In Part 1 – Price Rises and Causes, I wrote about how the World Food Program are slashing their aid this year, unless they receive further funding from donors. Unfortunately, this is just the tip of the iceberg for the developing world.
The one thing that is likely to cause social unrest, above politics, religion and human rights, is when peoples’ access to food starts to disappear and empty stomachs abound.
We are wasting energy on a scale never seen before, and the immediate consequence of this is that we are no longer producing enough food for everyone’s current rate of consumption. As a result of shortages, the food prices are rising, denying the world’s poorest of sustenance. The initial effects in Japan are stories such as Kentucky Fried Chicken increasing their prices for the first time since 1992.
However, for the developing world, where people spend a far higher proportion of their budget on food, the situation is becoming desperate. The world is beginning to erupt in a series of food riots. I have tried to summarise some of the major disturbances, but the list is growing longer every day.
Food riots – The Americas and Africa
The Mexico tortilla riots in January 2007 were the harbinger of much of what was to come, as their corn supply was the first victim of the subsidised mass production of biofuel in the United States.
Also in the Americas, on Friday at least 4 people were killed in food protests in Haiti. Some of the deaths are believed to have been caused by United Nations peacekeepers shooting at armed rioters.
Across the Atlantic in Africa, the situation is even more serious.
In Burkina Faso rioting shut down some of the main towns in February, whilst in Cameroon they have suffered from the most deadly food riots of all; at least 17, but possibly 100, people having died in February.
Guinea Conakry has seen 5 anti-government riots over the last 18 months, related to the cost of living. In the Ivory Coast 1 person died last week as food protests became violent and there was also 1 death during riots in Mauritania last year. At least 34 people were apparently arrested in food protests in Morocco this February.
Mozambique has suffered riots that some are blaming on biofuel production and in Senegal there was a “brutal” crackdown on food protests last week, following other demonstrations last November.
The Financial Times has reported on the fear that these riots are set to spread:
Kanayo Nwanze, the vice-president of the United Nations’ International Fund for Agriculture, told a conference in Ethiopia that food riots could become a common feature, particularly after the price of rice has doubled in three months.
“The social unrest we have seen in places such as Burkina Faso, Senegal or Cameroon may become common in other places in Africa,” Mr Nwanze said.
Food riots – The Middle East
Rioting has been less frequent in the Middle East, but it appears the situation is coming to a head. On Thursday, Reuters reported that:
In the United Arab Emirates and Bahrain, the combination of rising prices and falling dollar purchasing power has sparked riots and protests by migrant workers, many of whom live in squalor among the skyscrapers and sports car showrooms.
Whilst in Yemen tanks were deployed on Friday after 5 days of food protests in which at least one person has died, we can still read about a Saudi businessman planning on building a £5 billion mile-high skyscraper in one of the most land-rich countries in the world.
One of the many major crises in Iraq at the moment is that millions of its people are suffering from a lack of food and clean water. UN officials say that humanitarian needs have increased dramatically over the last 2 years.
Egypt are the world’s largest grain importer, and there are worries of an approaching disaster there. The government already subsidise bread for many of the country’s 80 million people, and their numbers are increasing as world wheat prices spiral. The government, feeling the burden of this new demand for subsidised bread, have enlisted the army to help with the production and distribution. There have been at least 15 deaths in bread queues so far this year.
The social upheaval of famine in a country such as Egypt, already suffering under political repression, could be extreme.
Food riots – Rest of the world
Further afield, there were demonstrations in Uzbekistan last year, an unusual sight in a country where such action is often met with extreme force.
The monks’ protest in Burma last autumn had its basis in poverty, caused by rising energy and food costs. In Indonesia, food protests have been widespread, leading some to suggest that the situation is close to the levels of social unrest seen in 1965, when President Sukarno was overthrown by General Suharto and over 500,000 suspected communists were murdered.
In China there are suggestions that they will not be unscathed by food riots in their Olympic year, and even in Italy there have been protests against the rise in pasta prices.
Rice prices and their effect on importers and exporters
In every food commodity market, exporters and importers alike are facing difficult decisions. The BBC reported in February that:
In an attempt to limit the impact of rising prices on their populations, governments have lowered import tariffs, raised food subsidies and imposed duties on food exports.
I would like to focus especially on rice and the impact its cost is having in trade across Asia and Africa. Rice has become the staple diet of many countries and for most of them the situation is becoming bleak, especially for the net importers of food. In The Times, they recently reported that:
“Rice production will fall this year below the global consumption level of 430 million tonnes.”
As a result, the price of rice has doubled since the beginnning of the year. In an effort to control the subsequent inflation, a lot of the main exporting countries such as China and Vietnam have cut their exports. India have banned exports of all non-basmati rice; their inflation has reached a 3-year high of 7% in the last few weeks.
Bloomberg report that there is a crackdown on illicit exports from Pakistan, where power shortages have been affecting milling. They also say how Malaysia is set to import from other South-East Asian countries to build up their reserves. Most worryingly perhaps, is that the Philippines, the world’s largest rice importers, are buying from the regional emergency stockpile, and also from the United States.
In Thailand, the world’s top rice exporter, rice farmers are needing to protect their fields from thieves. The Guardian tells how cropping machines are banned from the roads at night, in case they try to pull off the rice equivalent of sheep rustling. Also mentioned is, how along with Cambodia and the others previously mentioned, Thailand is considering cutting its rice exports:
The country produces 30m tonnes of rice a year, and aims to export 8.5m tonnes. Last year 9.5m tonnes was sold abroad and more may be exported this year, prompting ministers to consider curbs. “A rice shortage in the local market is very likely,” said Prasert Kosalwit, director general of the Thai government’s rice department.
Price controls and hoarding impacting prices further
Countries are cutting exports in order to control their inflation, a measure needed so that their own urban populations are not priced out of buying domestically produced rice. However, this has actually increased world rice prices further, as the remaining rice in the market is fought over by the importing countries. This is especially worrisome for Africa, as the Financial Times reported yesterday:
In the past weeks, traders and diplomats have warned that many West African countries, where rice is a staple, had yet to purchase the grain this year, leaving them subject to record prices now.
Countries in the Middle East such as Kuwait are also having severe problems locating rice, due to India’s recent bans on exports. This is causing their own inflation to rise rapidly.
Hoarding of rice is being punished in the the Philippines with jail sentences. The wayward suppliers are eager to cash in on expected further price rises later this year but their actions are contributing to the problem, as Matein Khalid, an investment banker and economic analyst in Dubai, mentions as part of an opinion piece in the Khaleej Times:
Inflation psychology aside, agflation hits the poor like a financial neutron bomb and encourages hoarding behaviour that make price spirals a self fulfilling prophecy. As agflation accelerates, countries with farmland like Russia, Argentina, Ukraine, Australia and Brazil will possess a new currency of geopolitical power…
I believe Thai rice will prove a far bigger money maker for investors than Saudi sour crude. As rice prices double, the poor of Southeast Asia will go ballistic, threatening the government of countries like the Philippines, Burma and Vietnam. With water scarce, low investment in agriculture and dependence on imported food is a disaster for the Arab world…
The BBC have prepared a report on what they call the “rice pinch” in South East Asia. It is dismissive about Japan’s role as they are neither a large importer or exporter of rice:
Instead of importing rice, Japan heavily subsidises its rice farmers, paying them as much as four times the market price and restricting imports.
This policy is defended by a farming community with considerable political weight, and many Japanese agree home-grown rice tastes best.
Food security is seen as politically important and the country keeps a large stockpile of rice – even though it is probably wealthy enough to buy on the international market even if prices continue to rise.
I think that this report overstates the security of the Japanese food situation, and I will be exploring rice production in Japan further in a later post.
The neoliberal view of the food crisis
The World Bank President Robert B. Zoellick called for a “new deal” for boosting world agriculture last week:
Zoellick said the time was “now or never” to break the impasse in global trade talks. A “fairer and more open trading system” would encourage developing country farmers to expand production, he said.
“The poor need lower food prices now. But the world’s agricultural trading system is stuck in the past. If ever there was a time to cut distorting agricultural subsidies and open markets for food imports, it must be now…”
However, “powerful voices across the political spectrum, including in my own country, are calling for, rationalizing, protectionism,” Zoellick said. “This economic isolationism signals a defeatism that will reap the losses, not the gains, of globalization.”
He wants agricultural industries to make cuts in protective subsidies, and for countries to open up to imports. But where are these additional imports going to come from?
The World Bank seem unaware of the damage that they have caused globally with their one-sided “free trade”, and how it will always be this way with such a disparity of power. It is foolish for them to think that the American agribusinesses will ever let them level the playing fields. Also, history shows that developing industries need a level of protectionism, especially those as vital to a country as its agriculture.
Further neoliberal analysis is given by Caroline Boin and Alec Van Gelder from “International Policy Network” who say that poor countries will benefit from being forced to drop their import tariffs, as this will encourage production in exporters. This production increase will enable their access to fertilizers, irrigation and genetically modified crops, boosting production further.
All of this analysis ignores the fact that it is likely to be peak oil and associated peak food, including the limiting factors of land and water, which have created this situation, not trade factors.
It fails to recognise the flaw in their solution; even the countries who have opened their markets to the world are now being faced with no one selling to them. As previously mentioned, other countries are choosing to keep their own food in-country in order to combat inflation.
It is a runaway effect that can only be dampened with a dramatic increase in supply. Or a decrease in demand.
Globalisation and the destruction of local agriculture
Certain countries are not prepared for the unavailability of imported foods, due to population shifts and environmental and historical factors. In other countries “free markets” have destroyed local sustainable agriculture with policies such as export subsidies and food dumping. The World Bank want to limit the sort of behaviour that has been prevalent among the developed world. The Guardian says:
“Urbanisation and world trade rules have encouraged the dumping of rice and other food on African countries, which now import up to 40% of food.”
In Ghana, local rice cannot be produced at a low enough price to compete with imported American grain, despite the low labour costs. This has resulted in the destruction of their local agriculture, rather than its development. Coupled with this, they are now reliant upon on a product which is at the mercy of the American and world food markets, and the recent turmoil therein.
Similarly, in Jamaica, locally produced milk is washed away as it cannot compete with the price of powdered American imports. As one farmer in the documentary “Life and Debt” says, the International Monetary Fund and the World Bank have worked in his country as follows:
“If we lend you $50 million, you have to lower your trade barriers, and you have to compete with us on a level playing field. This is double talk…America subsidizes some of its exports by 137 percent. Nobody can compete with that.”
The film goes on to hypothesise that the country will be in real trouble when the unnaturally cheap food from the United States stops coming. Most of the farms in Jamaica will have had to shut, and the infrastructure and skilled workers will no longer be in place to take up the slack.
When the cheap imports are no longer available
We will find out the truth behind the film’s hypothesis sooner than they had imagined, as the oil, fertilizer and transportation prices continue to rise and the United States switches their agricultural production away from rice and milk and towards corn for biofuels.
The poor in countries similar to Ghana and Jamaica can no longer afford the price of imported food and are finding themselves without a local supply. Their domestic industries were not competitive enough with the neoliberal mass-producing agribusinesses and the once-farmers were forced to relocate to urban areas to find work in the service sector.
Those poor countries best suited to the coming strife will be those whose traditional industry and methods have not been eroded by so-called “free trade”.
GM damage and more deforestation
In India, another sort of powerful agribusiness is causing damage, by reducing genetic diversity. Monsanto are forcing their sterile grain products onto farmers through deals with suppliers. These farmers are committing suicide in their hundreds of thousands. As Vandana Shiva said in a speech to the UK Soil Association in 2007, though normally resilient to disasters such as crop failure due to drought, the farmers have been seized with growing despair at an unknown enemy that is reducing their yields and making them dependable on non-renewable seeds.
In South America natural habitats are being destroyed indirectly, due to the increase in production of soy beans. They are planted on cattle ranchers’ previously cleared land which have been damaged by overgrazing, and the ranchers are thus forced to continue their deforestation elsewhere. These soy beans are then transported half way around the world to China and Japan, a process becoming ever more expensive due to rising fuel costs.
No quick-fix solution
There is no easy solution for boosting production quickly and cheaply. Any changes in trade will come too late, and even the World Bank’s dreams of influencing the American agribusinesses and the Common Agricultural Policy in the European Union would not succeed in this task.
European Union Intervention stocks of grain have run out. There is no chance that everyone will be fed this year, and it is difficult to see where the extra production will come from in the future. As oil becomes more scarce and fertilizers more expensive to produce, will the whole world start to look like North Korea, where a quarter of the population are starving, rations have been cut for even the reasonably privileged, and people are executed for trying to leave the country in search of food?
This has all been one horrific market failure, due in large part to policies designed to create wealth for the few, rather than the many. How many people in the developing world will starve to death, die in rioting or commit suicide? How many millions of acres of rainforests need to be destroyed before we give up on our impossible dream of constant growth?
Food in the West is an unnaturally small part of our expenditure. Most people do not seem to realise that even a small increase in the price of this vital commodity can destroy the lives of our fellow humans.
In Part 3 I will look at the current food situation in Japan.
[…] This low level of food production has placed the country in a dangerous situation, as other countries are limiting their food exports in order to protect their own consumption. I wrote about this in Part 2 – The Developing World Erupts. […]
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