BILLIONS MADE MAKE BILLIONS HUNGRY

Sumit Chowdhury

An acute food crisis, the severity of which has hitherto been unseen in these prosperously prevailing times of triumphant capitalism, has seized the world.Billions, mostly those wretched of the earth living in the poorest enclaves of the global economy, are having to bear the brunt. As food prices skyrocket putting bare survival at stake, hungry multitudes across the accursed continents of Asia, Africa and Latin America are riotously taking to the streets. The flare-ups, it is feared, are likely to turn into bigger blowups, if something drastic is not done at once to stem the tide. An unprecedented upheaval may sweep through the world prising open the very entrails of the existing exploitative and profit-raking world-system. Great hunger, if history is to be believed, always fuels great anger. It happened in France in the hungry autumn of 1789 and it happened in Russia in the hungry winter of 1917. Sure enough, the current worldwide food crisis is not, as we are usually made to believe, the upshot of any major shortage in supply or a dreadful decline in agricultural output. In fact, if official statistics is to be trusted, farmers the world over have been producing more food in their farmlands than ever before. According to a World Bank study in April 2008, global cereal production has gone up to an all-time record of 2,164mt (wheat 679mt, rice 423mt, both all-time records), an increase of more than three percent over the previous year, and is expected to rise by 2.6 percent in the current year. A report of the Agricultural Department of the USA says that global wheat production had increased from 564mt (21.54bn bushels) in 1997 to 627mt (22.29bn bushels) in 2007. And yet, grain supplies reached the lowest since 1985 and the world food inventory touched rock bottom (143mt) in 25 years, resulting in the eruption of food riots in as many as 33 countries in just the first quarter of this year.

Hunger amidst plenty
Such paradox may baffle but hunger amidst plenty had been the defining feature of all the famines in the past, particularly in the colonial times and the areas under colonial domination. People went hungry not because of inadequate yield or supply of food but the inability of the poorest of the poor to
gain access to or avail of it. Food there was aplenty but remained out of reach for those who didn't have the means to purchase it at the soaring, sky-kissing price at which it was sold. The causes of famines were structural, rooted as they were in the unequal and the unfair nature of the social arrangements. No other place illustrates better this fundamental fact than Kalahandi, the most vivid symbol of famine in India. Paddy production in this wildly beautiful land across the Indravati river basin in west Orissa has always been higher than the national average for districts and yet it has forever remained the heart of darkness. Because ruthless rice merchants-cum-mahajans have wrecked the self-sustaining agricultural practice of the indigenous Kondhs and replaced it with commercial farming (including all the Green Revolution ingredients such as tractors and power-tillers, HYV seeds and chemical fertilisers), thereby alienating the local communities from their land and driving them into desperate indebtedness from which there was never any escape.

Agriculture on the roulette wheel

In fact, it is this kind of commercial farming and the consequent demise of traditional agriculture that is overtly responsible for the chronic food insecurity most parts of the underdeveloped world perpetually suffer from. The advent of unbridled capitalism in agriculture dramatically transformed the rural scenarios in these areas, altering not only farming methods and techniques, but also changing forever the way land and production relations were constituted. Both land and the produce of the land became commodities, something that could be bought and sold in the marketplace; peasants who lost their lands to farming ventures, sold their labour to work the lands that once belonged to them and were subjected to the vagaries of a market mechanism about which they knew next to nothing; hundreds of thousands, displaced from their land, would migrate to other areas in search of alternative
livelihoods, filling up the already choking slums in the cities and strengthening the army of the unemployed; in the meanwhile, omnipresent markets controlled by mafia-like cartels came to dominate every aspect of life in the countryside. More often than not, in keeping with the logic of capitalism, markets would fluctuate, rising to great heights if the going was good and collapsing if things took a different turn. A glut here and a slump there would bring forth a crisis; prices of food products would then be raised or lowered, as the requirement might be, to cope with the situation. Speculative trading would, thus, gain ground, becoming the norm over time. Agriculture would be placed on the roulette wheel and food-stocks stashed away in cold storages till the wheel turned distinctly in favour. The demands of agribusiness would lend itself to all-out gambling and unscrupulous traders would rule the roost.

Prices of speculative trading

The severe food crisis that has at present hit the world can be traced to a similar casino culture that permeates agriculture in these globalising times. Agribusiness is big business and today's casino kings are the giant multinationals like Cargill, Monsanto, Mosaic, Archer Daniels Midlands and so on who exercise iron control in both supply and demand in agricultural trading and stocks through opaque pricing and other financial instruments. Many of these corporations – having dubious track records – have started investing in a big way in futures trading in agro-products and food commodities. They are not buying or selling but betting on price movements in the stock exchanges. The funds have grown exponentially in the aftermath of the collapse of the mortgage market – termed the 'sub-prime crisis' – in the USA since end- 2007. Desperate for swift returns, investors are withdrawing trillions of dollars from the equity and mortgage bonds to invest in futures trading on food products. According to a Citibank report, funds invested in commodity futures in wheat alone increased from $5 billion in 2000 to $175bn in 2007 and investment in
commodity indices increased by $40bn to $180bn in the first quarter of 2007. Global speculation on foodstuff can be seen best in the Chicago Stock Exchange (CHX) where a number of hedge funds, investment banks and pension funds are investing enormous amounts in agro-inputs. In the first quarter of 2008, the investment on agriculture at CHX increased by more than 25 percent while according to the Chicago firm, Coal Partners, the participation of hedge funds in raw materials increased threefold to $55bn in the past couple of years. The trading frenzy has sent food prices soaring across the world. True, prices of
primary commodities like cereals, edible oils and milk have been rising since the turn of the millennium but since the onset of the credit crisis in the USA prices of food in the global market have been climbing at an astounding pace. In a series of caveats in January this year, New York Times reported that prices of 60 agricultural commodities traded on the world market increased by 37 percent in 2007 and 14 percent the year before. Corn prices began their ascent in the early fall of 2006 and within months climbed by some 70 percent. According to a Food and Agriculture Organisation (FAO) report, global food prices have increased by 83 percent in the last two years of which the price of rice itself has gone up by 141 percent. And according to another study by the Agricultural Department of the USA, the global market price of rice has gone up by 217 percent since 2006, that of wheat by 136 percent and soybean by 107 percent. CHX predicts that future prices of wheat are likely to go up by 73 percent, soybean by 52 percent and soybean oil by 44 percent. It is difficult to estimate how many people across the world will be affected by this phenomenal rise in food prices. It, however, goes without saying that it would badly affect the poorer and marginalised sections of the underdeveloped world. More than 900 million poor in Asia earn less than $2 a day – they would certainly be the worst-hit. And among them, it is the women and children who will be distressed the most. The World Food Programme (WFP) announced on April 22 that it had begun cutting provisions for school meals to the world's poorest children, that the price of basic food was rising so rapidly that shortfall for its financing for food relief programmes had grown from $500m to $755m in less than two months. A programme providing 450,000 Cambodian children has been suspended and a similar programme in Kenya serving 1.2 million children is facing cuts of nearly 50 percent.

Prices of capitalist consumption

Spiralling prices, which is endemic to capitalism, is also intrinsically triggered by the prohibitive energy needs of a growth-driven, growth-obsessed, growth-isthe- be-all-and-end-all system and the unrestrained, never-flagging consumerism it breeds. Both of these, typically, have had a major role in the unfolding drama about the global food catastrophe. The capitalist world, it may be emphasised, has a gargantuan appetite for fossil fuels and today its main source of energy is petroleum. With oil stocks constantly depleting and crude oil prices going up by more than 500 percent in the last decade or so, the capitalist countries of Europe and the USA, with mighty automobile industries, opted for bio-fuels like corn oil, also known as ethanol. Attracted by ethanol's potential as an alternative to petroleum and to meet the ever-growing demands of an automobile-crazy society, the government of USA handed massive subsidies to corn-growers; and, in a span of less than five years, huge tracts of prime agricultural lands cultivating wheat or soybean were taken over to grow corn – that, too, is being used for conversion to ethanol and not for satisfying basic human needs; it may be worthwhile to note that 240kg corn, enough to feed a family for a year, produces a mere 100 litres of ethanol, just enough to fill an SUV car. A survey of the Agricultural Department of the USA points out that the use of food crops required for producing bio-fuels in that country have gone up from 11mt in 1995 to 50mt in 2007. Primary agriculture is evidently being sacrificed at the altar of the energy needs of the capitalist world. The price of ethanol, however, is tied to that of crude oil which, in turn, is tied to the US dollar: the higher the fall of the dollar's value in the international currency market, the more the price of crude oil, and that of ethanol. With dollar value steadily declining on account of the ongoing recession in the USA and crude oil prices rising inexorably in leaps and bounds, dragging ethanol in its wake, prices of foodstuff are automatically soaring. Similar impact on the nature of agricultural production has arisen from the burgeoning consumerism of the prospering middle classes in the fast-growing economies of the underdeveloped territories, particularly China and India, the two most populous countries of the world. With the cash-rich middle classes wanting more protein food, the demand for meat has risen dramatically in these areas and the use of maize and soy to feed cattle, pigs and poultry has gone up sharply to satisfy this demand. One of the caveats in the New York Times mentioned earlier, reports that the world's meat supply, which was 71mt in 1961, rose to 284mt in 2007. Per capita consumption, too, has doubled in this period. Consumerism born of capitalist development inevitably rings the death knell for agriculture.

A death warrant for agriculture

Experience of the past two decades show that the so-called neoliberal therapy – prescribed by the World Bank and the International Monetary Fund (IMF) in the wake of the Washington Consensus in 1990 and zealously implemented by most of the crony aspiring-to-be-developed countries – and the so-called free trade regimen, advocated and imposed on the lesser economies by the World Trade Organisation (WTO), have together destroyed or debilitated the once-thriving agriculture in the vast hinterlands of Asia, Africa and Latin America. Neoliberalism has, in particular, ruined the small farmers and paved the way for agribusiness multinationals to come in and make hay. With subsidies taken off and almost all expenditure on agricultural infrastructures virtually stopped, the subsistence farmers have en masse been pushed to the margins even as the multinational marauders laid siege to the rural economies with their seeds, fertilizers, pesticides and genetic engineering know how. Egged on by these multinationals, farmers switched from self-consuming or rotational cropping to cultivating cash crops; and when invariably crops failed, repeatedly in many cases, the multinationals, now acting as their saviors, did brisker business. The horrible experience of the cotton growers in Andhra Pradesh, many of whom through the 90s and till recent years committed suicide, is a case in point. Free trade lured many of these small and now-capitalist farmers from the peripheries into the hub of the world market. They perish soon enough, unable, as they were to cope with the intricacies of the market operations and stand up to the might of the oligopolistic agro-cartels who have complete control over pricing. Till the 70s, the sub-Saharan economies were frugal on providing food to the people. They didn't have oranges but bread and milk to sustain themselves. When the World Bank prescribed these economies to orient towards the market, they started producing oranges for export in lieu of wheat imports. After a time, the price of wheat shot up and that of oranges went down, plunging these African countries into a quagmire. Profit out of crisis The food crisis is not just a tale of misery and despair. These may be the worst of times for the world's hungry billions, but these are the best of times for the giant agribusinesses whose earnings and profits have already begun to reach astronomical figures. Monsanto reported last month that its net income for three months up to the end of February this year has more than doubled to $1.12bn from $543m over the same period last year, and its profits went up from $1.44bn to $2.22bn. Cargill's net earnings soared by 86 percent from $553m to $1.03bn over the same three months' period. And, Archer Daniels Midland, one of world's largest processor of soya, corn and wheat, increased its earnings by 42 percent, from $363m to $517m, in the first quarter of 2008. The operating profits of its grains merchandising and handling jumped 16-fold from $21m to $341m. Similarly, Mosaic Company, one of the world's largest fertiliser companies, saw its income in three months up to the end of February this year rise more than 12- fold, from $42m to $520.8m, on the back of a major shortage in fertiliser. As billions go hungry, the agribusiness tycoons, cashboxes ringing loudly on their backs, are laughing their way to the bank.

The last laugh

Soon the tears of the hungry billions will dry up. The angry billions will then ....


Writer’s e-mail address: sumit_chowdhury@yahoo.com