Corporate Vultures Lurk Behind the World Food Crisis

By Anuradha Mittal, AlterNet. Posted April 29, 2008.

UN agencies are meeting in Berne to tackle the world food price crisis. Heads of International Financial Institutions (IFIs), including Robert Zoellick, President of the World Bank (former U.S. trade representative) and Pascal Lamy, WTO's Director General, are among the attendees. Will the "battle plan" emerging from the Swiss capital, a charming city with splendid sandstone buildings and far removed from the grinding poverty and hunger which has reduced people to eating mud cakes in Haiti and scavenging garbage heaps, be more of the same -- promote free trade to deal with the food crisis?

The growing social unrest against food prices has forced governments to take policy measures such as export bans, to fulfill domestic needs. This has created uproar among policy circles as fear of trade being undermined sets in. "The food crisis of 2008 may become a challenge to globalization," exclaims The Economist in its April 17, 2008 issue. Not surprisingly then, the "Doha Development Round" which has been in a stalemate since the collapse of the 2003 WTO Ministerial in Cancun, largely due to the hypocrisy of agricultural polices of the rich nations, is being resuscitated as a solution to rising food prices.

Speaking at the Center for Global Development, Zoellick passionately argued that the time was "now or never" for breaking the Doha Round impasse and reaching a global trade deal. Pascal Lamy has argued, "At a time when the world economy is in rough waters, concluding the Doha Round can provide a strong anchor." Dominique Strauss-Kahn, Managing Director of the IMF, has claimed: "No one should forget that all countries rely on open trade to feed their populations. [...] Completing the Doha round would play a critically helpful role in this regard, as it would reduce trade barriers and distortions and encourage agricultural trade."

Preaching at the altar of free market to deal with the current crisis requires a degree of official amnesia. It was through the removal of tariff barriers, made possible by the international trade agreements, that allowed rich nations such as the U.S. to dump heavily subsidized farm surplus in developing countries while destroying their agricultural base and undermining local food production. In Cameroon, lowering tariff protection to 25 percent increased poultry imports by about six-fold while import surges wiped out 70 percent of Senegal's poultry industry. Similarly reduction of rice tariffs from 100 to 20 percent in Ghana as a result of the structural adjustment policies enforced by the World Bank, increased rice imports from 250,000 tons in 1998 to 415,150 tons in 2003. In all, 66 percent of rice producers recorded negative returns leading to loss of employment. Vegetable oil imports in Mozambique shrank domestic production from 21,000 tons in 1981 to 3,500 in 2002, negatively impacting some 108,000 small-holder households growing oilseeds.

Developing countries had an overall agricultural trade surplus of almost $7 billion per year in the 1960s. According to the Food and Agricultural Organization (FAO), gross imports of food by developing countries grew with trade liberalization, turning into a food trade deficit of more than $11 billion by 2001 with a cereal import bill for Low Income Food Deficit Countries reaching over $38 billion in 2007/2008.

Erosion of the agricultural bases of developing countries has increased hunger among their farmers while destroying their ability to meet their food needs. The 1996 World Food Summit's commitment to reduce the number of hungry people -- 815 million then -- by half by 2015 had become a far-fetched idea by its 10th anniversary. U.N. Special Rapporteur on the Right to Food, Jean Ziegler, reported last June that nearly 854 million people in the world-one in every six human beings-are gravely undernourished.

So on who's behalf are the heads of the IFIs promoting the conclusion of the Doha Round and further liberalization of agriculture. While Investors Chronicle in its April 2008 feature story, "Crop Boom Winners" explores how investors can gain exposure to the dramatic turnaround in food and farmland prices, a new report from GRAIN, Making a Killing from the Food Crisis, shows Cargill, the world's biggest grain trader, achieved an 86 percent increase in profits from commodity trading in the first quarter of 2008; Bunge had a 77 percent increase in profits during the last quarter of 2007; ADM, the second largest grain trader in the world, registered a 67 percent per cent increase in profits in 2007. Behind the chieftains of the capitalist system are powerful transnational corporations, traders, and speculators who trade food worldwide, determine commodity prices, create and then manipulate shortages and surpluses to their advantage, and are the real beneficiaries of international trade agreements.

The vultures of greed are circling the carcasses of growing hunger and poverty as another 100 million join the ranks of the world's poorest - nearly 3 billion people who live on less than $2 a day. Agriculture is fundamental to the well-being of all people, both in terms of access to safe and nutritious food and as the foundation of healthy communities, cultures, and environment. The answer to the current crisis must be centered on small-scale farmers producing for local and regional markets. It is time for the developing countries to uphold the rights of their people to food sovereignty and break with decades of ill-advised policies that have failed to benefit their people.

See more stories tagged with: world bank, imf, wto, food shortages, ifis

Anuradha Mittal is executive director of the Oakland Institute.

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