone coasts - can be integrated into country, sectoral, and regional development strategies”. In other words, a series of expensive, prescriptive and ill-planned strategies will be imposed on poorer nations in return for World Bank funds.

In an excellent report on the food crisis, the biodiversity group GRAIN says:
“Farmers across the world produced a record 2.3 billion tons of grain in 2007, up 4% on the previous year. Since 1961 the world’s cereal output has tripled, while the population has doubled. Stocks are at their lowest level in 30 years, it’s true, but the bottom line is that there is enough food produced in the world to feed the population. The problem is that it doesn’t get to all of those who need it. Less than half of the world’s grain production is directly eaten by people.

“Most goes into animal feed and, increasingly, biofuels – massive inflexible industrial chains. In fact, once you look behind the cold curtain of statistics, you realise that something is fundamentally wrong with our food system. We have allowed food to be transformed from something that nourishes people and provides them with secure livelihoods into a commodity for speculation and bargaining. The perverse logic of this system has come to a head. Today it is staring us in the face that this system puts the profits of investors before the food needs of people.”

The way out of this impasse is through putting land into the hands of the people who work it and giving them independence and self-determination. It also means placing the global chemical and agri-business and food distribution corporations under democratic control and common ownership. Scientists and technologists could then get to work on sustainable, holistic approaches to agriculture and food production on the basis of need and not profit.

Penny Cole
Environment editor

Food prices revolt grows

Governments across the globe are being shaken by mass protests, as people take to the streets demanding lower food prices. According to the World Bank, increases in global wheat prices reached 181% over the 36 months leading up to February 2008, and overall global food prices increased by 83%. The UN says the price of rice has soared by 75% in just two months.

There have been strikes and protests across Africa, in Ivory Coast, Burkina Faso, Cameroon, Senegal, Mauritania, Guinea and Mozambique. In Asia, there have been protests in India, Singapore, Philippines, and Bangladesh. In Mexico thousands have marched and people in El Salvador protested outside the state bank. This week alone:

· Protestors in Haiti marched on the presidential palace demanding a cut in food prices; five people were killed, leading to demands for the government to resign.
· in Vietnam, 15,000 workers in a factory making trainers went on strike demanding better to pay to cover higher food prices.
· In Egypt, strikers took to the streets demanding a cut in the cost of bread.

In Europe too, droughts in Spain, France and the Po Valley last year have led to big rises in fresh food prices. With durum wheat up 30% this year, pasta is becoming a luxury product. In Britain, the cost of an average basket of groceries has risen 12% in a year.

World Bank president Robert Zoellick has warned of growing unrest if a solution is not found. And Prime Minister Brown called for food price inflation to top the agenda at the G8 summit in Japan in July. Both Zoellick and Brown called for more aid. But G8 countries are not even meeting their existing promise, made at Gleneagles in 2005, to double aid to Africa by 2010. Aid was lower in 2007 than in 2006, and in fact rich countries gave a higher proportion of their GDP in aid in 1963 than in 2007.

As for “trade not aid”, the International Monetary Fund says more than 20 African countries will see their trade balance worsen by more than 1% of GDP through having to pay more for food. The World Bank among others blames biofuels production for driving up food prices. Brown says he will review the impact of the UK’s biofuels subsidies and opposes further increases in EU subsidies. This is too little, too late. The world is now locked into profit-driven, bio-fuel production at the expense of food production. The market itself is in the driving seat.

The immediate causes of food price inflation are selling food crops at high prices for bio-fuels; switching land from food production to bio-fuels; last year’s drought in food producing areas such as Australia and Central Europe and the increasing cost of oil, leading to higher production and transportation costs.

But the underlying cause is the profit-driven system of food production at the expense of local needs. With the expansion of agri-business in the last three decades of globalisation, food dependency has increased and local systems of food production and exchange have been overturned. Now agri-business is moving into more profitable areas, creating food shortages where there could be plenty for all.

With starvation on a global scale now looming, what is needed is a strategy to wrest control of all land and natural resources from the global corporations (and the governments that support their rule). We could then combine technology with new scientific understanding of agricultural production to create systems of sustainable, dependable local food production.

In two very concise and readable books – Running a Temperature, an action plan for the eco crisis and House of Cards: from fantasy finance to global crash, the members of A World to Win propose a programme of democratisation of both ownership and of the state as the only solution to the growing global crisis. Included in both books are radical proposals for food, agriculture and land use. We call on everyone to join us in developing these ideas further with a view to putting them into practice.

Penny Cole
Environment editor

Speculation feeds rice price crisis

Across Asia, sudden stratospheric increases in rice prices have prompted countries to ban exports amid fears that shortages could provoke food riots following street protests in Jakarta, capital of Indonesia. World prices for rice, the staple food of about 2.5 billion Asian people, have almost doubled since the beginning of the year, joining those of wheat, corn and other agricultural commodities which have surged since the end of 2006.

Governments of producing countries are restricting exports to ensure their own populations get enough to eat at a price they can afford, but the result is to raise prices further. Last week, Cambodia banned all exports for two months to ensure "food security", following the lead of Egypt, a major exporter. Vietnam, which ships 5m tonnes abroad each year, on Friday declared a 20% cut in exports. Global demand outstripped supply by nearly 2m tonnes last year. The predicted shortfall this year is more than 3m tonnes of the 424m tonnes required.

The World Food Programme has raised the alarm on potential mass starvation. "There are hundreds of millions living at, or just below, the poverty line of $1-a-day, spending 70% of their day-labour wages on food. If food costs double they've no opportunity to increase their earnings and no alternative but to reduce what they and their families eat."

Global food prices, based on United Nations records, rose 35% in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65%. Analysts attribute rising food prices to many causes: spiralling oil prices, the key input to all production; extra demand for biofuels to offset rising oil prices which reduces available food stocks; a rapidly growing population; the shift to an increasing consumption of meat as incomes rise for some in rapidly developing Asian countries - meat production needs a vastly greater amount of land; neglect of irrigation and research; and changing weather patterns throughout the world which have adversely affected production.

With global rice stocks at their lowest level since 1976, prices are expected to continue to rise until the end of next year, at least. Some analysts predict rice could hit $1,000 (£500) a tonne before farmers plant more crops and increase supplies – a response which will take years to come into effect.

Severe weather across Asia has certainly damaged production. Record icy temperatures were recorded in China and Vietnam, which also suffered a pest outbreak. Bangladesh endured a devastating cyclone while Australia suffered a prolonged and devastating drought. "It's been described as a 'perfect storm' of factors that have pushed prices to their highest levels since the 1970s," said Adam Barclay, of the International Rice Research Institute.

But even this ‘perfect storm’ explanation omits a surely more obvious source of the sudden inflation in food – speculation and profiteering. As credit markets remain closed, property values and stock markets are declining, and recession deepening, investors are seeking new homes for their capital – and fast. Andrew Lynch, a portfolio manager at global asset management company Schroders inadvertently lifted the lid:

"The food retailers, the Tescos and Carrefours of the world ... can manage to disguise quite effectively to the average person on the street food inflation by special offers here and discounts there, and get a lot of prominence while quietly pushing up the price of a loaf of bread by 10% in three months. That's why I own much more [shares] in food retail."

Gerry Gold
Economics editor

Global food crisis grows

The United Nations World Food Programme (WFP) is warning that it will be forced to abandon millions of people to starvation, as sharp increases in food prices eat into its funds. International market prices for wheat, corn, soya beans and dozens of other commodities have doubled or trebled in recent years.

The main focus of the WFP to date has been to provide aid in areas where food was unavailable. But the programme now faces having to help countries where the price of food, rather than shortages, is the problem. Josette Sheeran, WFP executive director, said the agency - the world’s largest humanitarian programme - would look at “cutting the food rations or even the number or people reached” if donors did not provide more money.

The price jump in agricultural commodities – such as wheat, corn, rice and soya beans – is having a wider impact than thought, hitting countries that have previously largely escaped hunger. The WFP says that in response to rising food costs, families in developing countries were moving in some cases from three meals a day to just one, or dropping a diverse diet to rely on one staple food.

Egypt has widened its food rationing system for the first time in two decades while Pakistan has reintroduced a ration card system that was abandoned in the mid-1980s. Countries such as China and Russia are imposing price controls while others, such as Argentina and Vietnam, are enforcing foreign sales taxes or export bans.

The WFP’s warning came just hours after Richard Branson launched another bio-fuelled stunt to publicise his continuing campaign for a greener, cleaner, and altogether kinder capitalism. And the connection between these two events?

There are many factors contributing to rising food prices – strong demand from rapidly developing countries like China and India; the sharply increased price of oil for agriculture, shipping and fertiliser production, a rising global population; more frequent floods and droughts caused by climate change. But the biggest impact comes from the shift to biofuels.

In the space of a few years, the US has diverted about 40m tonnes of maize to produce bioethanol – about 4% of global production of coarse grains. That rapid growth is largely the result of government subsidies as the fading global power struggles to reduce its dependence on carbon-based oil imported from the Middle East.

A report from the Nature Conservancy and the University of Minnesota has raised serious questions over how biofuels are grown. Converting rainforests, peatlands, savannahs or grasslands to grow fuel crops releases CO2, in some cases a staggering 420 times more CO2 than from burning fossil fuel, the report says. Using fertiliser on biofuel crops will emit enough nitrous oxide (more than 296 times more powerful heat trapping gas than CO2) to wipe out all the carbon savings biofuels produce, say other sources. Biofuel crops could also put an unbearable strain on the global water supply, say Swedish researchers.

Far from providing a green alternative to fossil fuels, there is a danger that the struggle to sustain capitalist production through biofuels will trigger a vicious cycle of a food versus fuel competition over which will yield the most profit. This will lead to further food shortages, drive up food prices, and encourage even more farmers to choose to grow fuel over food crops to meet the increasing demand - and clear more land in the process. The choice is becoming simpler: either starvation on a global scale or the transformation of economic and political systems, transferring the power over life and death away from greedy corporations and into the hands of the majority who have real needs.

Gerry Gold
AWTW economics editor

The great unravelling

“Housing market faces big slowdown” reports the Financial Times, while today’s Daily Telegraph main headline is “Fastest rise in food prices for 14 years”. These are not unrelated stories but are further indications of the great unravelling that is occurring in the major capitalist economies and financial system.

In ten years, house prices in Britain have gone through the roof (pardon the pun), rising by 300-400% depending on the region. This unsustainable inflation was fuelled by low interest rates, mortgage loans five, six or more times annual income, a shortage of new affordable home both to buy and rent and, in general, a belief that the sky was the limit. In this dream-like world, vast numbers of people remortgaged against the increased “value” of their property to buy consumer goods and thus keep the global economy ticking over.

This process was an expression at a personal level of what was taking place at macro-economic level. For 30 years, global corporations have borrowed heavily to finance their expansion/mergers/takeovers. In turn, this gave rise to a new global financial system where money could apparently beget even greater sums of money by sheer electronic manipulation. It was as if the Middle Ages alchemist’s promise of turning common metals into gold had at last become possible. The “share” that fell to ordinary people came in the form of credit (meaning debt) to buy more of the goods that the corporations were turning out.

Which brings us to the Daily Telegraph story about food prices. They are increasing at their highest rate for more than a decade, according to official figures released yesterday. Food factories are having to pay 6% more for their raw ingredients than a year ago - the highest annual rate since 1993, says the government’s National Statistics office.

A survey by the website mysupermarket.com, which compares prices across online supermarket chains, found that the three biggest - Tesco, Asda and Sainsbury's - are charging their shoppers 12% more on average for a basket of 25 staple goods compared with last year. That equates to an annual increase for most families of about £750. A kilo of peas has gone up from £1.19 to £1.79 at Tesco, a dozen eggs at Sainsbury's has leapt from £1.62 to £2.35, while Asda has increased the price of its orange juice from 73p a litre to 88p. The cost of a pint of milk has reached an all-time high of 33½p and sliced bread costs a record £1.20 in big stores.

Driving food price inflation is climate change – itself a product of unsustainable capitalist growth - combined with rising fuel prices. Global warming has produced a drought in some key crop growing areas, notably in Australia and the United States. Adding to grain shortages is the turning over of crop land from growing for food to production of raw material for ethanol and other biofuels. In addition, whole areas of former farmland in China and India are being given over to manufacturing and service industries, leading to greater pressure on world supply. Fuel costs have soared as the price of oil reaches nearly $100 a barrel. This in turn is a reflection of the falling value of the dollar, in which oil is priced. The dollar’s devaluation is absolutely connected to the fact that the United States has lived on borrowed money for several decades.

The impending collapse of the housing market combined with rampant inflation will devastate millions of lives. Alternatives to the crazed world of the market economy are urgently required. A House of Cards – from fantasy finance to global crash has some viable proposals. Why don’t you check them out?

Paul Feldman
AWTW communications editor