The sources of the food crisis

The sources of the crisis
The policies pursued by the international financial institutions since the 1980s
have been significant in determining why developing countries cannot ensure
food security for their own citizens. During the heyday of the “Washington
consensus” of the 1980s and 1990s, the International Monetary Fund (IMF)
and the World Bank supported market incentives by demanding that developing
countries phase out agricultural subsidies that otherwise could have helped
develop a strong domestic economy, and that grain buffer stocks be sold to
pay off debt. A continuous and erroneous fixation on trade liberalisation as the
answer to the world’s economic and social problems took focus away from the
vastly underdeveloped domestic agricultural sector in developing countries.
Many of those countries are now net importers of food, as opposed to their
status as net exporters in the 1960s, and with the incredibly high prices of
food commodities, it is clear that the policies of the IMF and the World Bank
failed in their purpose. At the same time, more deregulation in trade and financial markets has mainly
favoured agrofood multinationals based in industrialised countries and not the
working rural and urban poor across the globe. The effects of the world trade
system can be seen in the large increase of import bills of low-income food
deficit countries, which have more than doubled in five years. Contrary to the
promises of free trade advocates, successive rounds of trade liberalisation have
not ensured equity and food security for all. Much of the problem can be ascribed
to the multinational corporations that control the majority of international trade
in maize and other grains, as well as massive subsidies to large-scale farms
in the US and Europe that deprive developing country farmers of a place in the
market. Trade growth has so far brought monopolisation in world grain markets
and in banana, cocoa and tea trading, which has damaged the world food
system and not provided greater food security or advances in workers’ rights
to a decent life.
In an effort to make quick returns and seek new investment options away from
the traditional stock market, investors like hedge funds have sought out the
agricultural commodity market in search for high-yield gains. The massive
increase in speculative investment has been a contributing factor in driving up
prices of basic food staples. In a few years, investments in food commodities
and futures have grown twenty-fold because deregulation has allowed noncommercial
traders to seek profit gains in a relatively small market, causing
sudden volatility and turmoil.
Another part of the problem is that the world is getting more populous. By 2050,
more than 9 billion people will inhabit our globe. The strain on food availability is
estimated to rise in the future but already, as the middle classes in developing
countries like China and India grows and their blossoming economies allow
them to shift their eating patterns, pressure on water accessibility and grain
production is rising because meat and dairy products are in higher demand
than ten years ago.
Climate change will make matters worse: recurring droughts, flooding and other
climate change-related pressures resulting from increased greenhouse gas
emissions are a global challenge. Climate change disasters occur most often
in developing countries where failed harvests and poor crop yields can result in
people going hungry for months because the working poor can no longer afford
to purchase basic foodstuffs at new and higher prices. As the impact of climate
change intensifies over the coming decades, changes in weather patterns will
continue and food production will be put under even more pressure. However,
climate change cannot be tackled through simplistic advocacy of biofuels
without concern for their side-effects. While the production of organic material
for biofuels has diverted large amounts of food crops into the fuel tanks of cars,
it has only accounted for 1½ percent of global fuel supply.

 


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