A “Perfect Storm” or A Manufactured Crisis? Understanding the Global Food shortage

author : Marco Rosaire Rossi topic : Inflation

by Marco Rosaire Rossi

An international consensus has formed that the world is in a middle of a “perfect storm” of factors causing the price of food to dramatically increase within a short period of the time. For some of the world’s poorest, the price of food has increased 80% since the beginning of the year. The World Bank has declared that 33 countries are facing political instability due to food shortages and that without the addition of $500 million to global food aid organizations, another 100 million people will be added to the list of 800 million who die every year of malnourishment and starvation. Jean Ziegler, the United Nations special rapporteur on the right to food, has referred to the crisis as a “silent mass murder.”

The willingness of international institutions to bring attention to this extremely dire situation is commendable. However, there is an inherent problem with referring to the crisis as a “perfect storm”: people don’t make storms; they are phenomena of nature, not of society. The constant reiteration of the crisis as a “perfect storm” has an ideological underpinning; it serves to reinforce the “naturalness” of the global food market, and frames the debate about food cost in a manner that favors only two solutions: foreign aid and trade liberalization. Economic sovereignty is still out of the question. In reality, there is nothing “natural” about the global food market – it is a highly constructed institution. And foreign aid, while offering some much-needed relief, won’t fix the underlying problems. Trade liberalization will not only make it worse, but is one of the primary reasons we got into the crisis in the first place.

There are many reasons as to why the price of food is rising, but the primary reasons all have to do with the energy industry and its effects on the environment. Since the end of World War I the global economy has existed as an oil economy. For the past year oil prices have increased dramatically due to a lack of supply caused by the growing shortage of easily accessible crude. This shortage is worsened by an increased demand for oil from India and China, turmoil in Iraq, and the Bush administration’s threats to Iran. Combined, these factors have driven up the prices of oil to unbelievable amounts in a very short period of time. Oil is recently hit $134 a barrel; this time last year it was about $60 a barrel. The rising cost of oil leads to an increase in the cost of transportation, storage, agricultural inputs, and other factors which directly affect the price of food. Oil is also has having secondary effects on the price of food by contributing to global climate change. Climate change hasn’t deterred the overall production of food, but for key areas of the world it is a major issue and is definitely having an impact on diminishing supply. Australia has been hit hard with two years of droughts back to back. Southeast Asia and Africa – the two areas of the world that suffer from the greatest percentage of malnourished people – are also having troubles. The International Food Policy Research Institute reported that Southeast Asia could lose up to 22% of its cereal production and Africa could lose all its wheat by 2080 due to climate change.

Unfortunately the alternative energy sources that are being sought out to replace oil are also adding to the problem of high food prices. Globally, cereal crops actually increased this year -- with a record of 1.66 billion tons! – but a greater portion of this crop is being used for ethanol production. In the United States, 335 million tons of maize this year was produced for ethanol. This is up by 25% from the previous year. Not only that, but because of the high energy use of ethanol production, it has not proven to be a true alternative to oil. Since last year, the United States switched one-quarter of its total maize crop from food to ethanol, while its dependency on foreign oil only decreased by one percent.

Rising food cost is also directly related to obesity through the pitting of two types of food against each other: in this case it is grains versus meat. Part of the “Cola-Colonization” of developing nations is changing their traditional diets to mimic those that are more common in the Western world. This involves an increased demand for meat. This is especially the case for beef and pork, the consumption of which is increasing in China, India, and Latin America. Cereals, which could be otherwise fed to humans directly, are fed to livestock at a great loss of calories. As with ethanol, the increased demand for meat is causing the supply of cereals to shrink, thus driving up the price. What this means is that while the rising bourgeoisie in China and India may be able to adopt the diet of their Western counterparts, they do so at the cost of increasing starvation for people in rest of Asia.

All these factors are compounded by the world’s growing dependency on (mostly) the United States to feed it. The United States alone provides 60% of the world’s corn, and is the third largest wheat producer. This control over the world’s stomach has been brought about not “naturally, ” but by a history of neo-liberal economics pressed upon countries by the World Bank and International Monetary Fund (IMF). Developing nations are compelled through loan conditions to remove tariffs, end subsidies, and compete with the United States – which has tariffs and subsidizes its agricultural industry at over $16 billion a year. Predictably, the cheap US agricultural products destroy other country’s economies and centralize the world food source on a few key areas. This scenario leaves much of the world’s food potential untapped, and makes the global food economy vulnerable to shortages, high prices, and the political whims of a few countries.

There is no doubt that the main cause of hunger in the world is poverty. In certain areas of the world, mostly in rural Africa and the Asia Pacific region, people are caught in a poverty trap. The inability to afford key resources, like fertilizers or farming equipment, makes it impossible for the poor to compete in a global market. Thus, they fall behind those who can afford to compete. Thus, the gap between rich and poor widens. Thus, it bcomes harder and harder for the poor to get ahead. This trap is politically created, through unequal distribution of wealth and energy and agricultural policies, not naturally created through the ups and downs of so-called market forces If we are ever going to solve the issue of global poverty then we must begin to understand economies in the terms of sovereignty, equality, and human rights – and not just profits and growth.