The world food crisis and the capitalist market

[Joanne98]

This is the first part of a three-part series of articles on the world food crisis. Part two will be posted June 9.

As the June 3-5 Conference on World Food Security of the United Nations’ Food and Agriculture Organization (FAO) began in Rome, FAO Director Jacques Diouf said of the explosion of food prices: “It is touching every country in the world. We have not only seen riots and people dying, but also a government toppled , and we know that many countries...could tilt to one way or the other depending on the discontent or satisfaction of their population.”

With these words, Diouf expressed the growing concern of governments and ruling elites internationally over the potentially revolutionary implications of the upward spiral of prices for basic food staples, which has already sparked a social and economic crisis of global dimensions. In recent months, strikes and demonstrations against rising food prices have occurred in many parts of the world. These initial struggles have exposed the contradiction between the elementary demand of the world’s masses for affordable food and the workings of the capitalist market.

Diouf called for donations of US$30 billion to be invested in world agriculture. Even were this sum to be allocated, it would not begin to address the sources of the current crisis, which lie in economic and political processes of privatization and price speculation that have unfolded over the past three decades and are bound up with the globalization of capitalist agriculture.

With consumers increasingly unable to pay world market prices for food, national governments are compelled to intervene to avert famine and revolt. These interventions, while offering at best partial resolutions to local problems, only increase difficulties elsewhere. Exporting states are limiting their external sales in an attempt to shield their own populations from the worst of the price rises, while extorting higher prices from importing nations by restricting supply.

The most devastating price increases are those for the basic food grains. These are relatively non-perishable and therefore widely traded, and make up a third or more of daily caloric intake, especially in poorer countries. They are also used extensively in other parts of the food chain—e.g., for livestock feed and sweeteners—thus affecting prices for meat, eggs, dairy products and various processed foods.

Wheat prices in the US—the largest exporter and one of the few not imposing export restrictions—remain at historically high levels after an extraordinary spike in February. On April 28, Newsweek wrote of the commonly used hard red spring wheat variety: “For 50 years it traded at around $2 or $3 a bushel on the Minneapolis futures exchange, which specializes in hard red spring wheat. In September, the price was $7. In February, that price peaked for a day at $24, as the market panicked over low supply. ‘It wasn’t clear whether there would be enough to finish out the year,’ says Bill Lapp, an agricultural economist in Omaha. The current price is down again, but only to $11.24.”

http://www.wsws.org/articles/2008/jun2008/food-j07.shtml