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Profit and food are a deadly mix

Capitalism’s inability to feed the world, in spite of increased production and a slowdown in population growth, is underlined by a report which predicts that food prices will rise by 40% over the next decade.

Prices have remained high since the price spike of 2008, which led to food riots in many areas of Africa and Asia. High prices combined with the economic crisis have left about 1 billion people undernourished, says the annual report from the UN Food and Agriculture Organisation (FAO).

The price of grain is set to rise by between 15% and 40% in real terms, once adjusted for inflation, over the next decade. Vegetable oils will be 40% dearer; the cost of dairy food could rise between 16-45%.

Although the review suggests production can increase to meet demand, it warns that many people will not be able to afford the prices. It assumes that high energy prices will continue, and increase the cost of production and chemical inputs. This will have an impact on supplies and prices, and will increase the demand for bio-fuels. More areas will move out of food production and into oil crops.

The report explains that the extent to which world prices are reflected in domestic prices varies markedly by country. “The transmission of international prices to domestic markets can be impeded by border measures, domestic price supports and infrastructure weaknesses,” the FAC acknowledges.

Let’s unpack this bland statement. In a world of globalised unfairness the rich capitalist economies keep agricultural subsidies and hidden price subsidies in place, whilst the least developed countries are bullied into allowing market forces free rein in their home markets. Industrial agriculture enterprises continue to export food, while people living on their doorstep starve.

The FAO itself is entirely wedded to the free-market capitalist model, claiming that “there is a need for greater assurance of unimpeded access to global supplies” in order to “improve confidence in market functioning”. It unreservedly praises the trend towards the establishment of organised Commodity Exchanges in developing countries as a “welcome institutional development and a sign of market deepening”.

Yet Commodity Exchanges are at the centre of a great deal of reckless speculation, contributing to the economic crisis, and invariably at the expense of the smallest producers and poorest consumers. For the FAO, Commodity Exchanges are “useful and time-tested price discovery and hedging institutions, if they are regulated properly and attract sufficient volume to avoid monopolistic practices”.

Now that’s a very big “if”. More realistically, if there are increased profits to be made from food – which for capitalism is simply another commodity – then there will be increased speculation and market distortion. The outcome will be more hunger, the elimination of small farmers and further global land-grabbing by global investors and sovereign wealth funds.

This new form of rentiér capitalism will lead to further impoverishment of the soil as intensive farming methods are extended. New areas of marginal land cleared of scrub trees for bio-fuel production will add to global warming. The drive to clear virgin forest for palm oil plantations will increase – and at the climate summit in Cancun in December this activity will be given status as a carbon offset scheme. That’s the actual “time-tested” functioning of commodity markets in action.

The point is that capitalism is capable of extending the market in commodities into any area, but not of getting them to the people that need them in a fair, affordable way. In the case of training shoes or flat-screen TVs, that’s not the end of the world. When it comes to food, it is a life or death question for millions of hungry people. More than in any other area, food production is crying out for a new approach – ecologically sustainable, just and based on common ownership of land and global co-operation. Profit and food is a poisonous combination.

Penny Cole
Environment editor
18 June 2010

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