The economics of global famine

December 12, 1995

In the late 20th century, famine is not a consequence of "a shortage of food". On the contrary, famines are a result of a global oversupply of grain staples.

Famine has become a world-wide phenomenon. A large part of the population of the African continent is affected. There are several million people in "famine zones" in India and Bangladesh. In the labour surplus economies of south Asia and the Far East, an important segment of the rural and urban population, driven well below the poverty line due to the absence of employment opportunities, is seriously at risk. Hunger and deprivation, however, are no longer limited to the Third World. The global economic crisis has created a process of global impoverishment — unemployment, homelessness and low wages in the urban ghettoes and shantytowns, and the destruction of independent farmers in Europe and North America. Low levels of food consumption and malnutrition are increasingly hitting the urban poor in the rich countries. According to a recent study, 30 million people in the US are classified as "hungry". Since the early 1980s complex and far-reaching changes in the global economy have redefined the structure of industry and agriculture. World agriculture has, for the first time in history, the capacity to satisfy the food requirements of the entire planet. Yet the very nature of the global market system prevents this. The capacity to produce food is immense, yet the levels of food consumption remain exceedingly low because a large share of the world's population lives in abject poverty. Moreover, the process of agricultural "modernisation" (including the Green Revolution) has led to the dispossession of the peasantry, increased landlessness and environmental degradation. The very forces which encourage global food production to expand are also conducive to a contraction in the standard of living and a decline in the demand for food. In the First World, family farms are being driven into bankruptcy, and agricultural producers are losing control over the land they farm. In the developing countries, the peasantry is increasingly being transformed into an army of landless seasonal plantation workers. The earnings of farmers in rich and poor countries alike are being squeezed by a handful of global agro-industrial enterprises which simultaneously control the markets for grain, farm inputs, seeds and processed foods. With the signing of the Uruguay Round of the General Agreement on Tariffs and Trade, the new World Trade Organisation will give unrestricted freedom to the giant food corporations to enter the seed markets of developing countries and establish "plant breeders' rights" to the detriment of millions of small farmers. Throughout the developing world food security is destroyed, the national grain market is displaced, grain prices are re-aligned with those of the world market and the peasantry is subordinated to the requirements of the global food monopolies. Global impoverishment since the debt crisis tends to encourage stagnation in the production of basic food staples while redirecting agriculture towards "high value added" non-staple and processed foods. The economic policy actions of G7 governments and the Washington-based international financial institutions tend to support this world-wide restructuring of agriculture. The food giants are not only the recipients of US "food aid", they have become "development brokers" in a wide range of agro-industrial projects. With direct access to the World Bank, the US Department of Agriculture and the national governments, they exercise a dominant role in shaping the agricultural policy of indebted countries.

Colonial legacy

Since the early 1980s, grain markets have been deregulated under the supervision of the World Bank. US grain surpluses are being systematically used to destroy the peasantry and destabilise national food agriculture. Similarly, subsidised beef and dairy products imported duty free from the European Community have led to the demise of Africa's nomadic pastoral economy. European beef imports to west Africa increased seven-fold since 1984, displacing local livestock producers. In the Sahel, the deregulation of the grain market under the supervision of the World Bank was initiated at the height of the 1983-84 drought with devastating social consequences. The decline and weakening of food agriculture in sub-Saharan Africa, however, predates the era of IMF shock therapy. It was largely a legacy of the colonial era. In the Sahel, for example, agricultural infrastructure, irrigation, extension services and credit were channelled in support of export crop farming with traditional food crops (millet and sorghum) pushed steadily into marginal lands, the so-called "grey area" of the arid Sahelian belt. The debt crisis of the early 1980s pushed the colonial-style cash crop economy into a depression. The peasant's meagre cash income from export crops was compressed by the collapse of commodity prices, but there was nothing to fall back on because the life support system of traditional subsistence farming had been dismantled. Moreover, the cash crop economy combined with the commercial plunder of forest reserves caused serious environmental damage. The cash revenues from export crops were insufficient to buy enough food. The famines of the 1980s and '90s were, therefore, more severe and devastating than those of the '70s.

Bretton Woods institutions

While experiences differ from one region to another, since the early 1980s the same economic reform package — under the guidance of the Bretton Woods institutions — has been simultaneously imposed on a large number of indebted countries. Under World Bank supervision, trade barriers to grain, dairy products and meat from the rich countries were removed alongside the elimination of subsidies and preferential bank credit for farmers. The World Bank also encouraged reforms in the structure of land tenure and ownership which favour the formation of larger land-units, the forfeiture of land by the small-holder, the transformation of indigenous land rights and the privatisation of communal lands. While new "alternative" export crops were promoted, the reforms were also intent on preventing the Third World farmer from "switching back into food production" for household consumption or for domestic sale. The commercialisation of food production and the taking over of the peasant economy by urban-based agro-business was also encouraged. Developing countries were advised by the World Bank to develop new specialised export areas. In Senegal and Mali, for instance, a profitable fruits and vegetables business for export was developed in private plantations to the detriment of the peasant economy. In Bangladesh, village-based shrimp farming encroached upon the development of paddy production with detrimental environmental implications. This boom in non-traditional exports did not last, however, because the same so-called "high value added" exports were developed simultaneously in a large number of countries leading to a subsequent collapse in prices.

Destructive loans

Throughout the developing world, this pattern of "sectoral adjustment" in agriculture was unequivocally towards the destruction of food security. Dependency vis-á-is the world market was reinforced with a view to providing market outlets for US and European agricultural surpluses. "Food aid" to Sub-Saharan Africa increased by more than seven times since 1974 and commercial grain imports more than doubled. Food aid however was no longer earmarked for the drought-stricken countries of the Sahelian belt. It was also channelled into countries which until recently were more or less self-sufficient in food. Food aid is never given; it is always sold by governments on local markets invariably below the domestic market price. Severe austerity measures were imposed on African governments, and expenditures on rural development were drastically curtailed leading to the collapse of agricultural infrastructure. Since the debt crisis, the international financial institutions have moved away from providing credit in favour of supporting "real development projects". A new generation of "policy-based loans" was devised. Money has been provided "to help countries to adjust". These World Bank loan agreements included tight conditions. The money was granted only if the government complied with structural adjustment reforms with very precise implementation deadlines, and loan disbursements could be interrupted if the government did not conform. A lending practice had been set in motion in which the money granted in support of agricultural "adjustment" was not meant for investment in agricultural projects, but could be spent freely on commodity imports. Another important objective was also served. The adjustment loans diverted resources away from the domestic economy and encouraged countries to continue importing large quantities of consumer goods, including food staples, from the rich countries. The result of this was stagnation of the domestic economy, enlargement of the balance of payments crisis and growth of the debt burden.

Human-made famine

While "external" climatic variables play a role in triggering off famine and heightening the social impact of drought, famines in the age of globalisation are human-made. They are not the consequence of a scarcity of food but of a structure of global oversupply which undermines food security and destroys national food agriculture. Tightly regulated and controlled by international agro-business, this oversupply is ultimately conducive to the stagnation of both production and consumption of essential food staples and the impoverishment of farmers throughout the world. In the era of globalisation, the IMF-World Bank structural adjustment program has a direct relationship to famine because it systematically undermines all economic activities, whether urban or rural, which do not directly serve the interests of the global market. Import-substituting industries for the internal market are dismantled as a result of the lifting of tariff barriers and the collapse of internal purchasing power. This means that small artisans are impoverished and food farming is undermined in favour of export crops.
[Copyright by M. Chossudovsky, Ottawa, 1995. Abridged version printed with permission of the author.]


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