New Internationalist

Food Crisis - The Facts

Issue 418

The increase in global food prices may have temporarily stalled but food is expected to remain at record price levels for the foreseeable future. Industrial agriculture’s chickens have come home to roost. But the price is being paid not by agribusiness and food retailers but by small farmers whose income remains low, and by the millions being pushed into malnutrition.

Photo: QILAI SHEN / PANOS
Photo: QILAI SHEN / PANOS

Food price take-off

• In 2008 total world stocks of all grains were at their lowest for 30 years.

 

Who wins?

Big companies:

• The share price of two of the world’s biggest agribusinesses – Monsanto and Syngenta AG – almost doubled between June 2007 and June 2008.1

 

Who loses?

Hungry People:

• 2.6 billion people around the world live on $2 a day or less and spend 60 to 80 per cent of their income on food.8

• Today, 70 per cent of poor countries are food importers and 80 per cent of the estimated 845 million hungry people are small farmers.2

• The Food and Agriculture Organization estimates that the increase in food prices in 2007/08 meant 100 million more people could not afford food. A hundred million additional people were pushed into a situation of ‘food peril’.3

• Small farmers have seen few benefits from runaway food prices. In Spain the farmers’ union estimates that consumer prices are 600 per cent higher than the prices farmers receive. 9

• Slightly over a billion people in the world are overweight while slightly under a billion suffer from malnutrition.7

 

Speculators cash in

 

What’s happened to agriculture?

• The majority of people in Africa and Asia still survive by what they can earn working as farmers.

• The value of agricultural research funds to 16 research institutes (mostly in the South) has been steadily declining since 1996.12

• More than half of global agro-exports come from the US, Brazil, Argentina, Canada, Australia and France. Together these countries represent just 2% of world farmers.13

 

Why did food prices rise?

The US Government estimates that shifting agricultural land to biofuels increased world food prices 3 per cent, but a World Bank study holds the figure is as much as 75%.5

Less than half the world’s grain production is actually eaten by people – the rest ends up as animal feed and biofuels. In 2007 the global grain harvest was 2.1 billion tons. But only 1.01 billion tons will go to feed people. Some 760 million tons – or 14 times the global food deficit – will be fed to animals.6

Although estimates vary, up to 50% of the recent rise in food prices can be traced to the increased demand for a more meat-centred Western diet from the growing middle classes of India and China. Beef consumption in China has increased by 240% in the last decade.7

Speculative pressure – investment funds now control 50 to 60% of the wheat traded on the world’s biggest commodity markets. Speculative money in commodity futures like rice and grain has risen from $5 billion in 2000 to $175 billion in 2007.2

Climate change – and the severe weather it brings about – is estimated to have increased the number of undernourished people by between 40 and 170 million. A multi-year drought has cut Australian grain production by 60% and wiped out the rice harvest completely.14

Agricultural inputs (particularly petroleum-based ones) have gone up in line with the skyrocketing cost of a barrel of oil. The increases in the price of potash used in fertilizer (40% in SE Asia, 85% in Latin America, 130% in India and 227% in China) are particularly crippling.2

  1. Globe and Mail, 28 June 2008
  2. www.grain.org
  3. www.fao.org/worldfoodsituation
  4. Toronto Star, 24 April 2008
  5. The Guardian, 4 July 2008
  6. The Guardian, 15 April 2008
  7. 101 Facts You Should Know About Food, Icon Books 2007
  8. ‘The Food Crisis’, Ian Angus www.socialistproject.ca
  9. www.viacampesina.org
  10. Der Spiegel, 14 April 2008
  11. The Atlas of Food, Earthscan 2008
  12. www.scidev.net
  13. ‘The not-so-sudden world food crisis’ www.canadiandimension.org
  14. www.chathamhouse.org

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