Manufacturing a Food Crisis
- From: "woowee" <lbt006@xxxxxxxxxxx>
- Date: Thu, 22 May 2008 21:39:59 -0500
A good article for ba.n ngo.ng! ww
**************
http://www.thenation.com/doc/20080602/bello
Manufacturing a Food Crisis
By Walden Bello
May 15, 2008
When tens of thousands of people staged demonstrations in Mexico last year
to protest a 60 percent increase in the price of tortillas, many analysts
pointed to biofuel as the culprit. Because of US government subsidies,
American farmers were devoting more and more acreage to corn for ethanol
than for food, which sparked a steep rise in corn prices. The diversion of
corn from tortillas to biofuel was certainly one cause of skyrocketing
prices, though speculation on biofuel demand by transnational middlemen
may have played a bigger role. However, an intriguing question escaped
many observers: how on earth did Mexicans, who live in the land where corn
was domesticated, become dependent on US imports in the first place?
The Mexican food crisis cannot be fully understood without taking into
account the fact that in the years preceding the tortilla crisis, the
homeland of corn had been converted to a corn-importing economy by 'free
market' policies promoted by the International Monetary Fund (IMF), the
World Bank and Washington. The process began with the early 1980s debt
crisis. One of the two largest developing-country debtors, Mexico was
forced to beg for money from the Bank and IMF to service its debt to
international commercial banks. The quid pro quo for a multibillion-dollar
bailout was what a member of the World Bank executive board described as
'unprecedented thoroughgoing interventionism' designed to eliminate high
tariffs, state regulations and government support institutions, which
neoliberal doctrine identified as barriers to economic efficiency.
Interest payments rose from 19 percent of total government expenditures in
1982 to 57 percent in 1988, while capital expenditures dropped from an
already low 19.3 percent to 4.4 percent. The contraction of government
spending translated into the dismantling of state credit,
government-subsidized agricultural inputs, price supports, state marketing
boards and extension services. Unilateral liberalization of agricultural
trade pushed by the IMF and World Bank also contributed to the
destabilization of peasant producers.
This blow to peasant agriculture was followed by an even larger one in
1994, when the North American Free Trade Agreement went into effect.
Although NAFTA had a fifteen-year phaseout of tariff protection for
agricultural products, including corn, highly subsidized US corn quickly
flooded in, reducing prices by half and plunging the corn sector into
chronic crisis. Largely as a result of this agreement, Mexico's status as
a net food importer has now been firmly established.
With the shutting down of the state marketing agency for corn,
distribution of US corn imports and Mexican grain has come to be
monopolized by a few transnational traders, like US-owned Cargill and
partly US-owned Maseca, operating on both sides of the border. This has
given them tremendous power to speculate on trade trends, so that
movements in biofuel demand can be manipulated and magnified many times
over. At the same time, monopoly control of domestic trade has ensured
that a rise in international corn prices does not translate into
significantly higher prices paid to small producers.
It has become increasingly difficult for Mexican corn farmers to avoid the
fate of many of their fellow corn cultivators and other smallholders in
sectors such as rice, beef, poultry and pork, who have gone under because
of the advantages conferred by NAFTA on subsidized US producers. According
to a 2003 Carnegie Endowment report, imports of US agricultural products
threw at least 1.3 million farmers out of work--many of whom have since
found their way to the United States.
Prospects are not good, since the Mexican government continues to be
controlled by neoliberals who are systematically dismantling the peasant
support system, a key legacy of the Mexican Revolution. As Food First
executive director Eric Holt-Giménez sees it, 'It will take time and
effort to recover smallholder capacity, and there does not appear to be
any political will for this--to say nothing of the fact that NAFTA would
have to be renegotiated.'
Creating a Rice Crisis in the Philippines
That the global food crisis stems mainly from free-market restructuring of
agriculture is clearer in the case of rice. Unlike corn, less than 10
percent of world rice production is traded. Moreover, there has been no
diversion of rice from food consumption to biofuels. Yet this year alone,
prices nearly tripled, from $380 a ton in January to more than $1,000 in
April. Undoubtedly the inflation stems partly from speculation by
wholesaler cartels at a time of tightening supplies. However, as with
Mexico and corn, the big puzzle is why a number of formerly
self-sufficient rice-consuming countries have become severely dependent on
imports.
The Philippines provides a grim example of how neoliberal economic
restructuring transforms a country from a net food exporter to a net food
importer. The Philippines is the world's largest importer of rice.
Manila's desperate effort to secure supplies at any price has become
front-page news, and pictures of soldiers providing security for rice
distribution in poor communities have become emblematic of the global
crisis.
The broad contours of the Philippines story are similar to those of
Mexico. Dictator Ferdinand Marcos was guilty of many crimes and misdeeds,
including failure to follow through on land reform, but one thing he
cannot be accused of is starving the agricultural sector. To head off
peasant discontent, the regime provided farmers with subsidized fertilizer
and seeds, launched credit plans and built rural infrastructure. When
Marcos fled the country in 1986, there were 900,000 metric tons of rice in
government warehouses.
Paradoxically, the next few years under the new democratic dispensation
saw the gutting of government investment capacity. As in Mexico the World
Bank and IMF, working on behalf of international creditors, pressured the
Corazon Aquino administration to make repayment of the $26 billion foreign
debt a priority. Aquino acquiesced, though she was warned by the country's
top economists that the 'search for a recovery program that is consistent
with a debt repayment schedule determined by our creditors is a futile
one.' Between 1986 and 1993 8 percent to 10 percent of GDP left the
Philippines yearly in debt-service payments--roughly the same proportion
as in Mexico. Interest payments as a percentage of expenditures rose from
7 percent in 1980 to 28 percent in 1994; capital expenditures plunged from
26 percent to 16 percent. In short, debt servicing became the national
budgetary priority.
Spending on agriculture fell by more than half. The World Bank and its
local acolytes were not worried, however, since one purpose of the
belt-tightening was to get the private sector to energize the countryside.
But agricultural capacity quickly eroded. Irrigation stagnated, and by the
end of the 1990s only 17 percent of the Philippines' road network was
paved, compared with 82 percent in Thailand and 75 percent in Malaysia.
Crop yields were generally anemic, with the average rice yield way below
those in China, Vietnam and Thailand, where governments actively promoted
rural production. The post-Marcos agrarian reform program shriveled,
deprived of funding for support services, which had been the key to
successful reforms in Taiwan and South Korea. As in Mexico Filipino
peasants were confronted with full-scale retreat of the state as provider
of comprehensive support--a role they had come to depend on.
And the cutback in agricultural programs was followed by trade
liberalization, with the Philippines' 1995 entry into the World Trade
Organization having the same effect as Mexico's joining NAFTA. WTO
membership required the Philippines to eliminate quotas on all
agricultural imports except rice and allow a certain amount of each
commodity to enter at low tariff rates. While the country was allowed to
maintain a quota on rice imports, it nevertheless had to admit the
equivalent of 1 to 4 percent of domestic consumption over the next ten
years. In fact, because of gravely weakened production resulting from lack
of state support, the government imported much more than that to make up
for shortfalls. The massive imports depressed the price of rice,
discouraging farmers and keeping growth in production at a rate far below
that of the country's two top suppliers, Thailand and Vietnam.
The consequences of the Philippines' joining the WTO barreled through the
rest of its agriculture like a super-typhoon. Swamped by cheap corn
imports--much of it subsidized US grain--farmers reduced land devoted to
corn from 3.1 million hectares in 1993 to 2.5 million in 2000. Massive
importation of chicken parts nearly killed that industry, while surges in
imports destabilized the poultry, hog and vegetable industries.
During the 1994 campaign to ratify WTO membership, government economists,
coached by their World Bank handlers, promised that losses in corn and
other traditional crops would be more than compensated for by the new
export industry of 'high-value-added' crops like cut flowers, asparagus
and broccoli. Little of this materialized. Nor did many of the 500,000
agricultural jobs that were supposed to be created yearly by the magic of
the market; instead, agricultural employment dropped from 11.2 million in
1994 to 10.8 million in 2001.
The one-two punch of IMF-imposed adjustment and WTO-imposed trade
liberalization swiftly transformed a largely self-sufficient agricultural
economy into an import-dependent one as it steadily marginalized farmers.
It was a wrenching process, the pain of which was captured by a Filipino
government negotiator during a WTO session in Geneva. 'Our small
producers,' he said, 'are being slaughtered by the gross unfairness of the
international trading environment.'
The Great Transformation
The experience of Mexico and the Philippines was paralleled in one country
after another subjected to the ministrations of the IMF and the WTO. A
study of fourteen countries by the UN's Food and Agricultural Organization
found that the levels of food imports in 1995-98 exceeded those in 1990-94.
This was not surprising, since one of the main goals of the WTO's Agreement
on Agriculture was to open up markets in developing countries so they could
absorb surplus production in the North. As then-US Agriculture Secretary
John Block put it in 1986, 'The idea that developing countries should feed
themselves is an anachronism from a bygone era. They could better ensure
their food security by relying on US agricultural products, which are
available in most cases at lower cost.'
What Block did not say was that the lower cost of US products stemmed from
subsidies, which became more massive with each passing year despite the
fact that the WTO was supposed to phase them out. From $367 billion in
1995, the total amount of agricultural subsidies provided by
developed-country governments rose to $388 billion in 2004. Since the late
1990s subsidies have accounted for 40 percent of the value of agricultural
production in the European Union and 25 percent in the United States.
The apostles of the free market and the defenders of dumping may seem to
be at different ends of the spectrum, but the policies they advocate are
bringing about the same result: a globalized capitalist industrial
agriculture. Developing countries are being integrated into a system where
export-oriented production of meat and grain is dominated by large
industrial farms like those run by the Thai multinational CP and where
technology is continually upgraded by advances in genetic engineering from
firms like Monsanto. And the elimination of tariff and nontariff barriers
is facilitating a global agricultural supermarket of elite and
middle-class consumers serviced by grain-trading corporations like Cargill
and Archer Daniels Midland and transnational food retailers like the
British-owned Tesco and the French-owned Carrefour.
There is little room for the hundreds of millions of rural and urban poor
in this integrated global market. They are confined to giant suburban
favelas, where they contend with food prices that are often much higher
than the supermarket prices, or to rural reservations, where they are
trapped in marginal agricultural activities and increasingly vulnerable to
hunger. Indeed, within the same country, famine in the marginalized sector
sometimes coexists with prosperity in the globalized sector.
This is not simply the erosion of national food self-sufficiency or food
security but what Africanist Deborah Bryceson of Oxford calls
'de-peasantization'--the phasing out of a mode of production to make the
countryside a more congenial site for intensive capital accumulation. This
transformation is a traumatic one for hundreds of millions of people, since
peasant production is not simply an economic activity. It is an ancient way
of life, a culture, which is one reason displaced or marginalized peasants
in India have taken to committing suicide. In the state of Andhra Pradesh,
farmer suicides rose from 233 in 1998 to 2,600 in 2002; in Maharashtra,
suicides more than tripled, from 1,083 in 1995 to 3,926 in 2005. One
estimate is that some 150,000 Indian farmers have taken their lives.
Collapse of prices from trade liberalization and loss of control over
seeds to biotech firms is part of a comprehensive problem, says global
justice activist Vandana Shiva: 'Under globalization, the farmer is losing
her/his social, cultural, economic identity as a producer. A farmer is now
a 'consumer' of costly seeds and costly chemicals sold by powerful global
corporations through powerful landlords and money lenders locally.'
African Agriculture: From Compliance to Defiance
De-peasantization is at an advanced state in Latin America and Asia. And
if the World Bank has its way, Africa will travel in the same direction.
As Bryceson and her colleagues correctly point out in a recent article,
the World Development Report for 2008, which touches extensively on
agriculture in Africa, is practically a blueprint for the transformation
of the continent's peasant-based agriculture into large-scale commercial
farming. However, as in many other places today, the Bank's wards are
moving from sullen resentment to outright defiance.
At the time of decolonization, in the 1960s, Africa was actually a net
food exporter. Today the continent imports 25 percent of its food; almost
every country is a net importer. Hunger and famine have become recurrent
phenomena, with the past three years alone seeing food emergencies break
out in the Horn of Africa, the Sahel, and Southern and Central Africa.
Agriculture in Africa is in deep crisis, and the causes range from wars to
bad governance, lack of agricultural technology and the spread of HIV/AIDS.
However, as in Mexico and the Philippines, an important part of the
explanation is the phasing out of government controls and support
mechanisms under the IMF and World Bank structural adjustment programs
imposed as the price for assistance in servicing external debt.
Structural adjustment brought about declining investment, increased
unemployment, reduced social spending, reduced consumption and low output.
Lifting price controls on fertilizers while simultaneously cutting back on
agricultural credit systems simply led to reduced fertilizer use, lower
yields and lower investment. Moreover, reality refused to conform to the
doctrinal expectation that withdrawal of the state would pave the way for
the market to dynamize agriculture. Instead, the private sector, which
correctly saw reduced state expenditures as creating more risk, failed to
step into the breach. In country after country, the departure of the state
'crowded out' rather than 'crowded in' private investment. Where private
traders did replace the state, noted an Oxfam report, 'they have sometimes
done so on highly unfavorable terms for poor farmers,' leaving 'farmers
more food insecure, and governments reliant on unpredictable international
aid flows.' The usually pro-private sector Economist agreed, admitting that
'many of the private firms brought in to replace state researchers turned
out to be rent-seeking monopolists.'
The support that African governments were allowed to muster was channeled
by the World Bank toward export agriculture to generate foreign exchange,
which states needed to service debt. But, as in Ethiopia during the 1980s
famine, this led to the dedication of good land to export crops, with food
crops forced into less suitable soil, thus exacerbating food insecurity.
Moreover, the World Bank's encouragement of several economies to focus on
the same export crops often led to overproduction, triggering price
collapses in international markets. For instance, the very success of
Ghana's expansion of cocoa production triggered a 48 percent drop in the
international price between 1986 and 1989. In 2002-03 a collapse in coffee
prices contributed to another food emergency in Ethiopia.
As in Mexico and the Philippines, structural adjustment in Africa was not
simply about underinvestment but state divestment. But there was one major
difference. In Africa the World Bank and IMF micromanaged, making decisions
on how fast subsidies should be phased out, how many civil servants had to
be fired and even, as in the case of Malawi, how much of the country's
grain reserve should be sold and to whom.
Compounding the negative impact of adjustment were unfair EU and US trade
practices. Liberalization allowed subsidized EU beef to drive many West
African and South African cattle raisers to ruin. With their subsidies
legitimized by the WTO, US growers offloaded cotton on world markets at 20
percent to 55 percent of production cost, thereby bankrupting West and
Central African farmers.
According to Oxfam, the number of sub-Saharan Africans living on less than
a dollar a day almost doubled, to 313 million, between 1981 and 2001--46
percent of the whole continent. The role of structural adjustment in
creating poverty was hard to deny. As the World Bank's chief economist for
Africa admitted, 'We did not think that the human costs of these programs
could be so great, and the economic gains would be so slow in coming.'
In 1999 the government of Malawi initiated a program to give each
smallholder family a starter pack of free fertilizers and seeds. The
result was a national surplus of corn. What came after is a story that
should be enshrined as a classic case study of one of the greatest
blunders of neoliberal economics. The World Bank and other aid donors
forced the scaling down and eventual scrapping of the program, arguing
that the subsidy distorted trade. Without the free packs, output
plummeted. In the meantime, the IMF insisted that the government sell off
a large portion of its grain reserves to enable the food reserve agency to
settle its commercial debts. The government complied. When the food crisis
turned into a famine in 2001-02, there were hardly any reserves left.
About 1,500 people perished. The IMF was unrepentant; in fact, it
suspended its disbursements on an adjustment program on the grounds that
'the parastatal sector will continue to pose risks to the successful
implementation of the 2002/03 budget. Government interventions in the food
and other agricultural markets... [are] crowding out more productive
spending.'
By the time an even worse food crisis developed in 2005, the government
had had enough of World Bank/IMF stupidity. A new president reintroduced
the fertilizer subsidy, enabling 2 million households to buy it at a third
of the retail price and seeds at a discount. The result: bumper harvests
for two years, a million-ton maize surplus and the country transformed
into a supplier of corn to Southern Africa.
Malawi's defiance of the World Bank would probably have been an act of
heroic but futile resistance a decade ago. The environment is different
today, since structural adjustment has been discredited throughout Africa.
Even some donor governments and NGOs that used to subscribe to it have
distanced themselves from the Bank. Perhaps the motivation is to prevent
their influence in the continent from being further eroded by association
with a failed approach and unpopular institutions when Chinese aid is
emerging as an alternative to World Bank, IMF and Western government aid
programs.
Food Sovereignty: An Alternative Paradigm?
It is not only defiance from governments like Malawi and dissent from
their erstwhile allies that are undermining the IMF and the World Bank.
Peasant organizations around the world have become increasingly militant
in their resistance to the globalization of industrial agriculture.
Indeed, it is because of pressure from farmers' groups that the
governments of the South have refused to grant wider access to their
agricultural markets and demanded a massive slashing of US and EU
agricultural subsidies, which brought the WTO's Doha Round of negotiations
to a standstill.
Farmers' groups have networked internationally; one of the most dynamic to
emerge is Via Campesina (Peasant's Path). Via not only seeks to get 'WTO
out of agriculture' and opposes the paradigm of a globalized capitalist
industrial agriculture; it also proposes an alternative--food sovereignty.
Food sovereignty means, first of all, the right of a country to determine
its production and consumption of food and the exemption of agriculture
from global trade regimes like that of the WTO. It also means
consolidation of a smallholder-centered agriculture via protection of the
domestic market from low-priced imports; remunerative prices for farmers
and fisherfolk; abolition of all direct and indirect export subsidies; and
the phasing out of domestic subsidies that promote unsustainable
agriculture. Via's platform also calls for an end to the Trade Related
Intellectual Property Rights regime, or TRIPs, which allows corporations
to patent plant seeds; opposes agro-technology based on genetic
engineering; and demands land reform.
In contrast to an integrated global monoculture, Via offers the vision of
an international agricultural economy composed of diverse national
agricultural economies trading with one another but focused primarily on
domestic production.
Once regarded as relics of the pre-industrial era, peasants are now
leading the opposition to a capitalist industrial agriculture that would
consign them to the dustbin of history. They have become what Karl Marx
described as a politically conscious 'class for itself,' contradicting his
predictions about their demise. With the global food crisis, they are
moving to center stage--and they have allies and supporters. For as
peasants refuse to go gently into that good night and fight
de-peasantization, developments in the twenty-first century are revealing
the panacea of globalized capitalist industrial agriculture to be a
nightmare. With environmental crises multiplying, the social dysfunctions
of urban-industrial life piling up and industrialized agriculture creating
greater food insecurity, the farmers' movement increasingly has relevance
not only to peasants but to everyone threatened by the catastrophic
consequences of global capital's vision for organizing production,
community and life itself.
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