Food crisis? Who is at fault?
Posted by jingoisticbuthornydesperado on August 1, 2008
The Economist lately have an interesting debate on food crisis.
I feel socially obliged to comment about this. Walden Bello has written a comprehensive article ‘Manufacturing a Food Crisis’, for June 2, 2008th edition of The Nation.
Summarising Mexico’s problem as an example; pointed out by Walden Bello, “Mexico was a net corn exporter before Mexico submitted herself to free trade alliance with North America. Due to its free trade pact, it was gradually reduced into a net corn importer; the local farmers could not compete with North Americans subsidised import (25% state subsidy). IMF and the World Bank made sure that Mexico did comply with the conditions of free trade while conveniently ignoring North American subsided corn. Mexican farmers were forced out of business, and Mexico became highly dependent on American corn trade.”
To further add on, on my part. The world has one less producer each time because of oxymoronic bias free-trade, thus making food prices more volatile with less dependable food sources. Higher prices didn’t benefit the Mexican corn farmers because when it happened, NAFTA has already destroyed its local farm communities, benefiting only the elitist northern neighbour not its poor corn farmers.
Again Walden Bello pointed out that ‘in Malawi, the nation had a surplus of corn, however IMF insisted that the Malawian government should sell of its corn surplus (including its grain reserve) to service its (Malawi’s) debt. When famine occurred in 2001-2002, 1500 Malawians perished as its stockpile was depleted from its obligation induced export!’
If the food price continues to increase, what will guarantee that other nations will not suffer the same fate experienced by the Malawians, if IMF still insists that third world nations should service their debt by selling their valuable stockpile of agricultural commodity to nations that have obesity to worry about. High food prices will continue to plague poor nations with food insecurity, as long as IMF continues with its biased and skewed interference. All it takes is one bad harvest and poor nations will go into famine, having to seek out foreign food aid again, then having to service its food debt again by selling its valuable stockpile. High food prices will work in an ideal free market world, but the world is not ideal.
Of course, India’s agricultural system is not perfect, but to ask India to conform to the standards of Western bloc’s skewed free trade is equivalent to suicidal. Local farmers will be forced out of business by subsidised Western products (European subsidy accounts to 40% as quoted from The Nation). This again might exacerbate the food crisis. Of course, bigger and more efficient companies can replace smaller local farmers, but this is again if and only if IMF and the World bank do not interfere. Taking the Philippines as an example, as Wallen Bello from the Nation pointed out again, ‘both IMF and the World bank insisted the Philippines government to make repayment of $26 billion debt a priority. The government complied but at the cost of reduced agricultural expenditure and support. These factors caused the agricultural infrastructure to deteriorate, further impoverishing the poor. Due to poor agricultural infrastructure, multinational companies did not dare to invest in its agricultural industry contrary to the beliefs of IMF and the World bank.’
To say free market can resolve the food crisis due to high price while ignoring the fact that there are other (Western induced) variables distorting the benefits of free trade is not completely justified.
No doubt India, China and Indonesia account for 1.7 billion of the poor that benefited from high price of food products from the market economy, closing the gap between the poor farmers and the well-of middle to rich class. But regardless of the price of agricultural products, these three countries will not starve anyway, however, other less fortunate third world countries apart from India, China and Indonesia are less fortunate. High price of food is almost synonymous to famine for them. The benefits of market economy are in my opinion mere by-products (sugar coating) of sound governmental policies.