New Internationalist

Starved by the system

July 2008

Corporations are making a killing from the world food crisis

The rising cost of food all over the world has taken households, governments and the media by storm. The price of wheat has gone up by 130 per cent in the last year. Rice doubled in price in Asia in the first three months of 2008 alone, hitting record highs on the Chicago futures market. For most of 2007 the spiralling cost of cooking oil, fruit and vegetables, as well as dairy and meat, led to a fall in their consumption.

From Haiti to Cameroon to Bangladesh, people have been taking to the streets in anger at being unable to afford the food they need. In fear of political turmoil, world leaders have been calling for more food aid, as well as for more funds and technology to boost agricultural production. Cereal exporting countries are closing their borders to protect their domestic markets, while other nations panic-buy. Is this a price blip? No. A food shortage? Not that either. We are in a structural meltdown, the direct result of three decades of neoliberal globalization.

Farmers across the world produced a record 2.3 billion tonnes of grain in 2007, up 4 per cent on the previous year. Since 1961 global output has tripled, while the population has doubled. There is enough food being produced to feed everyone in the world. The problem is that it isn’t getting to all who need it.

The policy-makers who have shaped today’s world food system – and who are supposed to be responsible for averting such catastrophes – have come out with a number of explanations for the crisis: drought affecting harvests; rising demand in China and India; mass diversion of crops and land into biofuel production. All of these are contributing to the current food crisis, but they do not account for the full depth of what is happening.

While the media focus on food riots, the untold story is the massive profits being made by corporations and investors. Cargill, the world’s biggest grain trader, achieved an 86 per cent increase in profits from commodity trading in the first quarter of this year. Bunge, another huge food trader, had a 77 per cent increase last year. ADM, the second largest grain trader in the world, registered a 67 per cent profit hike in 2007.

Nor are retail giants taking the strain: profits at Tesco, the UK supermarket giant, rose by a record 11.8 per cent last year. Other major retailers, such as France’s Carrefour and Wal-Mart of the US, say that food sales are the main sector sustaining their profit increases. Investment funds, running away from sliding stock markets and the credit crunch, are having a heyday on the commodity markets, driving prices out of reach for food importers like Bangladesh and the Philippines.

These profits are no freak windfalls. Over the past 30 years, the IMF and the World Bank have pushed Majority World countries to dismantle all forms of protection for their local farmers and to open up their markets to global agribusiness, speculators and subsidized food from rich countries. This has shifted most developing countries dramatically from being net exporters of food into importers. On top of this, finance liberalization has made it easier for investors to control markets for their own private benefit.

The fundamental cause of today’s food crisis is neoliberal globalization itself, which has transformed food from a source of livelihood security into a mere commodity to be gambled away, even at the cost of hunger among the world’s poorest.

Read the full report by GRAIN: ‘Making a killing from hunger: We need to overturn food policy, now!’:

This column was published in the July 2008 issue of New Internationalist. To read more, buy this issue or subscribe.

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This article was originally published in issue 413

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