Ali’s blog

Mostly quant stuff with occasional digressions

Food riots and their implications

Posted by alifinmath on April 9, 2008

An article in the Guardian:

Rising food prices could spark worldwide unrest and threaten political stability, the UN’s top humanitarian official warned yesterday after two days of rioting in Egypt over the doubling of prices of basic foods in a year and protests in other parts of the world.

Prices have risen 40% on average globally since last summer.

As well as this week’s violence in Egypt, the rising cost and scarcity of food has been blamed for:

· Riots in Haiti last week that killed four people

· Violent protests in Ivory Coast

· Price riots in Cameroon in February that left 40 people dead

· Heated demonstrations in Mauritania, Mozambique and Senegal

· Protests in Uzbekistan, Yemen, Bolivia and Indonesia

UN staff in Jordan also went on strike for a day this week to demand a pay rise in the face of a 50% hike in prices, while Asian countries such as Cambodia, China, Vietnam, India and Pakistan have curbed rice exports to ensure supplies for their own residents.

Bye-bye, neoliberal globalisation with its wet dreams of unfettered markets. Where are you, Tom Friedman, you shill for “free markets” and globalisation? Have you scurried under some stone? The price mechanism (and the concomitant hijacking of the “free market” by Western agribusiness crooks like ADM, Cargill and Cenex) will come to an end in essentials such as food.

As I may have said before, one key ingredient to hijacking the so-called “free market” is to first hijack the state. Indeed, as I’ve argued before, the modern state has co-evolved with monopoly capitalism and tends to be partial towards it (if not entirely its instrument, as in the US). More on state-assisted agribusiness capitalism:

Around the world, farm income is plummeting, pushing farmers off the land and into destitution. At the very same time, soaring food prices are putting tens of millions onto starvation diets.

Welcome to the bizarre world of capitalist agriculture, where the drive to boost profits of giant transnational corporations is imperiling the production of our means of survival.

Like most Grey County farmers, Rae MacIntyre raises beef. Not long ago, “there was a slaughterhouse in every county,” he says. That’s all gone now; the only significant purchaser is the corporate goliath, Cargill, which has an abattoir in Guelph, MacIntyre says. Most Ontario beef is sold into the U.S. for whatever it will bring, and these days that’s next to nothing.

Grey County used to be a major supplier of apples. Now few apples are sold, MacIntyre says. “Juice apples … are often composted or used for animal feed.” Many of the apples we see in stores are flown in from China. The same applies to apple juice and apple sauce, despite the misleading “made in Canada” labels on the packaging.

The sickness in Canada’s farms is rooted in the way the proceeds of agriculture are divided between farmers and workers, on the one hand, and capitalist corporations on the other.

In Canada’s hog industry, between 1988 and 2002, and despite inflation, farm-gate prices (including inflation) fell 5% from 1988 to 2007. Packinghouse workers’ wages rose a bit, but much less than inflation. Yet the price of pork to consumers went up 39%.

In 2005, the NFU noted that wheat farmers were getting five cents from each loaf of bread, the same amount as thirty years earlier. The income of supermarket workers has been under sharp attack. But the share of each loaf that goes to corporate millers, bakers, and grocers rose from 38 cents to $1.35.

In 2004, which the NFU says was the second-worst year for farming in history, the corporations living off the farmers had their most profitable year ever. The corporations are appropriating every penny of the profits of farming — indeed, more than 100%, since farmers are unable to cover their costs from farm-product sales.

How do they get away with it?

“The problem is market power,” a Farmers Union document explains. On one side are the “huge transnationals with only two or three competitors” — on the other side, “individual farmers competing in a global market against a billion other farmers.” In such conditions, agribusiness can set prices at will — whatever level best drains the farmers’ resources without shutting down cultivation completely.

As I may have mentioned before, there’s a deliberate and disingenuous conflation of “free enterprise” with state-assisted monopoly capitalism. To the extent that criticism of the latter is construed as an attack on free markets. Yet free trade has existed for millennia: there are scores, hundreds, thousands of small producers and a corresponding number of customers. No-one has market power or attempts to control the market. No-one employs the resources of the modern state — its powers of legislation, financial support, ability to award contracts, and military might — to control the market. Present-day capitalism is barely two centuries old and a highly artificial creation whose benefits are directed towards a small entrenched ruling class.

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