Corporations profiting out of food crisis

October 20, 2012

The United Nations has warned that world grain reserves have fallen to critically low levels as world food prices have risen to levels close to that of 2008 — a year in which food riots took place in more than 30 countries.
UN Food and Agriculture Organisation economist Abdolreza Abbassian told the October 13 Observer: “We’ve not been producing as much as we are consuming. That is why stocks are being run down. Supplies are now very tight across the world and reserves are at a very low level, leaving no room for unexpected events next year.”
Today, about one in eight people around the world do not have enough to eat and 2.5 million children die of hunger every year. The UN released its report State of Food Insecurity in the World 2012 on October 9. The report said 15% of those in poor countries — about 850 million people — are hungry. A further 15 million people in developed countries are also undernourished.
The report said some gains were made in reducing hunger since the early 1990s, but admitted: “Most of the progress, however, was achieved before 2007–08. Since then, global progress in reducing hunger has slowed and levelled off.”

The latest food price hikes threaten to drive more people back into hunger.
The small group of food multinationals that monopolise the world food market are positioning themselves to take full advantage of the crisis.

Hunger and food insecurity is great for big business. During the “Great Hunger of 2008”, big food corporations such as Monsanto, ADM, Bunge and Cargill posted huge profits.
In August, the director of agriculture trading at giant commodities trading firm Glencore Chris Mahoney said: “The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities.”
Oxfam UK’s Jodie Thorpe told the Independent Glencore was “profiting from the misery and suffering of poor people who are worst hit by high and volatile food prices … Glencore’s comment that ‘high prices and lots of volatility and dislocation’ was ‘good’ gives us a rare glimpse into the little-known world of companies that dominate the global food system”.
The UN said world food prices leapt 6% in July and rose a further 1.4% in September. Food giant Cargill announced on October 11 that it had quadrupled its July-August quarter result compared with last year, posting earnings of $975 million.

Consulting firm Maplecroft released its Food Security Risk Index on October 10, saying three quarters of African countries faced a high or extreme risk of widespread hunger next year. Somalia, Burundi, Chad, Ethiopia and South Sudan were among the African nations in the extreme risk category.

The report said Haiti and Afghanistan were also at extreme risk of “famine and societal unrest stemming from food shortages and price fluctuations”. Maplecroft's Helen Hodge told Al Jazeera: “Food price forecasts for 2013 provide a worrying picture.”

The UN’s Office for the Coordination of Humanitarian Affairs released its Global Hunger Index on October 11. It said 20 countries had “extremely alarming” levels of hunger. Top of the list were Burundi, Eritrea and Haiti.
This year’s record-breaking heatwave in the US — the world’s biggest corn producer — together with low grain harvests in western Europe (due to heavy rains), and Russia and the Ukraine (due to drought), partly explain the recent food price hikes.
Extreme weather events, such as this year’s US drought will become increasingly common in a warmer world. The spread of industrial agriculture, which consumes huge amounts of fossil fuels and greenhouse gas-producing fertilisers, is itself a big driver of climate change.
In this way, the modern food system is helping to undermine the world’s future food security.
Another big factor explaining high food prices is the ongoing use of food to feed cars instead of people.
Despite the heatwave wiping out so much of this year’s corn crop, the US government has made no move to reduce the amount of corn — about 40% of the yield — that will be used to produce biofuel.
In July 2008, The Guardian published a leaked internal World Bank document that said biofuel production had led to a 70% rise in food prices.
Financial speculation on global food markets also helps keep food out of reach of the poor. After the collapse of the sub-prime mortgage bubble in 2008, panicked dealers shifted trillions out of real estate and into the food commodity market, which pushed prices up.
Friends of the Earth Europe said in a report released in January that banks and financial traders have increasingly turned to gambling with food commodity futures since the global economic crisis began.
“The huge growth in financial speculation has led to prices no longer being solely driven by supply and demand, but also increasingly by the actions of financial speculators and the performance of their investments. Excessive speculation has forced food prices to rise in recent years and has increased the frequency and scale of price volatility.”
Food loss and wastage is another big issue. The UN Food and Agriculture Organisation says about 45% of all fruit, vegetables, roots and tubers are wasted each year. Losses run to about 30% for cereals and seafood, 20% for meat products and about 15% for dairy foods.
Food First executive director Eric Holt Gimenez wrote in The Huffington Post in May that the world’s food crisis is not due to there being not enough food to go around. In fact, food production has outstripped global population growth for the past 20 years.
“The world already produces more than 1.5 times enough food to feed everyone on the planet. That's enough to feed 10 billion people, the population peak we expect by 2050. But the people making less than $2 a day — most of whom are resource-poor farmers cultivating unviably small plots of land — can't afford to buy this food.”

Put these factors together and the picture is clear. Modern hunger is not a consequence of food scarcity, but of poverty, inequality and corporate control of the food system.


The undermining of the small-scale agricultural producers around the world, particularly in the global South, has seriously undermined food sovereignty. The logic of capital (the compulsion to expand and accumulate) has made it inevitable that agri-businesses would expand throughout the global in order to maximize profits, which can only be achieved by producing food for those who can afford to purchase it (and to purchase much more than they need) rather than those too poor to be consumers. This has contributed to more than 10 million people annually dying from preventable and treatable diseases, a crisis that is examined in a new book titled Capitalism: A Structural Genocide.
Excellent article. In 1942-1945 6-7 million Indians were deliberately starved to death by the British in Bengal and the neighboring provinces of Orissa, Bihar and Assam when the price of the rice staple increased about 4-fold for a variety of reasons. Australia was complicit in this Bengali Holocaust (Bengal Famine) by withholding grain from its huge grain stores, presumably on British orders. Australia produced about 24 million tonnes of grain during WW2 but grain imports into India from all sources in 1942-1945 totalled a mere 1.67 million tonnes (see my book "Jane Austen and the Black Hole of British History", now available for free perusal on the Web: ) . A global cereal price rise doubling occurred in 2000-2008 in the build up to the Global Financial Crisis (GFC) but it can be argued that scores of millions of lives were saved when markets crashed and oil and food prices fell in 2009. However grain prices are now above 2008 levels (see FAO: Speculation, global warming consequences and the obscene, UK-, US- and EU-mandated food for fuel (Biofuel Genocide: ) contribute to this deadly food price rise that eventually resumed after the GFC. It can be estimated from UN Population Division data that 18 million people die avoidably from deprivation and deprivation-exacerbated disease every year (see my book "Body Count. Global avoidable mortality since 1950", now available for free perusal on the Web: Humanity , socialism and social humanism mean food sharing not food speculation. Dr Gideon Polya.

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