What lies behind rise in global food prices?

Price rises of 30-50% of food prices and energy in industrial countries are confronting many workers, in particular the unemployed and ‘working poor', with problems of making ends meet. But the doubling or so of basic food stuffs in the peripheral countries poses a deadlier threat. Since more than one billion people live with less than $1 a day, and since many of them have to spend up to 90% of their income on food, such a tremendous rise of food prices immediately threatens them with starvation.

This catastrophic, life-threatening situation has led to a series of hunger revolts and strikes with demands for higher wages etc. At the time of writing there have been revolts in a whole series of countries: in Egypt, Burkina Faso, South Africa, Cameroon, Morocco Mozambique, Senegal, Ivory Coast, Mauritania, Yemen, Indonesia, India, Bangladesh, Thailand, Philippines, Mexico and Peru, Argentine, Honduras, Haiti.

How are we to understand the causes of this situation?

The fear of starvation has been a nightmare which has accompanied - and spurred on - the ascent of humanity from its beginnings. The root cause of this danger has always been the relative primitiveness of the productive forces of society. The famines which periodically afflicted pre-capitalist societies were the result of an insufficient understanding and mastery of the laws of nature. Ever since society has been divided into classes, the exploited and the poor have been the main victims of this backwardness and the fragility of human existence flowing from it. Today, however, where  hundreds of millions of human beings are threatened by starvation, it becomes increasingly clear that the root cause of hunger today lies in the backwardness, not of science and technology, but of our social organisation. Even the representatives of the official institutions of the ruling order are obliged to admit that the present crisis is ‘man made'. During its ascendant period, capitalism, despite all the misery it caused, believed itself to be capable, in the long run, of liberating humanity from the scourge of famine. This belief was based on the capitalism's ability - indeed its imperious need as a system of competition - constantly to revolutionise the forces of production. In the years that followed World War II, it pointed to the successes of modern agriculture, to the development of the welfare state, to the industrialisation of new regions of the planet, to the raising of life expectancy in many countries, as proofs that, in the end, it would win the ‘battle against hunger' declared by the United Nations Food and Agriculture Organisation. In recent times, it has claimed, through the economic development of countries like China or India, to have saved several hundreds of millions from the clutches of starvation. And even now, it would have us believe that soaring prices world wide are the product of economic progress, of the new wealth which has been created in the emerging countries, of the new craving of the masses for hamburgers and yoghurt. But even if this were the case, we would have to ask ourselves about the sense of an economic system which is able to nourish some only at the price of condemning others to death, the losers of the competitive struggle for existence.

But in reality, the exploding hunger in the world today is not even the result of such a despicable ‘progress'. What we see is the spread of starvation in the most backward regions of the world and in the ‘emerging countries'. Across the world, the myth that capitalism could banish the spectre of hunger is being exposed as a wretched lie. What is true is that capitalism has created material and social preconditions for such a victory. In doing so, capitalism itself has become the main obstacle to such a progress. The mass protests against hunger in Asia, Africa and Latin America in the past months reveal to the world that the causes of famine are not natural but social.

The many one-sided explanations of the ruling class

The politicians and experts of the ruling class have put forward a series of explanations for the present dramatic situation. These include the economic ‘boom' in parts of Asia, the development of ‘bio-fuels', ecological disasters and climate change, the ruining of agrarian subsistence economy in many ‘underdeveloped' countries, a speculative run on foodstuffs, the limitations on agricultural production imposed in order to prop up food prices etc. All of these explanations contain a grain of truth. None of them, taken in isolation, explain anything at all. They are at best symptoms which, taken as a whole, indicate the root causes of the problem. The bourgeoisie will always lie, even to itself, about its crises. But what is striking today is the degree to which governments and experts are themselves incapable of understanding what is going on, or of reacting with any semblance of coherence. The helplessness of the apparently almighty ruling class becomes increasingly clear. The partial ‘explanations' of the bourgeoisie, apart from being the cynical expression of rival particular interests, only go to hide the responsibility of the capitalist system for the present catastrophe. In particular, none of these arguments, and not even all of them taken together, can explain the two main characteristics of the present crisis: its profoundness, and the sudden brutality of its present acceleration.

Depth of the capitalist crisis

Whereas in the past hundreds of millions of Chinese only had very little to eat, now there is a bigger consumption of meat, dairy products and wheat. Growing demand for more meat and milk means cattle and poultry feed crops take over agricultural lands, feeding far fewer mouths from the same acreage. This is the main explanation put forward by many fractions of the bourgeoisie. This proletarianisation of a part of the peasant masses, which has radically transformed their way of life, and integrated them into the world market, is assumed by the ruling class to be identical with a great improvement of their condition. But what remains to be explained is how this improvement, this lifting of millions out of the clutches of starvation, itself in turn has led to its opposite.

Bio-fuels. Replacing petrol by wheat, corn, palm oil, etc. has indeed led to dramatic shortages of food staples. According to a recent World Bank report, the switch to bio-fuels, especially in the USA, has pushed food prices up by 75% (Guardian, 4.7.08). Not only is the pollution balance sheet of bio-fuels negative (recent research shows that bio-fuels increase air pollution by discharging more harmful particles than normal fuel, not to mention the fact that some bio-fuels need almost as much oil as energy input as the energy they produce), but their global ecological and economic consequences are disastrous for the whole of humanity. Such a change of cultivation of wheat, corn/maize, palm oil etc. for production of energy instead of for food is a typical expression of capitalist blindness and destructiveness. It is driven in part by a futile attempt to cope with rising oil prices, and in part - especially for the United States - by the hope of reducing its dependence on imported oil in order to protect its security interests as an imperialist power.

Export subsidies and protectionism. On the one hand there is agricultural overproduction in some countries and a permanent export offensive; at the same time other countries can no longer feed themselves. Competition and protectionism in agriculture have meant that as with any other commodity in the economy, more productive farmers in industrial countries must export (often with government subsidies) large parts of their crops to ‘Third World' countries and ruin the local peasantry - increasing the exodus from the country to the city, swelling international waves of refugees and leading to the abandonment of land formerly used for agriculture. In Africa for example many local farmers have been ruined by European chicken or beef exports. Mexico no longer produces enough food staples to feed its population. The country has to spend more than $10 billion annually on food imports. ‘Left' propagandists of the ruling class, but also many well meaning but misguided or badly informed people, have called for a return to subsistence farming in the ‘peripheral' countries, and the abolition of agricultural export subsidies and protection of their own markets by the old capitalist countries. What these arguments fail to take into consideration is that capitalism, from the outset, lives and expands through the integration of subsistence farmers into the world market, meaning their ruin and their - often violent - separation from the land, from their means of production. The recovery of the land for the producers is only possible as part of a revolutionary overthrow of capitalism itself. This will mean nothing less than the overcoming of private property of production for the market and of the antagonism between city and country, the progressive dissolution of the monstrous mega-cities through a world wide and planned return of hundreds of millions of people to the countryside: not the old countryside of rural isolation and backwardness, but a countryside newly invigorated by its integration with the cities and with a world wide human culture.

While the bourgeois media list these above mentioned factors, they try to prevent the unmasking of the deeper root causes. In reality we are witnessing not least the combined, accumulated consequences of the long-term effects of the pollution of the environment and the deeply destructive tendencies of capitalism in agriculture.

 

Capitalist destructiveness in agriculture and the environment

 

Several destructive tendencies have become undeniable. Due to the pressure of competition traditional farming practices have receded and farmers have become dependent on chemical fertilisers, pesticides and artificial irrigation. The International Rice Research Institute warns that the sustainability of rice farming in Asia is threatened by overuse of fertilisers and its damage to soil health. By now some 40% of agricultural products are the result of irrigation; 75% of the drinking water available on the earth is used by agriculture for this purpose. Planting Alfalfa in California, citrus fruits in Israel, cotton around the Aral Lake in the former Soviet Union, wheat in Saudi Arabia or in Yemen, i.e. planting crops in areas which do not provide the natural condition for their growth, means an enormous waste of water in agriculture.

The massive use of GM/GE ‘hybrid seeds' poses a direct threat to bio-diversity; while in many areas of the world, the soil is getting more and more polluted or even totally poisoned. In China 10% of the land area is contaminated and 120,000 peasants die each year from cancers caused by soil pollution. One result of the exhaustion of soil through the ruthless drive for productivity is the fact that in the Netherlands, the agricultural powerhouse in Europe, foodstuffs have an extremely low nutritional value.

And global warming means that with each 1°C increase in temperature, rice, wheat and corn yields could drop 10%. Recent heat waves in Australia have led to a severe crop damage and drought. First findings show that increased temperatures threaten the capacity for survival of many plants or reduce their nutritional value.

Thus a new danger is cropping up - which mankind might have imagined was a nightmare of the past. The combined effects of climate-determined drought and floods and its consequences on agriculture, continuous destruction and reduction of usable soil, pollution and over-fishing of the oceans will lead to scarcity of food. Since 1984 world grain production, for example, has failed to keep pace with world population growth. In the space of 20 years it's fallen from 343kgs per person to 303kgs. (Carnegie Department of Global Ecology in Stanford)

The folly of the system means that capitalism is compelled to be an over-producer of almost all goods while at the same time it creates a scarcity of food staples by destroying the very basis in nature of the conditions of their growth. The very roots of this absurdity can be found in capitalist production: "Large landed property reduces the agricultural population to an ever decreasing minimum and confronts it with an ever growing industrial population crammed together in large towns; in this way it produces conditions that provoke an irreparable rift in the interdependent process of social metabolism, a metabolism prescribed by the natural laws of life itself. The result of this is a squandering of the soil, which is carried by trade far beyond the bounds of a single country" (Marx, Capital: Vol. III. Part VI)

Brutal acceleration of the crisis

Since the collapse of the housing speculation in the USA and other countries (Britain, Spain etc.) many hedge-funds or other investors look for alternative possibilities of placing their money. Agricultural crops have become the latest target of speculation. The cynical calculation of speculation in times of severe crisis: foodstuffs are a ‘safe bet', since they are the last thing which people can afford to do without! Billions of speculative dollars have already been placed in agricultural companies. These colossal speculative sums have certainly speeded up the price hikes in agricultural products, but they are not the actual root cause. We can assume even if the speculation ceased, price rises of agricultural products will continue.

Nevertheless, this insight into the role of speculation (which is a red herring if taken in isolation) gives us a clue about the real interconnections in the contemporary world economy. In reality, there is a direct connection between the ‘property crisis' and the earthquake taking place in world finance, and the food price explosion. The world recession of 1929, the most brutal in the history of capitalism to date, was accompanied by a dramatic fall in prices. The pauperisation of the working masses at the time was linked to the fact that wages, in the context of mass unemployment, fell even more dramatically than other prices. Today on the contrary, the world wide recession tendencies which are becoming manifest are accompanied by a general surge of inflation. The soaring prices of foodstuffs are the spearhead of this development, intricately linked to the rising cost of energy, transport and so on. The recent churning of hundreds of millions of dollars into the economy by governments in order to prop up the failing bank and finance systems has probably contributed more than any other factor to the recent world wide inflation spiral.

The present day sharpening of the world wide and historic crisis of world capitalism turns out to be a many headed hydra. Alongside the monstrous property and finance crisis which continues to smoulder at the heart of capitalism, there has already appeared a second monster in the form of soaring prices and starvation. And who can tell which others may soon follow? For the moment, the ruling class still appears stunned and somewhat helpless. Its day to day reactions reveal the attempt to increase state control over the economy and to coordinate policy internationally, but also the sharpening of competition between the capitalist nations. The soothing words of policy makers are aimed at disguising from the world, and even from themselves, the feeling of progressively losing any control over what is happening to their system. A development which confronts the ruling class with a twofold danger: that of the destabilisation of entire countries or even continents in a spiral of chaos, and the danger, in the longer term, of a revolutionary upheaval that puts capitalism itself into question. ICC (Updated 5/7/8)

A longer version of this article appears on ICC Online .