Food and Markets: A Crisis of Faith

Unlike the crisis of 1970s stagflation that signalled the end for the Keynesian social-democratic model, the food crisis of 2008 could be marked down in history for setting in motion an opposite trend.

In the wake of a food crisis that gripped the media’s attention during the summer of 2008, a new set of questions is beginning to surface. As analysts predict that the era of cheap resources is finally over, that the food emergency is no blip but a situation that could last indefinitely, the international community is being forced to re-examine the basic direction of world development.

Could it be that the interlinked crises in food, energy and financial markets indicate the commencement of a terminal decline in the export-led, free market development model that has defined the past few decades of globalisation? Or will the emergency in food provision, as previously happened in 1974, reinforce the same policies in favour of large-scale industrial farming that have already devastated rural communities throughout the developing world?

The inability of world leaders to face up to the root causes or policy contradictions of a food crisis is nothing new. Throughout the 1980s and 90s, mass protests over a recurring food crisis in developing countries were popularly known as “IMF riots”, although the solutions – as today – were handed to the very structures that caused those crises.

The Ethiopian famine during the 1980s led not to initiatives that helped sustain poor rural dwellers, but rather the dedication of good land to export crops under the tutelage of the World Bank, thus further exacerbating food insecurity and storing up a repeat of the famine situation that is surfacing today. In Peru in August 1990, following the dictats of the IMF, fuel prices increased 30 times overnight, and bread prices increased 12 times within a day. In Caracas, 1989, after a 200 percent increase in the price of bread, anti-IMF riots led to the indiscriminate killing of men, women and children.[1]

More examples could be repeated ad infinitum. Compared to the last major food and fuel crisis of 1973/4, which culminated in similarly vain promises from the FAO’s first World Food Conference to end hunger and prevent a repeat occurrence, the needed lessons after 34 years are far from being acknowledged.

The main difference today is in the parting of extremes, or the deepening polarisation between alternative paradigms, narratives and solutions. On one side of the court stand the impassioned NGOs and hardened campaigners who have long opposed large-scale agribusiness in place of food sovereignty, bottom-up development, and the empowerment of small farmers through local and regional markets. The food price crisis, they say, has exposed the disaster of global agricultural production and the conclusive failure of a market fundamentalist ideology left unchecked for far too long.

On the other side of the court, supported by Gordon Brown, George W. Bush, Bill Gates’ pockets and the most powerful financial institutions in the world, stand the Green Revolutionaries led by chemical technologies and multinational corporations from the E.U and U.S.A. One path, say almost all of the NGOs, will lead to social justice, the strengthening of local communities and food security for all, while the current path is inherently unsustainable, responsible for continued hunger in a world of plenty, and incapable of ending poverty.

By 2008 it should be a platitude to state that the escalating global food crisis, which some NGO’s are pointedly distinguishing as the “food price crisis”, is the inevitable long-term consequence of misguided economic policies and a disastrous free market restructuring of agricultural land. The official version of history over the past few decades as interpreted by G8 governments, however, could not be more different. In the World Bank’s latest World Development Report 2008 on agriculture, the same model of development that has created a global crisis in food production in the first place – import liberalization, elimination of tariffs, a dependency on cash crops, GMO seeds and fertilizers, and all other measures that work in favour of agribusiness and against the millions of small-scale farmers struggling against poverty and hunger - is being promoted as the only solution.[2] The $1.2 billion of extra loans as part of the World Bank’s ‘Global Food Crisis Response Facility’ will be handed out with the same underlying conditions of further trade liberalisation and market reforms.

Likewise, the IMF used the crisis to augment its existing arrangements under the Poverty Reduction and Growth Facility (PRGF), attaching the same conditions requiring structural adjustment to the 10 countries, mostly in Africa, already forced to make new agreements.[3] The World Trade Organisation similarly tried to capitalise on the crisis by working to increase its mandate through the Doha Round of trade agreements, alongside a push to persuade developing countries to further liberalise their financial sectors under the General Agreement on Trade in Services (GATS).[4] Between the expert rhetoric and analysis by international financial institutions on the catastrophic extent of the crisis, with even the IMF declaring that some countries are at “tipping point”,[5] their proffered medicine is still being mixed with the same deep-seated poisons.

This basic contradiction of agreeing to increase agricultural production in developing countries to address the plight of small and poor farmers, while promoting policies that achieve the opposite ends, was set in stone after the UN’s emergency food summit held in Rome. The final declaration made no attempt to address the structural problems and deeper causes of the crisis, as evidenced in key paragraph 7(e) that concluded: “We encourage... efforts in liberalizing international trade in agriculture by reducing trade barriers and market distorting policies.”[6] A rare mention of small farmers was only made in reference to international markets, underlining the continued prioritising of market fundamentalism and trade over food security.[7] A renewed commitment was made to reduce by half the number of undernourished people by 2015, but after 45 years of similar promises one NGO called this “the big lie” that no-one at the Summit believes will happen.[8]

Despite both Ban Ki-moon and Jacques Diouf’s impassioned speeches and articles over the period of the Summit, neither of them sought to address the entrenched structural origins of the food crisis. Most worrying was Ban’s simplistic prescriptions for improved market efficiency and a 50 percent rise in food production by 2030 to meet rising demand,[9] thus playing into the hands of politicians who seek to divert political debate away from the role of agribusinesses in the current food crisis, as well as the corporations who wish to accelerate a “Doubly Green Revolution” in agriculture as propounded by Bill Gates and the Rockefeller Foundation.

The inevitable result, without a critical re-examination of the unsustainable manner in which food is produced and distributed, will be more of the same; more privatization, more corporate monopolization of food systems, more GMO crop initiatives, more displacement of poor farmers, more migration into cities and slums, more hunger, more poverty, more overconsumption and obesity. And all this without even considering the environmental footprint of producing more food on less available land, or transporting more food through international markets which contradicts the urgent need of reducing CO2 emissions. The search for technical fixes to produce cheap and abundant food may have made sense in the 1940s, but 70 years of the “productionist” model has led to the vital challenge of defining a sustainable diet – one that recognises the central crisis of distribution and overcomes the co-existence of under-, over- and mal-consumption in a world defined by extremes of inequality.[10] Not even Ban Ki-moon, it seems, was able to acknowledge the most basic contradiction of all: that already we are producing more than enough food.

There are signs, however, that the world direction is changing course. As a knee-jerk response to skyrocketing food price inflation, those developing governments fortunate enough to have export stocks began pulling out of the global market to safeguard their domestic prices. The failure of the Doha round of trade negotiations, which sought to further liberalise agricultural markets, was widely interpreted as recalcitrance on the part of developing countries – and the issue of agriculture, in the light of the food crisis, was cited by most accounts to have provoked the collapse.

The only source of good to emerge from spiralling food price inflation is the resultant crisis of faith amongst poorer and developing countries in neoliberal economic orthodoxy. Unlike the crisis of 1970s stagflation that signalled the end for the Keynesian social-democratic model, 2008 could be marked down in history for setting in motion an opposite trend. A notable example of this gradual shift in economic thinking is set down in the UN’s latest World Economic and Social Survey (WESS), released a week before the G8 Summit. A belief in the self-regulating market is no longer credible, was the Report’s message, noting that “John Maynard Keynes, until recently persona non grata in policy circles, is once again the ‘defunct economist’ to consult.”[11]

Such an acknowledgement of the redistribution agenda is no longer confined to renegade economists exempt from mainstream discussion. Although the food price crisis has failed to serve as a wake-up call to world leaders, a crucial international debate has started to emerge on the whole theology of food security. For now, the redundant model of export-led agriculture and import dependency has won through, but the calls for people-led social change are rapidly achieving a long-awaited consensus.

References:

[1] Examples taken from Michel Chossudovsky. The Globalization of Poverty and the New World Order (Global Research, 2003)

[2] World Development Report 2008: Agriculture for Development (World Bank, 19 October 2008)

[3] World Bank and IMF Emergency Loans: A Cure or a Curse for the Food Crisis? (Eurodad, 17 June 08)

[4] Myriam Vander Stichele. Ignoring the crises? How further GATS liberalisation impacts the financial and food crises (South Centre Bulletin, 18 June 2008)

[5] IMF fears food prices may stir economic mayhem (Sydney Morning Herald, 2 July 2008)

[6] Declaration of the High-Level Conference on World Food Security: The challenges of climate change and bioenergy (Food and Agriculture Organization of the United Nations (FAO), 5 June 2008)

[7] Ibid, see paragraph 6(a).

[8] Ciao FAO: Another "Failure-as-Usual" Food Summit (Action group on erosion, technology and concentration - etc. Translator. Volume 5, No.1 June 20008)

[9] Ban Ki-moon. The New Face of Hunger (Washington Post, 12 March 2008)

[10] Interview with Tim Lang, Professor of Food Policy at City University in London (GRAIN, Seedling Magazine, July 2008)

[11] World Economic and Social Survey 2008: Overcoming Economic Insecurity (United Nations Department of Economic and Social Affairs, 2 July 2008) p 6.

Adam W. Parsons is the editor for Share the World's Resources (stwr), an NGO that advocates for essential resources such as food, water and energy to be shared internationally under the agency of the United Nations. He can be reached at editor@stwr.org.

© Scoop Media