Solving the food crisis: the causes and the solutions

Headlines in recent weeks are ablaze with reports of food riots. Seemingly overnight, the world went from cheap food and generous surpluses to food prices spiking 80 per cent and countries banning exports of food in an attempt to stave off shortages. Without massive, immediate injections of food aid, 100 million more people in the Global South are poised to join the swelling ranks of the world’s hungry. This is a very curious prospect for a food system that just registered its largest grain harvest ever.

The protests are not simply crazed “riots” of depraved masses. They are angry demonstrations over exorbitant food prices in countries that formerly had food surpluses, and where governments and industry are unresponsive. They reflect demands for food sovereignty: people’s political and economic right to determine the course of their own food systems.

Welcome to the new world food crisis. Except that it has been brewing for decades.

The immediate reasons for runaway food prices are well known. They include droughts in major wheat-producing countries including Australia, high oil prices, low grain reserves (now down to 54 days worth, globally), a doubling of per-capita meat consumption in some rapidly developing countries, and the diversion of 5 per cent of the world’s cereals to agrofuels.

These proximate causes explain how food supplies are being crunched at a time of swelling demand, thereby pushing prices upwards. But these factors do not really explain how, in an increasingly affluent and productive food system, next year up to one billion people will likely go hungry.

To solve the problem of hunger, we need to address the root cause of the food crisis - the corporate monopolisation of the world’s food system.

The underlying causes of the food crisis becomes more apparent when the problem is placed in historical context. Although a complete narrative would go back to colonisation, much of the vulnerability of the food systems in the Global South has arisen in just the past few decades.

Starting in the 1960s, the Green Revolution marketed “technological packages” of hybrid seeds, fertilisers, and pesticides to developing countries in Asia, Africa, and Latin America. While yields increased, hunger was not successfully alleviated. This is in part because Green Revolution technologies were more easily adopted by large farmers who took over rich bottomlands, displacing the peasantry.

Many smallholders left agriculture and migrated to the cities, forming the “misery belts” now common throughout the Global South. Others, encouraged by government “land reforms” cleared new agricultural land in tropical forests and fragile hillsides.

Development projects soon followed, offering cheap credit so that smallholders could buy the Green Revolution technological packages. Under the fragile forest and hillside conditions, Green Revolution packages degraded soils rapidly, requiring greater and greater fertiliser applications as yields eventually declined. The Green Revolution, ostensibly a project to save the world from hunger, undermined the ability of the poor to feed themselves by displacing them from their land and degraded the agroecosystems they depended on to produce food.

The second major development in the rise of the “industrial agri-foods complex” was the Structural Adjustment Programs (SAPs) that began in the 1980s. The SAPs were conditional loan programs enforced in tandem by the World Bank and the International Monetary Fund (IMF) so that countries of the Global South, debt-ridden after 20 years of development, would pay back their loans to northern banks.

To receive loans from the World Bank, these countries had to sign an agreement with the IMF agreeing to remove their tariff barriers to foreign imports, privatise state companies and services, and dismantle their marketing boards. This opened the door to widespread “dumping” of highly subsidised grain surpluses from the US and Europe.

Farmers in the Global South could not compete with grain sold at prices below the cost of production and were driven out of business. The rural poor were then available to work for starvation wages on plantations growing low-profit agricultural exports including bananas, cotton, tobacco, coffee, sugar, and beef, or high-end, non-traditional export crops, like snow-peas and flowers. As SAPs destroyed the supports for national food production, southern countries lost the ability to feed themselves.

The spread of Free Trade Agreements (FTAs) and the rise of the World Trade Organization (WTO) ended any aspirations to food security the Global South might have had.

The WTO was formed in 1995 for the global enforcement of market-led economic development. The WTO’s Agreement on Agriculture (AoA) restricts government power to establish agricultural policies. The WTO’s “disciplines” (areas of enforceable deregulation) include domestic supports, export subsidies, market access, tariffs, and quotas - all the mechanisms needed by nations to regulate their farming sector and ensure a stable food supply.

The WTO has a number of obscure rules kept in colored “boxes” that allow the US and EU to exempt their subsidies from WTO disciplines. This double standard privileges northern grain, seed and chemical companies seeking to dominate southern markets.

Under the banner of “comparative advantage,” many poor countries that had previously been self-sufficient in food were turned into net food importers - as 70 per cent of developing countries now are. Forty years ago the Global South as a whole produced annual trade surpluses in food of $7 billion. Today the southern food deficit has swelled to $11 billion per year.

These processes put poor countries in a very vulnerable position for the time when biofuels and other factors brought about a massive price swing for agricultural commodities on the international market.

The renewable fuel targets of the US Energy Acts of 2005 and 2007 mandated the consumption of 4 billion, 7.5 billion, and then 36 billion gallons a year of agrofuels. This obligatory market - sweetened with tariffs and subsidies that prop up half of ethanol’s wholesale market price - has led to a worldwide “agrofuels boom”.

Between 2001 and 2007, the amount of corn used in US ethanol distilleries exploded from 18 million tons to 81 million tons. In 2007, the jump in ethanol production more than doubled the average annual growth in demand for the world’s grains that took place between 1990 and 2005. At this rate, half of the US corn harvest will be diverted to ethanol production by the end of 2008.

As more corn is planted, it displaces wheat and soybeans, increasing their market prices. Since US corn accounts for some 40 per cent of global production, US agrofuel expansion impacts global markets for all food grains, and exacerbates food-price inflation worldwide.

The agrofuels boom collapses the food system with the energy economy. Ever since the Green Revolution, cheap oil has driven a fuel-intensive industrial food system. Rising petroleum costs makes industrial farming more expensive and raises the cost of transporting food the 1,200-2,000 miles it frequently travels through the global food system. At the time of writing, the price of oil is a record US$129 a barrel. Freight costs are up 80 per cent since 2006 and fertiliser prices spiked at 150 per cent. Now, thanks to agrofuels, food not only depends on oil, it competes with fuel.

Just how big agrofuels’ direct effect is on food prices depends on who is talking. President Bush says it’s responsible for about 15 per cent of the rise in costs. The US Department of Agriculture claims 20 per cent. The World Bank asserts that the 60 per cent rise in corn prices from 2005-07, “is largely because of the US ethanol program, combined with market forces.” What is clear is that both direct and indirect effects of agrofuels on the food system are global, profound, and highly destructive.

Our world leaders have been quick to offer a spate of solutions: A “New Deal” from the World Bank, another “Green Revolution” from the Bill and Melinda Gates and Rockefeller Foundations, and $970 million in emergency food aid from the US. Billions more will be spent, and it’s a lucrative business. As the crisis has unfolded, seed, chemical and grain companies are basking in the glow of the agrofuels boom and posting profits 60-80 per cent higher than last year.

Emergency measures are urgently needed to make food accessible to poor people. But so are profound changes to a globalised food system in dire need of reform.

In the immediate term, the World Food Program (WFP) needs $755 million to close its funding gap and make emergency food available. The WFP should purchase this food as locally as possible from smallholders at premium prices, then distribute or sell at accessible prices to people that are too poor to buy it otherwise. This will reactivate the peasant sector, avoid “dumping” of cheap grains from abroad, and reduce the costs of relief, thus getting more food to hungry people.

If accompanied by a strong rural support system of production credit, transport, marketing and distribution, this will rebuild local food systems as it extends relief.

Another way to rebuild national food economies and to improve food security is to implement regulatory mechanisms that stabilise market prices, such as national grain reserves. We can also stabilise prices by supporting the immediate five-year moratorium on biofuels that former United Nations Special Rapporteur on Hunger, Jean Zeigler, has called for.

Another key remedy to address the global food crisis is to prioritise smallholder farming and agroecology. The International Assessment of Agricultural Science and Technology (IAASTD) recently released its final report in Johannesburg, South Africa. The result of an exhaustive four-year international consultation with 400 experts (similar to that of the Intergovernmental Panel on Climate Change), the IAASTD calls for an overhaul of agriculture dominated by multinational companies and governed by unfair trade rules.

The report avoids genetically engineered “fixes” for food production and emphasises the importance of locally-based, agroecological approaches to farming.

The key advantages to this way of farming - aside from its low environmental impact - is that it provides both food and employment to the world’s poor, plus a surplus for the market. On a pound-per-acre basis, these small family farms have proven themselves to be more productive than large-scale industrial farms. And they use less oil, especially if food is traded locally or sub-regionally.

These alternatives, growing throughout the world, are like small islands of sustainability in increasingly perilous economic and environmental seas. As industrialised farming and free trade regimes fail us, these approaches will be key to building resilience back into a dysfunctional global food system.

Expecting solutions from the institutions that created the disaster in the first place is like calling an arsonist to put out the fire. Getting the poor back on the land and providing them the support presently being captured by the world’s agri-foods monopolies would be a truly systemic and durable solution to our current global food crisis.