As food banks become a feature of advanced capitalist societies, we look at the impact of speculation on food prices. The IMF made storing cereal supplies illegal in 1998, because it was contrary to free market ideology. We have been subject to the effects of speculation ever since.
The FAO – the Food and Agriculture Organization of the United Nations – defines people’s right to food as follows:
“The right to adequate food is realized when every man, woman and child, alone or in community with others, has the physical and economic access at all times to adequate food or means for its procurement.”
Concretely, this right means that countries have an obligation to ensure that their population has access to enough and affordable food. Yet this right has been denied to millions of people over the past decades for the sake of the interests of a happy few.
Once upon a time in a less capitalistic world, countries had cereals stocks in order to avoid food shortage or more importantly price raises. In 1998, the IMF declared this practice illegal because it was contrary to the wonderful principle of liberalism. As we all well know, markets regulate themselves perfectly, and all governmental interventions are evil.
As a result, food prices and in particular cereals have become extremely volatile. This volatility is particularly damaging for small farmers and for people suffering from hunger. In 2013, the FAO estimated that 842 million people are undernourished (12% of the global population). Malnutrition is a cause of death for more than 3.1 million children under 5 every year.
Speculators rapidly figured out that unlike the internet or real estate bubbles, food would always be needed. And so started to speculate heavily on food prices from 2006 onwards, helped by the fact that only four companies (known as the ABCD group for ADM, Bunge, Cargill and (Louis) Dreyfus) account for an estimated 75% to 90% of the global grain trade. Between 2006 and 2008 average world prices for rice rose by 217%, for wheat by 136%. In a 2011 report (pdf), the UN directly linked food-related crises with speculation.
These increases in prices have very concrete consequences. In 2007-2008, a global crisis broke out which led to food riots and social insecurity in several countries, in Africa, Asia, the Middle East and Latin America. The rapid increase in prices by late 2010 led to the 2011 East Africa famine. In Somalia alone, an estimated 260000 people died from direct consequences of the crisis. This crisis could have been tempered had countries been able to regulate the prices through cereal stocks.
The way to tackle speculation is well known: regulation. A 2009 report by MEP Mairead McGuinness provided the solution: ‘
“The European Parliament considers that a targeted global system of decentralised regional and local food stocks would be beneficial.”
Yet, and despite the efforts of organisations such as Oxfam or Action for food reserves, decisions-makers are still lacking the political courage to stop a system leaving millions of people’s lives at the mercy of mercantile interests.
Global production could feed 12 billion people. Hunger is not a problem of production but a problem of repartition and speculation that needs to be tackled NOW.
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