The world food crisis and the capitalist market
By Alex Lantier April 2008
For GOD's sake stock up on food, medicine and other essentials while you
still can. This is the real deal. This is no Y2K that doesn't happen. We are
just seeing the start of the worst depression that has ever hit the modern
world and things are going to go south fast. The main reason is that the
gov needs to create MEGA INFLATION of prices to shoot their own
debt back into lower digits. So Bread today 4$ is 50$ tomorrow. Get a
grain grinder, mill NOW. Stock up on HORSE FEED! Wheatberries. Rice.
Millet. It is cute as hell to send e-mails and info and such but if you aren't
taking real steps right now to get you and your loved ones will not be ready
for the famine and inflation that is coming & you will be roadkill! There will be no one
that comes to your rescue. This is going to make Hurricane Katrina look like
a picnic.
As the June 3-5 Conference on World Food Security of the United Nations’Food and Agriculture Organization (FAO) began in Rome, FAO Director Jacques Diouf said of the explosion of food prices: “It is touching every country in the world. We have not only seen riots and people dying, but also a government toppled [in Haiti], and we know that many countries...could tilt to one way or the other depending on the discontent or satisfaction of their population.”
With these words, Diouf expressed the growing concern of governments and ruling elites internationally over the potentially revolutionary implications of the upward spiral of prices for basic food staples, which has already sparked a social and economic crisis of global dimensions. In recent months, strikes and demonstrations against rising food prices have occurred in many parts of the world. These initial struggles have exposed the
contradiction between the elementary demand of the world’s masses for affordable food and the workings of the capitalist market.Diouf called for donations of US$30 billion to be invested in world agriculture. Even were this sum to be allocated, it would not begin to address the sources of the current crisis, which lie in economic and political processes of privatization and price speculation that have unfolded over the past three decades and are bound up with the globalization of capitalist agriculture.
With consumers increasingly unable to pay world market prices for food,
national governments are compelled to intervene to
avert famine and revolt. These interventions, while offering at best
partial resolutions to local problems, only increase difficulties
elsewhere. Exporting states are limiting their external sales in an attempt
to shield their own populations from the worst of the
price rises, while extorting higher prices from importing nations by
restricting supply.The most devastating price increases are those for the basic food grains.
These are relatively non-perishable and therefore
widely traded, and make up a third or more of daily caloric intake,
especially in poorer countries. They are also used
extensively in other parts of the food chain—e.g., for livestock feed and
sweeteners—thus affecting prices for meat, eggs, dairy
products and various processed foods.Wheat prices in the US—the largest exporter and one of the few not imposing
export restrictions—remain at historically high
levels after an extraordinary spike in February. On April 28, Newsweek
wrote of the commonly used hard red spring wheat
variety: “For 50 years it traded at around $2 or $3 a bushel on the
Minneapolis futures exchange, which specializes in hard red
spring wheat. In September, the price was $7. In February, that price
peaked for a day at $24, as the market panicked over
low supply. ‘It wasn’t clear whether there would be enough to finish out
the year,’ says Bill Lapp, an agricultural economist in
Omaha. The current price is down again, but only to $11.24.”Other major exporters are also charging record prices or have ceased
exports altogether. Prices at the main European wheat
export port of Rouen, near Paris, were EUROS 280 per ton in April, up from
EUROS100 in 2006. Russia has imposed a 40
percent export tax on wheat, and a large December 2007 Russia wheat sale to
Egypt fetched a price of roughly US$11.80 per
bushel. Argentina and Kazakhstan have both banned wheat exports. Kazakhstan
cited the “need to assure the country’s food
security, and not permit negative consequences for the domestic market, in
conditions of a significant rise in prices on the worldgrain market and a shortage of food grain in the world.”
The world rice market has been even further destabilized. In part, this is
because it is relatively small—only 7 percent of the
global 2006-2007 crop of 420 megatons (Mt) was traded internationally,
versus 19 percent of the 592-Mt 2006-2007 crop of
wheat—and therefore more vulnerable to supply shocks.Also, far more of the world’s main rice exporters (Thailand, Vietnam,
India, Pakistan, the US, China and Egypt) are poorer
countries, where the state fixes low domestic prices for the crop. These
countries have imposed export restrictions as well, as
rising world prices give rice processors an incentive to export large
quantities of rice to higher-priced international markets.India, Vietnam, China and Egypt all announced rice export bans or
restrictions in April. Forbes magazine quoted Vietnamese
Industry Minister Nguyen Thanh Bien as saying the measure would “reduce the
quantity but increase the value and export
revenues, while ensuring food security and serving the state’s interest.”
These bans leave Thailand as the largest exporter by far.
Thai 100 percent B-grade white rice, the industry benchmark, passed
US$1,000 per ton on April 24, up from US$383 per ton
in January.Thai exporters could further raise prices if Iran and Indonesia,
traditional rice importers that have until now waited for prices to
fall, begin purchasing rice. They told the International Herald Tribune,
“If Iran buys rose from Thailand, Thai 100 percent
B-grade white rice would hit $1,300 a ton.” These price increases have
particularly hurt poorer countries in sub-Saharan
Africa, the Middle East and the Americas, which represent about half of
world import demand.Corn prices have also exploded. Prices in the US—which has about 40 percent
of world production of roughly 700 Mt, and
60 percent of the world export market—jumped to US$6.61 per bushel on May
6, on supply fears due to rainy weather during
the corn-planting season and rapid demand growth from ethanol biofuel
plants. This is up from US$1.90 per bushel in 2005.China, another major producer and traditional exporter, faces high demand
for animal feed as well as from ethanol and corn
syrup plants. It may end up importing some corn by the end of the year.In a recent analysis of rising food prices, Joachim von Braun of the
International Food Policy Research Institute (IFPRI),
calculated average prices for grains since 2000, weighted by volume
exported from different exporting ports. He found that the
price of most grains remained roughly constant between January 2000 and
January 2004, but in the ensuing period until January
2008, increased from roughly US$150 to US$400 per ton (for rice), US$120 to
US$410 per ton (wheat), and US$100 to
US$200 per ton (corn).He noted: “In 2007, the international food price index rose by nearly 40
percent, compared with 9 percent the year before, and
in the first three months of 2008 prices increased further, by about 50
percent.”Political developments indicate the bitter struggle for advantage occurring
between different national bourgeoisies, under
conditions where the global economy has been destabilized by rising oil
prices and financial turmoil in the wake of the US
mortgage crisis.On May 8, the Financial Times reported that China, Saudi Arabia and Libya
were in talks with agricultural countries in Africa,
South America and eastern Europe to buy tracts of agricultural land on
which they could grow food to guarantee their “food
security.”On May 2, Thai Prime Minister Samak Sundaravej proposed that Thailand,
Vietnam, Burma, Laos and Cambodia form a rice
cartel, along the lines of the oil cartel OPEC, to charge higher prices for
rice on world markets. Thai government spokesman
Vichienchot Sukchokrat explained, “Though we are the food center of the
world, we have little influence on the price. With the
oil price rising so much, we import expensive oil but sell rice very
cheaply, and that’s unfair to us and hurts our trade balance.”
However, international criticism ultimately forced the Thai government to
abandon the idea, despite support from the Laotian
government.Smuggling and hoarding are surging in producing countries, as owners of
grain try to export it to take advantage of higher prices
on international markets. Forbes published a May 1 piece entitled “A Black
Market Grows in Rice,” describing smuggling’s
lucrative investment potential.It advised: “The biggest opportunities may be in China, the world’s largest
rice producer, where grain prices are among the
lowest in the world.... Reports of rice smuggling have surfaced this week
in areas all along China’s sprawling borders, from
Yunnan province next to Vietnam, to northwest Xinjiang, which borders the
central Asian states of Kazakhstan and
Kyrgyzstan, all the way to Guangdong, a prosperous southern Chinese
province that sources 60 percent of its rice from
elsewhere in the country.”Though not yet consciously unified, the response of the international
working class has shown the world scale and objectively
integral character of its struggles and demands. Strikes and protests have
spanned the globe.South Korean media reported a rare street protest in North Korea in March
2008 against a 60 percent reduction in
state-distributed rations and the execution of three North Koreans who
illegally crossed the border into China to search for
food. In China, there have been reports of strikes against factory owners
increasing food prices at company stores. Food
inflation in the country has reached 21 percent so far in 2008, according
to China’s National Bureau of Statistics. Rice prices
are reported to be fairly stable due to state subsidies, but prices for
pork, cooking oil and vegetables rose 55, 34 and 30
percent, respectively, in 2007.May Day saw large-scale anti-inflation demonstrations by workers across
Southeast Asia. Thousands marched on the
Malacanang presidential palace in Manila in the Philippines, the world’s
largest rice importer, where rice prices have doubled in
recent months. Fifteen thousand workers marched in Jakarta, Indonesia, amid
sharp increases in rice, oil and soy products. In
Thailand, 2,000 workers demonstrated outside government buildings in
Bangkok, with posters declaring: “Expensive rice
prices, cheap labor wages—How can laborers live?”In the Americas, women in Lima banged pots outside of Peru’s Congress on
May Day to demand more government subsidies
for eating halls for the poor. On March 13, protestors banged pots outside
the Central Reserve Bank of El Salvador to protest
rising prices, amid reports that a basic basket of food items now costs
$160, versus $128 in 2004. The country’s minimum
wage is $162.Already in February 2007, Mexico City saw a 75,000-strong “tortilla
protest” over the price of corn tortillas.On April 12, the Haitian government fell after 10 days of massive protests
against a 40 percent rise in food prices and the
doubling of the cost of imported rice. These protests turned into violent
confrontations with police forces and UN
“peacekeepers” occupying the country, with at least five people killed and
several UN troops injured.In the Middle East, rising food prices have brought a number of
long-simmering social and political conflicts into the open. Riots
shook southern Yemen in early April, with the government deploying tanks
against protestors demanding jobs and pay raises in
al-Dalea. Wheat prices in the country had doubled over the last year, and
rice and vegetable oil had increased by 20 percent.Foreign workers in the oil and construction sectors of Saudi Arabia and the
UAE launched unprecedented strikes in March
2008 for higher wages, amid rising rent and food costs. More than 600 such
workers were arrested and deported from the
UAE in early April.The outbreak of fighting between sectarian factions in Lebanon in early May
followed closely on the heels of a general strike
called by trade unions over price inflation of food and other goods.In Egypt, a major wheat importer, a textile workers’ strike over food
prices at Mahalla al-Kobra on April 6 turned into a
confrontation with police, who forced workers to return to work. Police
also arrested activists who had called for a general
strike in Cairo, but according to international media, most schools and
universities in Cairo were deserted. Workers
complained of long lines to obtain state-subsidized bread, under conditions
where non-subsidized bread often costs 10 to 12
times as much. Other staples such as rice and cooking oil were reported to
have doubled in price.In South Asia, a general strike against rising food prices hit the Indian
metropolis of Calcutta on April 21. On April 12, 10,000
textile workers rioted against high food prices in Fatullah, near Dhaka in
Bangladesh, a major rice importer. In Afghanistan,
workers blocked the main Jalalabad-Kabul road to demand lower food prices
on April 22.In Europe, rising prices for staples such as pasta, bread and dairy
products have fueled strikes this year, including in the
Scandinavian healthcare sector and the French retail industry. A May 1
rally in the Russian city of Chelyabinsk attracted
14,000 workers, who chanted, “Salaries must rise higher than prices.”In sub-Saharan Africa, protests have hit Mozambique, Senegal and the Ivory
Coast in recent months. Trade unions in South
Africa and Nigeria struck in May against higher food and electricity
prices. The most widely publicized protests this year were
February’s demonstrations in Cameroon and Burkina Faso, which left 40 and 5
dead, respectively, after confrontations with state security forces. GO TO FOOD CRISIS PART II. ====>
* * * * * * *
<==== BACK TO THE FUTURE INDEX PAGE
<==== BACK TO THE SURVIVE THE CRASH PAGE