The Global Crisis: Food, Water and Fuel (Spiraling Food Prices) by Michel Chossudovsky

....Continued...

Spiraling Food Prices

The global food crisis, characterized by major hikes in the prices of basic food staples, has spearheaded millions of people around the World into starvation and chronic deprivation.

According to the FAO, the price of grain staples has increased by 88% since March 2007. The price of wheat has increased by 181% over a three year period. The price of rice has increased by 50% over the last three months (See Ian Angus, Food Crisis: "The greatest demonstration of the historical failure of the capitalist model", Global Research, April 2008):

The price of rice has tripled over a five year period, from approximately 600$ a ton in 2003 to more than 1800$ a ton in May 2008.

"The most popular grade of Thailand rice sold for $198 a ton, five years ago and $323 a ton a year ago. In April 2008, the price hit $1,000. Increases are even greater on local markets — in Haiti, the market price of a 50 kilo bag of rice doubled in one week at the end of March 2008. These increases are catastrophic for the 2.6 billion people around the world who live on less than US$2 a day and spend 60% to 80% of their incomes on food. Hundreds of millions cannot afford to eat" (Ibid)

The main actors in the grain market are Cargill and Archer Daniels Midland (ADM). These two corporate giants control a large share of the global grain market. They are also involved in speculative transactions in futures and options on the NYMEX and the Chicago Board of Trade (CBOT). In the US, "the world's largest grower of GM crops, Cargill, ADM and competitor Zen Noh between them control 81 per cent of all maize exports and 65 per cent of all soyabean exports." ( Greg Muttitt, Control Freaks, Cargill and ADM, The Ecologist, March, 2001)

Background of Agricultural Reform

Since the early 1980s coinciding with the onslaught of the debt crisis, the gamut of neoliberal macroeconomic policy reforms have largely contributed to undermining local agriculture. Over the last 25 years, food farming in developing countries has been destabilized and destroyed by the imposition of IMF-World Bank reforms.

Commodity dumping of grain surpluses from the US, Canada and the European Union has led to the demise of food self-sufficiency and the destruction of the local peasant economy. In turn, this process has resulted in multibillion-dollar profits for Western agribusiness, resulting from import contracts by developing countries, which are no longer able to produce their own food.

These preexisting historical conditions of mass poverty have been exacerbated and aggravated by the recent surge in grain prices, which have led in some cases to the doubling of the retail price of food staples.

The price hikes has also been exacerbated by the use of corn to produce ethanol. In 2007, global production of corn was of the order of 12.32 billion bushels of which 3.2 billion were used for ethanol production. Almost 40 percent of corn production in the US will be channeled towards ethanol

Genetically Modified Seeds

Coinciding with the establishment the World Trade Organization (WTO) in 1995, another important historical change has occurred in the structure of global agriculture.

Under the articles of agreement of the World Trade Organization (WTO)), the food giants have been granted unrestricted freedom to enter the seeds' markets of developing countries.

The acquisition of exclusive "intellectual property rights" over plant varieties by international agro-industrial interests, also favors the destruction of bio-diversity.

Acting on behalf of a handful of biotech conglomerates GMO seeds have been imposed on farmers, often in the context of "food aid programs". In Ethiopia, for instance, kits of GMO seeds were handed out to impoverished farmers with a view to rehabilitating agricultural production in the wake of a major drought.

The GMO seeds were planted, yielding a harvest. But then the farmer came to realize that the GMO seeds could not be replanted without paying royalties to Monsanto, Arch Daniel Midland et al.

Then, the farmers discovered that the seeds would harvest only if they used the farm inputs including the fertilizer, insecticide and herbicide, produced and distributed by the biotech agribusiness companies. Entire peasant economies were locked into the grip of the agribusiness conglomerates.

The main biotech giants in GMO include Monsanto, Syngenta, Aventis, DuPont, Dow Chemical, Cargill and Arch Daniel Midland.

Breaking the Agricultural Cycle

With the widespread adoption of GMO seeds, a major transition has occurred in the structure and history of settled agriculture since its inception 10,000 years ago.

The reproduction of seeds at the village level in local nurseries has been disrupted by the use of genetically modified seeds. The agricultural cycle, which enables farmers to store their organic seeds and plant them to reap the next harvest, has been broken. This destructive pattern – invariably resulting in famine – is replicated in country after country leading to the worldwide demise of the peasant economy.

The FAO- World Bank Consensus

At the June 2008 FAO Rome Summit on the food crisis, politicians and economic analysts alike embraced the free market consensus: the outbreak of famines was presented as a result of the usual supply, demand and climatic considerations, beyond the control of policy-makers. "The solution": channel emergency relief to affected areas under the auspices of the World Food Program (WFP). Do not intervene with the interplay of market forces.

Ironically, these " expert opinions" are refuted by the data on global grain production: the FAO forecasts for world cereal production point to a record output in 2008.

Contradicting their own textbook explanations, World prices are, according to the World Bank, expected to remain high, despite the forcasted-increased supply of food staples.

State regulation of the prices of food staples and gasoline is not considered an option in the corridors of the FAO and the World Bank. And of course that is what is taught in the economics departments of America's most prestigious universities.

Meanwhile, local level farmgate prices barely cover production costs, spearheading the peasant economy into bankruptcy.

........to be continued....