Wednesday, July 2, 2008

Food Crises in Africa and Beyond

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There are times when taking an honest look at the world can be about as uplifting as a Dostoevsky novel. My research about the food crisis and its supposed solutions is one example of a clear grasp of the facts leading to near total despair.

The sad thing of course is that this is certainly a preventable - and I would argue a planned - crisis. As I argue in this piece largely about Africa, the IMF and the World Bank have taken dangerous steps to privatize and deregulate the global food industry. While marginalized populations around the world are struggling to make ends meet, Archer Daniels Midland and other agribusiness conglomerates are posting record profits. The deregulation was done in their interest and they are now reaping the benefits, while mostly urban impoverished populations unable to afford increased food prices are the hardest hit.

But the deregulation alone does not explain the crisis. As I argue here, it can hardly be a coincidence that the huge rise in food prices is occurring at almost exactly the same time as the U.S. mortgage market is crashing. It's as if there is too much speculative capital in the world, and wherever it goes it is likely to cause overvaluations of different kinds.

Theoretically speaking, there should be no cause for despair. All of these problems have solutions, some of them fairly intuitive. Farmers have been providing the world with food since the Bronze age. It may be a good idea to trust their instincts, to allow them to grow what makes sense in their national and regional environments, and for governments to worry first about feeding their own citizens and then exporting luxury goods. Speculation can be easily curbed through some kind of taxation, like the tax proposed by economist James Tobin; often a fraction of a per cent tax imposed on every transaction may be enough to dramatically decrease speculator's profit margins.

But these are common sense solutions. Someone let me know when the people who make decisions develop some common sense.

For more background reading and resources check out La Via Campesina and Food First.

2 comments:

ellis2chill@hotmail.com said...

Hi :) I read http://www.atimes.com/atimes/Global_Economy/JG09Dj02.html, thank you for this interesting article! But what about biofuels like ethanol, Im reading a lot about how biomass production is leading farmers away from food production. What is your opinion?

Shirin and Sameer said...

Hi ellis, thanks for your comment. One of the reasons I didn't talk much about biofuels in these articles is because that's one part of the story that is getting a fair amount of attention. This is a good example, and of course there are dozens more such articles, some better than others.

That said, I still think this is mostly about speculation. If you look for example at the research that has been done by the World Bank on this (except for this report which hasn't been published as yet), it seems that most of the changes are in projections for the future. So for example, biofuels are expected to be 10-15% of U.S. gasoline production by 2015 by some estimates. Even if these estimates are correct (which seems unlikely now), these are estimates for future consumption patterns. Current consumption patterns have not changed significantly enough to explain the sharp rise in food prices, at least not according to any of the research I could find.

That said, increased demand due to biofuels is a real worry (or will be soon), so let's hope that the global community invests in real solutions like some kind of battery powered vehicles, as well as wind, solar, etc. The more I learn about biofuels, the more I am convinced that they should not be part of any long term solution. One group that's doing good work on this is the Global Justice Ecology Project.