Policies for the global food crisis

The food crisis may have slipped from the headlines, but almost a billion people face starvation in 2009. Drought and high prices, along with a diversion to bio-fuels and higher costs in the West, will reduce production in most of the world's major grain producers.

A report from the UN Food and Agricultural Organisation (FAO) this week warns that food shortages are growing. In Eastern and Southern Africa, almost 30 million people face hunger due to three years of drought caused by global warming, combined with political conflict and the market system imposed by corporate globalisation.

Half of China's winter wheat harvest has been hit by drought and India is experiencing low rainfall. In Argentina, a year-long drought has killed nearly one million animals and destroyed half the grain. It is the same in Paraguay and in Uruguay average rainfall fell by more than third in the last twelve months.

The FAO report says that not only are the poor getting poorer, but formerly better off people are eating less. They are cutting back on education and health costs to buy food, and selling the assets they rely on for the future, such as land, tools, livestock.

Richer countries are not immune. In Australia, the coastal areas where agriculture thrived are now marginal for production, due to drought. In California a third year of drought is adding to an economic crisis that has Governor Schwarzenegger trying to balance the books with a tax increase, which the state legislature won’t pass.

California has the highest increase in unemployment and the largest number of home repossessions in the US. Things can only get worse – the melt water which is the basis of its agriculture, is coming to an end as rapid melting shrinks the mountain glaciers.

Meanwhile, the global chemical corporations continue their programme of trapping every farmer – large and small – in their net. The UN is desperately trying to win support for a new legal regime that stops patenting of crop varieties, but the powerful elites will ensure they don’t succeed.

And while drought resistant varieties are urgently needed, if developed in the current profit-driven system only the largest industrial farms will benefit. Small and medium sized farms will disappear.

However, there is another way forward. Here are some proposals:

• The whole chain of food production is taken out of the hands of profit-driven corporations – both agri-business and supermarket chains.
• Working democratically, farmers, distributors and consumers develop a holistic, sustainable, not-for-profit system that feeds everybody. 
• Land is brought into common ownership and producers are supported with fair prices.
• To counter the immediate crisis, drought resistant varieties are developed with public money diverted from weapons production.
• A new system of fertilisation is introduced, with composting carbon waste a legal requirement. Crop rotation is reinstated and a focus on local food reduces the need for mono-culture.
• Farmers in very marginal farming areas are helped to sustainably grow bio-fuels, to power their own homes, schools, hospitals and earn a livelihood.
  

What does everybody think? For years the system of “aid to poor countries” has failed and under the impact of global warming is collapsing altogether. The poorest in every country – even in California – are facing hunger in 2009. We have a chance to prevent it – but we need to act now.

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