What is really behind the food crisis?

We are told that there is not enough food for everyone, that there are too many human beings on the planet and therefore we must all reduce consumption - a handy idea in the hands of the bourgeois propagandists. The real facts and figures reveal that the world produces enough food. So where does the problem lie?

The purpose of this article is to show that the food shortages that afflicted many countries this year are not due to any natural disaster, or to the fact that there are too many human beings to feed. The facts will show this, and we will deal with these later in this article.

In 1859 Marx explained the following:

"No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.

"Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation." (Preface To "A Contribution To The Critique Of Political Economy", Karl Marx, 1859)

The point that Marx was making in the passage quoted above was that no new society is possible until the material forces for such a society have come into being. Capitalism has created massive productive forces over a period of more or less two centuries. This applies to food as well, not just in absolute terms but also in relative terms, i.e. in proportion to the actual number of human beings that inhabit the planet.

Food crisis to cause malnutrition (Photo by publik16 on flickr)The problem is not one of production, but of distribution. There are hundreds of millions, in fact billions, of people who go hungry not because there is not enough food produced, but because they cannot afford to buy the food that is produced. Thus we have "overproduction" of food, not in the sense that more food than is required is produced, but in the sense that it is too much for the market to absorb. We must always keep in mind that for capitalists individuals only exist if they have purchasing power, i.e. money in their pockets to spend. If they have no money they don't enter into their statistics.

That is if you look at them from an economic point of view. From a political point of view the situation is very different. These people not only exist but they are also very angry. Earlier this year we had food riots in dozens of countries across the world. These non-existent people from the market point of view came out onto the streets in Haiti and forced a Prime Minister to resign. Thus what we have is increasing social and political instability, a direct consequence of the limitations of capitalism.

On top of the food crisis we have the generalised crisis of capitalism which has had a huge impact on the consciousness of ordinary working people all over the world. Billions of people are questioning the system they live under. This system, which is supposed to be the best we could expect if we are to believe the mass media, governments and so-called economic experts.

To the Marxists what is happening around the globe comes as no surprise. In fact, what was surprising was not the financial crash at all. What was surprising was how long it took in coming. We have been warning for years that such a crisis would erupt sooner or later. If one reads the articles that have appeared on Marxist.com for a period of years, one will see that we consistently and systematically explained that the accumulation of huge quantities of debt, i.e. fictitious capital, would sooner or later lead to a severe downturn.

In 2006 we explained:

"We have entered the most turbulent period in world history. One shock after another is shaking the system to its foundations. The world situation is characterised by extreme instability, which is a reflection of the impasse of the capitalist system on a world scale. The world has been plunged into a maelstrom of conflicts, wars and terrorism. The counter-revolutionary tendencies in the present world situation are obvious. They are an expression of the fact that a socio-economic system that has outlived its historical usefulness and become a barrier to human progress is struggling to maintain itself. The old system is hopelessly diseased but refuses to die." (World revolution and the tasks of the Marxists - Part One, 2006)

The present economic impasse of world capitalism is an indication of the fact that what we said in 2006 was no exaggeration. When we stated that, "We have entered the most turbulent period in world history" some doubted whether this was really true. Could the period we were entering really be more turbulent than the first half of the 20th century that saw two world wars and the worst economic crisis that capitalism had experienced? No one can doubt now that we were right and that we have indeed entered such a period.

The contradictions that have piled up over decades have ripped through the surface of society with a vengeance. And within this crisis we have the particular crisis of food production or, to put it more precisely, of food distribution.

Under capitalism we have millions of unemployed and yet plenty of things need producing; we have millions of people losing their homes and yet many houses are empty; millions die of hunger and yet there is an abundance of food being produced.

The question of food and the so-called "food crisis" is used by the bourgeoisie to push home the idea that we need austerity measures in the advanced capitalist countries. The petit bourgeois add their voices to all this in attempting to make everyone feel guilty about our so-called "opulence". This is childish and superficial to say the least. If workers in the west were to eat less and consume less this would in no way solve the food crisis in the poorer countries. The purchasing power of billions of poor across the globe would not suddenly shoot up.

Thus this question of the food crisis requires unravelling from the myths that it is buried under by the official media. One very common and banal way of looking at the issue is that "there are too many human beings" or that "people in the West consume too much". Thus blame is not put at the door of the capitalist system, but on the shoulders of ordinary working people in the industrialised countries. This idea is quite fashionable among those who adhere to the "Green" movement. A closer and deeper look at the real situation will reveal that the world actually produces enough food to feed everyone. As we have already stated above, the problem is not one of supply, but of ability to buy!

"Third World" debt mechanism

To begin our analysis of the problem it is useful to go back in time and look at how the debt of the underdeveloped countries has evolved over the years and how it has increased to the advantage of the imperialist countries and their ruling elites.

Already before the 1970s we had the phenomenon of growing "third world" debt. But since the mid-1970s (i.e. since the first simultaneous world recession after the Second World War) more and more countries have been forced to turn to the IMF and World Bank to renegotiate their debts and implement policies such as the so-called "IMF stabilisation programmes."

Malnutrition (Photo by .ash on flickr) Throughout the 1960s and 1970s this affected the poorest countries, and the austerity programmes that flowed from all this led to similar results as today: growing unemployment; rising prices for basic goods; worsening health, education, social services; and also this provoked numerous mass movements, among them many of a revolutionary character.

At the heart of this were the monetarist policies that dominated bourgeois economic thinking after the explosion of inflation in the 1970s. Faced with this, the capitalists felt the need to "squeeze out" of the system the fictitious capital that had accumulated. This is something they are facing once again today, but on a much larger scale.

Some figures will help to show how the "third world" debt was growing. In 1960 it stood at $18 billion; by 1970 it had climbed to $75 billion and in 1973 to $112 billion. Just a decade later, in 1984 it had rocketed to $900 billion. In a period of just 24 years there had been a 50-fold increase in the overall debt of the underdeveloped world, which implied huge payments of interest to the advanced industrialised countries.

We see this staggering growth of debt, and yet it would be true to say that compared to what was to come later, up until 1973 the debt had been kept within certain limits, thanks to export earnings of the poorer countries and remittances from its migrant workers. All this was possible on the basis of the massive post-war boom (1948-73). In that period overall GDP of the main advanced capitalist countries grew by between 500-600%, an unprecedented growth in the productive forces, with some of the crumbs of this huge banquet falling to the underdeveloped world.

However, in relative terms, the picture was a different one. As the advanced capitalist countries went through a long period of boom, with a huge expansion of production and with it an accumulation of capital, most of the less developed countries saw themselves being tied more and more to the needs of the industrialised countries, with an unequal exchange of value. They were getting less for more. The prices of their exports (mainly raw materials and agricultural produce) were declining relative to the increasing prices of industrial goods. This also explains their growing indebtedness to the imperialist countries and their banking system.

Structural Adjustment Programmes

1974 was a turning point, with the first simultaneous world recession since the Second World War. This dramatically affected the underdeveloped countries and the situation facing these countries worsened (as the 1984 figure above confirms). In this situation the private banks started playing a growing role in granting loans to these countries, making the debt even worse. But this debt had to be paid back, and with interest. Where were these countries greatly going to find the money to finance debt repayment?

The answers the western financial system came up with in March 1980 to "solve" the crisis were the famous "Structural Adjustment Loans". A similar set up had in fact already existed since the 1950s but on a smaller scale. Now they developed them more).

World leaders discuss global food crisis over 18-course meal
World leaders discuss global food crisis over 18-course meal, 8 July 2008, see also article in Them and Us

These Loans were tied to conditions: higher interest rates; a reduction of price controls; tax relief for private companies; a reduction of state intervention in the economy; cuts in subsidies on basic foods and of course privatisation. This was the cure the imperialist powers offered the underdeveloped countries. It is like a man suffering from malnutrition and is told by his doctor that what he needs is to go on a strict diet!

The real concern of the IMF was not the suffering of the peoples in these countries. The idea they presented was that if they could get these countries to export more then they could balance their budgets and reduce debt. At the same time they demanded that these countries open up their own local markets, reducing tariff barriers and state subsidies to local producers, making it easier for the industrialised countries to export to them.

We can look at the example of the Philippines in 1981. That year the country was only granted a loan if its government agreed to reduce protectionist import controls. This would make goods of the advanced countries cheaper and therefore more competitive on the home markets of the poorer countries.

In the Philippines in 1982 interest payments as a percentage of government spending jumped from 19% to 57%, while at the same time there was a collapse in "capital spending", i.e. investments, from 19.3% to 4.4%.

Thus we see that in reality the Structural Adjustment Programmes (SAPs) were designed to create a profitable environment for the imperialist countries, not to strengthen the local economy at all. For although according to the theory, the underdeveloped countries were supposed to develop their exports, the main markets for these exports were in fact the USA, the EU and Japan, who all have protectionist barriers around their markets, while the markets of the underdeveloped countries were to be forced open to the imports of the industrialised countries. In this situation the only way the poor countries could compete in an "open market" would be by cutting down even further the wages of their already very poor workers.

The application of such a policy far from strengthening the economies of the underdeveloped countries, led to many bankruptcies of local industries. Faced with more competitive advanced industries, those in the poorer countries could not keep their position even within their own home market. This shows how the policy imposed by the imperialists was not aimed at strengthening the economy of the poorer countries... on the contrary.

We can give another example, that of Haiti in October 1995. The government had refused to sign a World Bank loan agreement, as it felt it could not apply the policies being linked to the loan. The response was that USAID blocked a $4.5 million loan to pressure the government into signing the "Adjustment Plan." We will see later the effects of this on Haitian agriculture.

These policies were applied in Bolivia, Costa Rica, the Ivory Coast, Indonesia, Malawi, Somalia and many other countries. Countries like Mexico and the Philippines have been transformed from countries that once were self-sufficient in food, to food dependent countries.

The effect of these policies in Zimbabwe are a clear example of how imperialism was destroying the local economy! At the beginning of 1990 an IMF/World Bank sponsored Structural Adjustment Programme was imposed on the country. Zimbabwe's debts had been growing in the previous period. Part of these debts had in fact been inherited from the previous racist white government.

To reduce debt and pay the interest on the debt accrued, spending on education and healthcare was drastically cut. Most importantly, state subsidies on food and price controls were removed. The result was that people started going hungry. By 1997 Zimbabwe was spending seven times more on debt servicing (i.e. paying interest) than on education and health.

All this was carried out by Mugabe. So long as he was squeezing wealth out of the impoverished masses of Zimbabwe and handing this over to the imperialist countries he was a friend of the West! In fact today's mess in the country is a direct result of those policies. (See also: Which way out of the Zimbabwean nightmare? By Fred Weston, 24 April 2008).

The effects of these same policies on Haiti have had a similar effect. Agriculture has been liberalised, and rural incomes and production have collapsed. Poor people are now reduced to eating mud mixed with a bit of oil and fat, just to fill their stomachs!

Real relationship between underdeveloped and developed countries

The debt mechanism hides the real relationship between the underdeveloped and the developed countries. The myth is that the west grants "aid" to these countries. The truth is that with this "aid" they lock these countries in a mortal death trap. Loans actually create a situation whereby more capital is taken out of the poor countries than is pumped in, thus enriching the advanced countries, or to put it better: enriching the capitalists and bankers in the advanced countries.

One figure confirms this: by 1989 the so-called "developing nations" were paying $52 billion MORE to the "developed" world in interest payments on debt than they received in aid or loans!

This process led to a steep fall in government subsidies for agriculture, severely affecting the ability of these countries to feed themselves. The Philippines from being a net exporter of food has now become one of the world's largest importers of rice, while a huge percentage of GDP leaves the country to service the debt.

Returning to the case of Haiti: 20 years ago this country produced 170,000 tonnes of rice per year, which was the equivalent of 95% of its needs for domestic consumption, having to import vey little. But then in 1995 in stepped the IMF with its loans. The problem is that the loans came with conditions attached. Haiti would get the loan if it cut tariffs (taxes) on imported rice from 35% to 3%. In this way imported rice, mainly from the USA, became more competitive. This destroyed local production, and now 75% of rice consumed in Haiti comes from the USA! This is a very clear example of how imperialism destroys productive capacity in these countries to boost its own production and profits. The fact that this can lead to mass starvation is of little concern to them. (See also Haiti: Which Way Forward Against Imperialism? By Rob Lyon, 06 January 2004, and other articles on Haiti).

In all this we see how the poor countries have been forced to open up their markets, to abide by the rules of "free trade". But does this rule apply to the advanced countries? Not at all! Since the late 1990s state subsidies to agriculture have covered 40% of the value of agricultural production in the EU and 25% in the USA. In the 30 richest countries 30% of farm revenue comes from state subsidies, to a total of $280 billion per year.

Thus we see how US cotton is sold on the world market at prices that vary from 20 to 55% of the actual cost of production. This has bankrupted West and Central African farmers! We can ask the question: Where is the "free market" here? We see how there is one rule for the poor and another for the rich.

On top of this we have the phenomenon of the so-called "set aside" policy in the EU, whereby farmers are paid to keep land fallow, i.e. not to produce. We have the destruction of food in both the EU and the USA in order to keep the price high on the markets. Canada for example pays farmers to kill pigs in order to keep supply down and prices high. But the meat, at best, is used to produce dog food, not to feed the hungry of the world.

The example of Malawi

Does it really have to be like this? It clearly does not! What happened in Malawi in 1999 is a very good example. That year the government decided to ignore the advice of the IMF and World Bank and gave smallholder farmers a starter pack of free fertilisers and seed. The result was that that year Malawi had a national surplus of corn!

But then the World Bank and other "aid donors" stepped in and forced the government to scrap the programme claiming it "distorted the market". Thus no more free packs were available to small farmers. And surprise, surprise, this resulted in a collapse in agricultural production. In 2000-02 there was famine in Malawi and about 1500 people died of hunger.

By 2005 Malawi was facing an even worse food crisis. Again a new government had had enough of World Bank/IMF "advice", and it decided to reintroduce subsidies on fertilisers. Two million farmer families were allowed to buy fertiliser at one third (33%) of the market price and they were also given discounts on seed. You can guess what the result was: for two years Malawi had a huge harvest, a one million tonne maize surplus and it was even exporting food to South Africa!

Just this one example shows that there is huge potential to produce food in these countries. The problem is not climate change or population growth (although climate has affected harvests in some parts of the world). It is about economic policies; it is about capitalism and how it works.

The present crisis has its roots in the 1973-74 worldwide recession and the explosion of inflation in the same period. The answer of the capitalists was to adopt monetarist policies and push for privatisation and cuts in government spending. With the privatisations the capitalists were looking for fields of investment and quick easy profits.

This is what we saw in the advanced capitalist countries and we are still seeing it today. This process had its parallel in the former colonial countries, but there it has meant death for millions of people. Now we are seeing this danger reappearing in Somalia, Ethiopia and so on. In the Horn of Africa around 14 million people are at risk today!

The present food crisis reflects the general crisis of capitalism over a long 30-year period. The situation is becoming intolerable and this explains the rioting in about 40 countries around the globe. This revolt is part of a rising wave of class struggle everywhere.

And yet enough food is produced in the world to feed everyone. The FAO (the United Nations Food and Agriculture Organisation) in the 1990s made a study of world food production and found that the world was producing enough to feed everyone 2700 calories per day, whereas back in 1965 this figure was only 2300. Thus world food production had gone up not just in absolute terms but also relative to population growth.

Another recent study (in the year 2000) found that the world was producing 3500 calories per day for every inhabitant of the planet. And this is just in grains production. It doesn't include things like vegetables, beans, nuts, root crops, fruit, grass-fed meats and fish. If we include these then we find that more than 2 kilos of food per day per person are produced, divided roughly into 1.2 kilos of grains, beans, nuts, 0.5 kilos of fruit and vegetables, and 0.5 kilos of meat, milk and eggs.

Thus, already under present-day capitalism there is enough food produced to feed everyone. Since the year 2000 there has been no significant fall in overall food production.

In fact in 2007 there was a record global grain harvest. In the last 20 years food production has grown by an average of +2% per year, while the world population has only grown by +1.4% per year.

It is true that in the very recent period stocks have been lower, but there is still enough food for everyone. Climate change has affected some areas, such as Australia which has been affected by drought, but overall world production has not gone down.

World production of wheat, Millions of tonnes
World production of wheat, Millions of tonnes

World production of rice, Millions of tonnes
World production of rice, Millions of tonnes

What is true is that the advanced capitalist countries have been concentrating food production in their hands, strangling the poorer countries. 40 years ago the "developing nations" had a food export surplus of around $7 billion. By 1980 this was down to $1 billion. But today what they call the "southern food deficit" has become $11 billion per year. The poor countries have to buy their food from the rich countries now.

Biofuels

We repeat: there has been no overall fall in world food production. However, there have been some policy changes and redirection of agricultural production that have affected supplies. For example, in the USA 30% of grain production has been turned over to producing biofuels. They prefer to put food in petrol tanks than to feed people!

They prefer to put food in petrol tanks than to feed people! (Photo by rrelam on flickr)They have tried to disguise this as part of the worldwide effort to reduce the greenhouse effect of excessive carbon emissions into the atmosphere. But some calculations have shown that corn-based ethanol, instead of leading to a 20% reduction in carbon emissions, as they had originally claimed, in actual fact nearly doubles emissions over a 30-year period.

Behind the so-called concern with the environment lies a conscious policy decision of US imperialism, which seeks to guarantee for itself "secure" supplies of energy as it sees areas like the Middle East gripped in political turmoil. Its adventure in Iraq has failed to achieve the hoped for results.

Over the past eight years the percentage of land in the USA turned over to growing crops for biofuels has gradually increased. In 2000, only 6% of overall US corn production went into the production of ethanol. In 2005, this figure had risen to 14% and by 2006 it reached 20%. This is precisely the amount of US corn production that in recent years was dedicated to exports.

It is not by chance, therefore, that in 2007 US corn exports were falling at the rate of 19%, and considering that the USA traditionally accounted for about 40% of all corn traded on the world market, close to a fall of one fifth in US corn exports for human consumption has a major impact on grain supplies internationally. The maths is easy to work out: one fifth of 40% is 8%. Thus we have a sudden fall of 8% of corn available for the world market, not due to any natural calamity, but due to the world political situation.

Speculation

Another important aspect to consider is speculation. Speculators have been shifting their operations to the food market. In recent years speculators have provoked bubbles in the stock exchange, in the dot com companies, in the housing market, etc. Each one of these has burst at some point. The housing bubble started to burst about two years ago. And it was just about two years ago, in the middle of 2006, that heavy speculation started in futures contracts in agricultural production. Since June 2006 the number of futures contracts in wheat, soybeans, corn and rough rice has tripled! (See graph below).

Monthly Traded Volumes of Futures Contracts

It was in 2006 in fact the New York Stock Exchange joined with the Amsterdam, Brussels, Lisbon and Paris Exchanges to create a unified world electronic Futures exchange, thus making speculation in futures even easier! This was a major contributing factor in creating a price bubble in agricultural goods. Global prices have gone up by 83% over the last three years as a result.

What we have seen has been a shifting of capital from one bubble to another in the quest for quick easy profits. The bursting of the housing bubble has made millions homeless around the world. Now the food bubble is starving millions to death!

The capitalist system worldwide does not mean just unemployment, homelessness, lack of healthcare and so on. It means death for millions of people who die simply because they cannot afford the prices of food products that have been pushed up by speculation.

Produce for need, not for profit

Surely this is enough to condemn the capitalist system! The time has come for a different way of running things: production for need and not for profit. To go back to Marx, "the material conditions for its solution are already present or at least in the course of formation." The world economy can produce enough food for everyone. It already produces more than we actually need, and as the case of Malawi indicates it has the potential to feed many more. We have just seen in the recent period western governments throwing hundreds of billions of dollars, in fact trillions at the banking system. This money will disappear down a bottomless pit. But what it does reveal is that the resources are there. This huge amount of capital could be used to wipe out "third world" debt and provide subsidies to farmers. On this basis all African countries could be producing a surplus of food.

Some figures will help to highlight the huge contradictions that exist today. Of the 4.4 billion people who live in the underdeveloped countries, 60% have no access to basic sanitation, 30% have no safe drinking water, 25% lack decent housing, 20% have no access to modern health services, 20% of the children do not get beyond primary school education and 20% are undernourished. More than 1.2 billion people live on less that $1 a day, of which more than 50% are children.

The flip side to this situation is that the three wealthiest people in the world have accumulated assets greater than the combined gross national product of all the least developed countries with their 600 million inhabitants. The assets of the 200 richest people in the world are greater than the combined income of 41% of the world's people.

None of this is caused by natural factors. They are the direct consequence of the capitalist mode of production. Relieving the debt of the 20 worst indebted countries could be achieved at the cost of between US$5.5 billion and $7.7 billion. That is less than the cost of one stealth bomber. A basic education for all would cost only $6bn a year. Providing water and sanitation for all would cost only $9bn. Basic health care and food provisions would cost $13bn. (Sources: United Nations Development Programme, Human Development Report 2000, New York: Oxford University Press, 2000; Human Development Report 1999, New York: Oxford University Press, 1999; Human Development Report 1998, New York: Oxford University Press, 1998.)

In the United States of America, the richest country in the world, poor people die for lack of basic healthcare and yet $42billion would provide free healthcare for all, but not a cent is available fore that kind of spending.

Is it not sufficiently clear from all this that the problems are to be found in the profit motive that drives the capitalist system? All the media propaganda about "food shortages" is false to the core. The figures we have provided demonstrate clearly that the food is available and the planet can actually produce even more.

The bourgeois media is constantly bombarding the general public with the idea that in the advanced capitalist countries we "consume too much", the logic being that we should consume less. When they use the word "we" they mean of course the working classes and middle classes, not the super rich at the top. They thus try to inculcate a feeling of guilt into the ordinary working people. What they are aiming at is an austerity programme, which involves cutting real wages and spending less on social welfare spending. This fits very nicely with the needs of the capitalist class which is aiming to cut production costs in order to be even more competitive on the world market.

As we have already seen, in this dishonest propaganda campaign they receive the help of groups like the Green Party in many advanced capitalist countries, who sell the idea that consuming less would have a positive effect on living conditions around the world. What these people ignore is that workers are already consuming less as a result of the deepening recession we have just entered. Figures show that consumption of certain food products have gone down. In countries like Britain the "discount" stores like Lidl and Aldi have seen their sales grow by 25-30% in the recent period. Has this reduced consumption had any beneficial effect on the billions of poor in the world, has there been any significant shift of income to the underdeveloped countries? No there has not. The attack on working people is in all countries, from the least developed to the most.

What is required is not some minor tinkering here or there with the capitalist system. What has to be removed is the system itself. And it has to be replaced by a worldwide socialist system! The present crisis of world capitalism - and the "food crisis" that is part of that overall crisis - is leading millions to question the very system they live under. The facts and figures are clear. Let us use them within the movement to counter the propaganda of the mainstream media and explain what is really happening!